What is the base tax credit for energy projects?

• For projects beginning construction on or after Jan. 29, 2023 or where the maximum net output is 1 MW or greater, the base tax credit is 6% of the taxpayer’s basis in the energy property or qualified facility (or energy storage technology).

What is the ITC rate for energy storage projects?

Energy storage installations that begin construction after Dec. 31, 2024, will be entitled to credits under the technology-neutral ITC under new Section 48E (discussed below). The base ITC rate for energy storage projects is 6% and the bonus rate is 30%.

What are the New IRA rules for energy storage?

Energy storage was one of the major beneficiaries of the IRA’s new rules on both the deployment and manufacturing sides. The IRA enacted the long-sought investment tax credit (ITC) under Section 48 and 48E of the Internal Revenue Code (the Code) for standalone energy storage facilities.

What are the final IRS regulations for energy projects?

These final IRS regulations follow the proposed guidance issued in November 2023 and clarify critical rules for energy property eligibility, project definitions, and bonus credit considerations. For energy developers, project owners, and investors, these updates provide both welcome flexibility and areas of continued complexity.

Does energy storage technology qualify for the ITC?

The preamble to the final regulations confirms: Energy storage technology qualifies for the ITC if Section 48 requirements are met, even when co-located with facilities eligible for other tax credits. Prevailing wage and apprenticeship requirements outlined in Sections 1.45-7, 1.45-8, and 1.45-12 apply to ITC projects.

What regulatory guidance has the government released on energy storage?

Of particular importance to the energy storage industry, the government has released final regulatory guidance for the ITC (both Section 48 and 48E of the Code), prevailing wage and apprenticeship (PWA) requirements, and transferability and direct payment, as well as other guidance on the energy community and domestic content tax credit “adders.”