WASHINGTON – The U.S. Department of the Treasury (Treasury) and the IRS released final rules for the Clean Electricity Investment and Production Tax Credits – also known as the technology-neutral credits – in tax code sections 45Y and 48E.
These credits are central to cutting energy costs for American families and businesses and producing abundant, affordable power to meet growing demand created by major investments in the U.S. economy. According to an analysis from the Department of Energy, the tech-neutral credits, along with other Inflation Reduction Act and Bipartisan Infrastructure Law provisions, are expected to save American families up to $38 billion on electricity bills through 2030.
The Clean Electricity Credits encourage innovation by allowing new zero-emissions technologies to develop over time, while also providing durable incentives for companies to make investments in clean energy technologies that are already contributing to the clean energy investment and manufacturing boom. The final rules issued provide important clarity and certainty around what clean electricity zero-emissions technologies qualify for the credits – including wind, solar, hydropower, marine and hydrokinetic, geothermal, nuclear, and certain waste energy recovery property. Treasury and the IRS anticipate releasing the first Annual Table confirming this list of qualifying technologies imminently. The final rules also provide guidance to clarify how combustion and gasification technologies can qualify in the future – including on how lifecycle analysis assessments compliant with the statute will be conducted.
Abigail Ross Hopper, president and CEO of the Solar Energy Industries Association (SEIA) stated:
The United States must adopt an all-of-the-above energy strategy to meet surging demand for electricity across the country. This tax credit is critical for driving investments in American-made energy projects across a range of technologies, particularly solar, which is adding more capacity to the energy grid than any other fuel source.
American solar and storage companies are investing hundreds of billions of dollars to build energy projects that power our country, including major infrastructure like data centers and manufacturing plants. The technology-neutral energy tax credit provides the long-term policy certainty companies need to invest in U.S. energy innovation and that, in turn, creates a stronger foundation for our energy security as well as thousands of well-paying jobs.
Over the next five years, the U.S. solar and storage industry will add more than 200 GW of new capacity to the grid, nearly doubling its current size. This growth is delivering an economic and jobs boom across the country and creating the conditions for the massive growth we’re seeing in American solar manufacturing.
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. “We urge lawmakers to protect these tax credits to drive job growth and continue to buildout American-made clean energy.
The existing Production Tax Credit and Investment Tax Credit will be available to projects that began construction before 2025. Qualifying projects placed in service after December 31, 2024 will be eligible for the new Clean Electricity Credits.
The final rules reflect careful consideration of stakeholder comments and largely maintain the rules as proposed. The final rules also confirm that future changes to the list of zero-emissions technologies or the designation of a lifecycle analysis model that may be used to determine emissions rates will need to be accompanied by an analysis prepared by the U.S. Department of Energy’s National Labs, in consultation with interagency and other experts.
The National Labs are already analyzing the lifecycle emissions of electricity production using certain biomass technologies, based on the requirements in the final rules. Treasury expects this analysis, when complete, will provide additional clarity for taxpayers.
To receive the full value of the credits, taxpayers must meet standards for paying prevailing wages and employing registered apprentices, helping ensure more clean energy jobs are good-paying jobs, and growing career opportunities for workers in the clean energy sector. The technology-neutral Clean Electricity Production and Investment Tax Credits are also eligible for bonus credits related to siting projects in energy communities and meeting certain standards for using domestic content, further supporting robust and geographically diverse job creation and economic opportunity in the growing clean energy sector.
Mike Carr, Executive Director of the Solar Energy Manufacturers for America (SEMA) Coalition, released the following statement:
The SEMA Coalition has consistently argued that Congress intended that energy storage systems and energy generation systems, including solar, are separate qualified facilities under the tech neutral credits. This is a critical clarification needed to support American solar manufacturers and workers.
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.
The industry is currently spending billions to open new factories across the United States. This is a significant step forward in securing demand from those new factories to further bolster our economic and energy security.