Renewable Energy Tax Credit Application Deadline Approaching
In 2009, the American Recovery and Reinvestment Act led to the Qualifying Advanced Energy Project Credit (48C) Program. Thanks to the Inflation Reduction Act of 2022, 48C was expanded. Qualified organizations nationwide now have access to $10 billion in tax credits for retrofits or renovations to facilities that are broadly involved in clean energy production and industrial decarbonization.
The federal government released new criteria for the program in February, requiring interested organizations to submit a concept paper, which must describe their proposed project in full, including what benefits will result from the work. Those benefits could include workforce utilization, energy savings, or pollution reduction, for example.
The credits are designed to spur the investment in and development of renewable energy projects and advance renewable energy technologies.
How are facilities eligible, and what do they need to do?
Existing industrial and manufacturing facilities, such as those that are involved in energy production or in recycling products that produce energy and that are planning on re-equipping or expanding, could be qualified. Additionally, organizations that may be planning on establishing a similar operation could also apply for the tax credit.
To be considered, projects must meet certain criteria newly established by the government. For instance, projects that involve retrofitting or establishing a facility that will recycle certain materials used in the production of clean energy or in the capture and removal of carbon oxide emissions should be presented for a tax credit. Projects that allow refineries to produce fuels or chemicals that are renewable or low carbon could also be considered. Additionally, the establishment of a new facility that will create energy that produces less greenhouse gas emissions than traditional facilities and retrofitting an existing facility with new machinery that will also produce fewer greenhouse gases are examples of projects for which the government could extend a tax credit.
To apply for the credit, facilities must prepare and submit a concept paper to the IRS and DOE. The concept papers (projects) will be ranked by the agencies, and credits, which are competitive, will be allocated to those that score the highest. Applicants that fail to secure a tax credit in round 1 may apply again in round 2. Organizations must submit one application for each project, even for those occurring at the same facility.
Follow this link to reach the application website and more information.
What does the credit cover?
- Infrastructure related to grid modernization
- Carbon capture
- EV production and energy storage
The applications for the first $4 billion in tax credits (round 1) will close on July 31, 2023. The remaining $6 billion (round 2) will be issued later. Walden has considerable experience helping clients pursue a variety of funding from government agencies and can help you apply for tax credits within the given time frame. Contact us at 516-559-6976 to learn more.