On November 22, 2023, Treasury published a proposed rule on the IRC section 48 Clean Energy Investment Tax Credit (ITC) meant to provide clarity and investment certainty for projects including offshore wind, battery storage, and small-scale renewables. The ITC, which provides clean energy developers a tax credit for investing in zero-emissions electricity generation and energy storage is enabled by sections 13102 and 13702 of the IRA.
The proposed rule provides ITC eligibility information for standalone battery storage, power conditioning and transfer equipment, such as subsea export cables needed in offshore wind projects, as well as onshore substation power conditioning equipment.
The proposal’s battery storage eligibility information is intended to support utilities during the electricity sector’s transition to clean energy by providing long-duration energy storage for electric reliability.
The proposed rules also cover the treatment of costs for interconnection-related property at lower-output clean energy projects, including local transmission and distribution upgrade costs, intended to reduce the cost and time needed to connect smaller renewable projects to the grid.
Treasury will accept public comments on the proposed rules through January 22, 2024.
Opportunities for Participation and Additional Resources:
- Proposed Rule: https://www.federalregister.gov/documents/2023/11/22/2023-25539/definition-of-energy-property-and-rules-applicable-to-the-energy-credit
- Correction: https://www.federalregister.gov/documents/2024/02/22/2024-03632/definition-of-energy-property-and-rules-applicable-to-the-energy-credit-correction