Inflation Reduction Act and Impact on Solar PV Projects
- The ACT includes a provision that provides non-taxable entities participating in clean energy a one-time direct payment investment tax credit (ITC) based on a percentage of the project's qualifying costs.
- This tax election is generally to be made on the tax-exempt organization's tax return filed for the year in which the project is placed in service; however, the IRS will need to provide further guidance on how an organization for which no return is required will make this election.
- The direct payment ITC is applicable for tax years starting after 2022 and ending before 2033.
- Cash refund for 6% of the basis of the property placed in service during the year may be increased to 30% if the project's maximum net output is less than 1 megawatt or certain prevailing wage and apprenticeship requirements are fulfilled.
- The direct payment ITC can be increased by 10% if a domestic content requirement is met. If the project is located in a qualified energy community, the ITC can be increased by an additional 10%.
*Details are subject to change based on updated guidance from relevant authorities.
While federal relief funds may make project funding possible, knowing how or where to start can be difficult. Please contact us for a no-obligation facility assessment or with any specific questions you may have about the 2022 Inflation Reduction Act and getting started with solar power by filling out the form below.