Sign Up For Novogradac Industry Alert Emails

Renewable Energy News Briefs - August 2023

The U.S. Department of the Treasury and Internal Revenue Service (IRS) issued proposed guidance in the June 21 Federal Register on transferability and elective pay mechanisms established under the Inflation Reduction Act (IRA). Elective pay will allow states, local governments, nonprofits and other eligible entities access to receive a direct payment from the IRS for clean energy tax credits. Transferability allows other types of entities to sell their credits on the open market. A press release from Treasury said these provisions will expand the reach of clean energy tax credits and help developers build new projects quicker and more affordably. The IRS issued separate guidance for elective pay, which will apply to 12 clean energy tax credits, including the investment tax credit (ITC) and production tax credit (PTC), and transferability, which will apply to 11 clean energy tax credits. Comments on the proposed guidance are due Aug. 14 and public hearings will take place Aug. 21 (for direct pay) and Aug. 23 (for transferability).

***

The IRS June 15 released two notices to clarify and update information stemming from last year’s passage of the IRA for communities that qualify for an ITC and production tax credit PTC bonus credit of 10% due to fossil energy industry decline, particularly hard-hit coal communities. Notice 2023-45 clarifies a section of Notice 2023-29, released in April, that describes requirement for a brownfield site safe harbor for projects with a nameplate capacity of 5 megawatts (MW) or less in alternating current and a special rule for beginning construction. Notice 2023-47 publishes information for taxpayers updated with 2022 unemployment data to use to determine if they meet certain requirements under the statistical area category or the coal closure category in Notice 2023-29. Notice 2023-47 also has three appendices, which provide lists of communities that qualify for energy community bonus credit amounts or rates. The U.S. Department of Energy’s energy communities map is now updated to reflect all eligible areas.

***

The IRS published a notice in the June 21 Federal Register setting the 2023 reference price for the renewable energy PTC for facilities producing electricity from wind. The 2023 amount is 3.74 cents per kilowatt-hour, which is 0.99 cents more than the 2022 figure. The IRS said that reference prices for other facilities producing electricity–closed-loop biomass, open-loop biomass, geothermal energy, solar energy, municipal solid waste, qualified hydropower production and marine and hydrokinetic renewable energy–have not been determined for calendar year 2023.

***

The IRS published a notice June 26 establishing the inflation adjustment factor for Internal Revenue Code (IRC) Section 45Q carbon sequestration for 2023 at 1.3471. Notice 2023-46 sets the Section 45Q credit for calendar year 2023 at $26.94 per metric ton of qualified carbon oxide under IRC Section 45Q(a)(1) and $13.47 per metric ton of qualified carbon oxide under IRC Section 45(Q)(a)(2). All 2023 figures represent a 7.5% increase over the 2022 levels.

Journal Category:

Renewable Energy Tax Credits

Authors:

Novogradac

Learn more about Novogradac's expertise and many services