Investment Tax Credit under the IRA

On January 14, Chantal Stevens attended a briefing on the IRA by Lyle Rawlings, President and CEO of Advance Solar Products, MSSIA Founder.  Here are the highlights of this presentation.

The Investment Tax Credit (ITC) is now 30% if the project is less than 1 megawatt, or if the project is greater than one megawatt and it meets the prevailing wage and apprenticeship requirements.  Note that it can be difficult to get apprenticeships approved without going through a union.

The IRA now offers a stand-alone ITC for batteries. This includes solar + batteries and will advance the installation of residential and commercial solar. Batteries are a must to keep the grid stable.This will also boost microgrids. In addition to the progress of technology, this will mean that smaller microgrids will start to increase in supermarkets and bank branches, gas stations, and hotels.

In addition, the IRA allows for a 10% adder for domestic content (federal regulations, Title 49 Part 661.5 - “Buy America.”) and a 10% adder for location in “energy communities” (e.g., located on brownfield, closed coal mine or coal power plant, community with employment/tax revenue from fossil fuel operations).  Also, the IRA allows for low-moderate-income adders: 10% for location in a low-income census tractor; 20% for location on a low-income residential building or a “Low Income Economic Benefit” project. There is nothing in the law that says you can’t add them up - one can get up to 70% ITC. They aren’t going to be easy; some requirements may be hard to meet. For the low and middle income, there is a limited allocation to capacity for these LMI adders.Downside: 18 MW is allocated each year for two years, and then it goes away. This adder only exists for 2023 and 2024, and you get 18MW for the entire country for these years.  Some of the tax experts consulted by Amicus said it may go in blocks by state, and the state energy offices will allocate certain projects.

Now the ITC can be sold directly to non-system owners, i.e., entities that are not owners of the system, but depreciation stays with the system owner. For government entities and non-profit organizations, the ITC is available as a refundable credit. (IRS can give you a check).  This doesn’t apply to residential - only commercial. This opens the door to more diverse utilization of the ITC.  It can be applied to active vs. passive income. More people can be investors in solar projects by buying the ITC - now getting 90 cents on the dollar.

Showing 1 reaction

Please check your e-mail for a link to activate your account.

get updates