The US has released the final rules for Clean Electricity Production and Electricity Investment Tax Credits under Sections 45Y and 48E
Solar, wind and nuclear are part of the list of qualifying technologies for these credits
Any future changes to the list of zero-emission technologies in the final rules, will need to be made after lengthy, inter-agency consultations
These credits will replace the traditional PTC and ITC credit structure for all facilities that enter service after December 31, 2024
Just days ahead of Donald Trump officially taking oath as the 47th President of the US, the country’s current administration under President Joe Biden has issued final rules on the Clean Electricity Production Tax Credits in tax code section 45Y, and Clean Electricity Investment Tax Credit under 48E. These are also referred to as technology-neutral credits and are a part of the Inflation Reduction Act of 2022.
Wind, solar, hydropower, marine and hydrokinetic, geothermal, nuclear and certain waste energy recovery property are some of the clean electricity zero-emissions technologies that qualify for these credits. The final regulations lay down rules to determine the GHG emission rates resulting from the production of electricity.
The current administration specifies that any future changes to the list of zero-emissions technologies or the designation of a lifecycle analysis model to determine emissions rates will need to be accompanied by an analysis prepared by the US Department of Energy’s National Labs, in consultation with interagency and other experts.
The Treasury Department says that eligible projects that entered construction before 2025 will be able to secure the traditional Production Tax Credit (PTC) and Investment Tax Credit (ITC). Those that enter service after December 31, 2024, will be eligible for the new Clean Electricity Credits that will replace the traditional PTC/ITC.
Altogether, these credits along with other IRA and Bipartisan Infrastructure Law provisions can help American families save up to $38 billion on electricity bills through 2030.
The final rules issued by the US Department of Treasury and the Internal Revenue Service (IRS) provide clarity and certainty around these credits.
“America’s clean energy boom is no coincidence, it’s President Biden’s industrial strategy in action: utilizing a range of incentives to accelerate innovative carbon cutting technologies and make the nation more energy resilient,” said the US Secretary of Energy Jennifer M. Granholm. “Today’s final guidance helps provide clean energy producers the clarity needed to deploy more clean energy solutions at scale to drive down costs for more American families and deliver future-facing careers for America’s workforce.”
The final rules released have found widespread support from the renewable energy industry. Solar Energy Manufacturers for America (SEMA) Coalition’s Executive Director Mike Carr says this provides investment certainty to the solar sector.
“This final rule will tighten requirements in order to better support American solar manufacturers (and domestic battery cell production), particularly the critical component manufacturers, as project developers will increasingly need to ensure they use American modules with domestically manufactured components to qualify for the Domestic Content Bonus,” explained Carr.
The President and CEO of the American Council on Renewable Energy (ACORE) Ray Long called it a game-changing policy. The President and CEO of the Solar Energy Industries Association (SEIA), Abigail Ross Hopper termed tax credits critical to drive investments in American-made energy projects, particularly solar. She stated, “Critically, this tax credit further incentivizes solar and storage projects to use U.S.-made components like solar modules, trackers, and batteries. Attempts to revoke these rules will only make it easier for China to win the race for global solar market dominance while killing American jobs and much needed economic opportunity.”
A day before the Treasury Department released the final rules, Aurora Energy Research said the US may see $336 billion less investment, 237 GW less clean energy generation capacity, and at least 97,000 net fewer American jobs by 2040 in the absence of tech-neutral tax credits in the country.
Treasury has already released its final rules for Advanced Manufacturing Production Tax Credits under Section 45X of the Internal Revenue Code which provides incentives for domestic production of the entire solar value chain (see Final Rules For Section 45X Advanced Manufacturing Production Credit).
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