The U.S. Treasury and the Internal Revenue Service (IRS) released guidance this week to provide additional clarity on the expanded investment tax credit (ITC).
Specifically, the guidance seeks to provide more clarity to help companies make investment decisions for clean energy projects, as they are included in the new and expanded incentives created by the Inflation Reduction Act.
“To continue the investment and jobs boom created by the Inflation Reduction Act, Treasury has focused on providing companies with clarity and certainty needed to secure financing and advance clean energy projects nationwide” Deputy Secretary of the Treasury Wally Adeyemo said. “Today’s guidance provides clarity for offshore wind and battery storage projects, as well as small scale projects that need to connect to the grid. Ensuring these projects can move forward efficiently is key to creating good-paying clean energy jobs and lowering Americans’ utility bills.”
The Notice of Proposed Rulemaking (NPRM) provides clarity around the eligibility of power conditioning and transfer equipment like subsea export cables used in offshore wind projects, as well as certain power conditioning equipment located in onshore substations. Further, it includes proposed rules around the eligibility of standalone battery storage for the ITC to help support the development of utility-scale, long-duration energy storage.
Additionally, it provides guidance on the costs of interconnection-related property for lower-output clean energy installations, including the costs of upgrades to local transmission and distribution networks that are necessary to connect the clean energy. Finally, it proposes updates to a range of other technical definitions and rules that will further support clarity and certainty for clean energy project developers.
“The Inflation Reduction Act has already fueled a clean energy investment boom in America,” John Podesta, senior advisor to the President for Clean Energy Innovation and Implementation, said. “Today’s guidance from Treasury on the Investment Tax Credit gives clean energy developers even more clarity and confidence to continue their momentum.”
The Treasury and the IRS will accept comments on the NPRM for 60 days.