Companies making components for everything from geothermal and hydropower projects to nuclear facilities and hydrogen electrolyzers to rare earth and silicon miners and refiners have $6 billion in tax credits available through newly released federal guidance.
The U.S. Department of the Treasury (Treasury), the U.S. Department of Energy (DOE), and the Internal Revenue Service (IRS) released additional information on the expanded Qualifying Advanced Energy Project Tax Credit (§ 48C) program under § 48C of the Internal Revenue Code.
The guidance outlines how the remainder of the $10 billion in total funding for the Qualifying Advanced Energy Project Credit program established in the Inflation Reduction Act will be spent. The 48C tax credit program provides incentives for clean energy manufacturing and recycling, industrial decarbonization, and critical materials processing, refining, and recycling.
Component manufacturers should work on concept papers now to apply for financing, since the last round of tax funding was significantly oversubscribed. Applicants submitted $42 billion in project proposals for $4 billion in available financing.
These are companies like Highland Materials, which secured over $255 million in tax equity financing to build the first polysilicon manufacturing plant for solar panels in the US since the passage of the Inflation Reduction Act.
As applicants begin drafting their proposals they need to keep in mind that projects are required to meet prevailing wage and apprenticeship requirements to meet the full 30 percent tax credit. Community outreach and engagement and benefits to disadvantaged communities have to be considered as part of any project.
Furthermore, $2.5 billion will be going to projects within 48C “energy communities”, which are defined as either brownfield sites, places with an above-average unemployment rate and an economy tied to fossil fuel production or use, communities near closed mines, or communities near retired coal-fired power plants.
Contact us to learn how Energy Transition Finance can help navigate the non-dilutive financing opportunities for companies engaged in the energy transition.