Proposed Regulations on Technology-Neutral PTC and ITC Released by Treasury | V&E Renewable Energy Update | Energy Transition | Inflation Reduction Act | Insights

Proposed Regulations on Clean Electricity <a href="">tax credits</a>

Proposed Regulations on Clean Electricity tax credits

The New PTC and New ITC

On May 29, 2024, the Treasury Department and the Internal Revenue Service released proposed regulations (REG-119283-23) concerning the clean electricity production tax credit and clean electricity investment tax credit under the inflation reduction act of 2022.


Historically, certain clean energy projects have been eligible for a production tax credit (PTC) and an investment tax credit (ITC) under Code sections 45 and 48. These credits are currently available for qualifying projects that commence construction before January 1, 2025.

New PTC and New ITC

Code sections 45Y and 48E will replace the existing provisions, offering a PTC or ITC for energy and storage projects with a greenhouse gas (GHG) emission rate of zero placed in service after December 31, 2024.

Tech-Neutral Approach

Unlike the previous credits, the new sections adopt a “tech-neutral approach,” making electricity or storage projects eligible for the New PTC or New ITC if they have a GHG emission rate of zero, regardless of the technology used.

Eligibility Criteria

clean energy Projects

Projects like wind, solar, hydropower, and geothermal are eligible for the New PTC or New ITC due to their low GHG emission rates.

Energy Storage Technology

Eligible storage technologies include electrical, hydrogen, and thermal storage meeting specific capacity requirements.

Other Eligible Facilities

Nuclear fission and fusion facilities, as well as Combined Heat and Power facilities, are also eligible for the tax credits.

Annual Table and Provisional Emission Rate

Treasury will publish an “Annual Table” identifying eligible facilities. Taxpayers can also rely on a “Provisional Emission Rate” from the Department of Energy for determining eligibility.

GHG Emission Rate Determination

Non-C&G Facilities

The GHG emission rate for facilities without combustion or gasification is based on a technical assessment of energy transformation.

C&G Facilities

For facilities with combustion or gasification, a full lifecycle analysis is required, considering emissions from various stages and activities.

Recapture Requirements

Recapture provisions apply if a facility’s actual GHG emission rate exceeds specified limits during the recapture period. Taxpayers must also expect zero emissions for ten years to qualify for the New ITC.

Read More of this Story at – 2024-06-05 01:18:45

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