Explainer: Who Can Now Benefit From US Tax Equity Policy?
Two core incentives take center stage to enhance the market penetrability of renewable energy under the IRA: The Investment Tax Credit (ITC) in section 45 of the Internal Revenue Service Code is available for energy efficiency/renewable energy improvements. It is equal to 30% of the value of the capitalized basis costs to develop, design, build, and install systems that: (1) use solar energy to generate electricity, or to heat, cool, (or provide hot water for use in) a structure (building), although heating swimming pool water does not qualify; (2) consist of fuel cell property with nameplate capacity of at least 0.5 kW and an electricity-only efficiency of at least 30% (up to $1,500 per 0.05 kW of capacity); (3) consist of small wind property with a nameplate capacity of 100 kW or less; (4).use fiber optic distributed sunlight to illuminate the inside of a structure. Also available is an ITC equal to 10% of the value of the capitalized basis costs to develop, design, build, and install systems for the following types of energy property: (1) geothermal electric systems, (2) micro-turbines (stationary plant of less than 2 MW with an electricity-only efficiency of 26%), (3) combined heat and power systems, and (4) geothermal heat pumps. Source: Department of Energy (ITC) and Renewable electricity Production Tax Credits (PTC) in section 45 of the Internal Revenue Code are available for the domestic production and sale of electricity from qualified sources and are equal to either $0.022/kWh ($0.015 adjusted for inflation each year; $0.022/kWh is the current value), or half that amount for certain types of power-producing systems during their first 10 years of operation. Source: Department of Energy (PTC). What are the ITC and PTC? Who is eligible? What are the revisions made under the IRA? If these questions sound familiar, this explainer is for you.