Renewable Energy Incentives from the Inflation Reduction Act
On August 16, 2022, President Biden signed into law the most significant piece of legislation for the renewable energy and storage space in almost 20 years. The Inflation Reduction Act (IRA) is a slimmer version of the Build Back Better bill that West Virginia Senator Joe Manchin opposed in its original form. The federal government will provide tax incentives up to $369 billion for new solar, wind, thermal, and energy storage devices over the next decade. The IRA was signed into law just as some renewable energy provisions were about to lapse. The former laws also did not provide any federal tax incentives for the standalone energy storage or clean hydrogen industries.
EXTENSION OF THE INVESTMENT AND PRODUCTION TAX CREDITS
The Inflation Reduction Act extends the Investment Tax Credit (ITC) through December 31, 2025, for solar, wind, geothermal, biogas, combined heat and power (CHP) facilities, and microgrid projects that begin construction before December 31, 2025. It includes interconnection costs in qualified ITC costs and extends the ITC for eligible costs associated with standalone energy storage. Under the previous law, energy storage devices had to be attached to a solar project to claim the ITC. Further revisions in the new law allow developers to claim the ITC for other technologies, such as carbon capture sequestration (CCS), clean hydrogen, nuclear power, and biofuel.
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This article was originally published on Marcumllp.com on November 29, 2022. Link to the original article is here: https://www.marcumllp.com/insights/renewable-energy-incentives-from-the-inflation-reduction-act
