Qualifying Advanced Energy Project Credit
What Is Section 48C?
The Inflation Reduction Act (IRA) of 2022 reinstated and extended the Section 48C Advanced Energy Manufacturing Credit to catalyze investment in manufacturing facilities for clean energy technologies. Section 48C is a competitive credit, meaning manufacturers must apply to the Internal Revenue Service to receive an allocation. Manufacturers of renewable energy property, fuel cells, grid modernization equipment, carbon capture equipment, energy conservation technology, hybrid and electric vehicles and infrastructure, and equipment to produce, refine, or blend any low-carbon or renewable fuel are encouraged to apply.
Ryan’s multidisciplinary team of tax and energy industry professionals are available to guide you through the credit allocation process, enabling your organization to remain focused on its core business. Our full-service approach includes pre-application diligence, concept paper preparation, comprehensive application support, and coordination of compliance requirements.
Manufacturers can seek up to 30% of their capital investment in a qualifying advanced energy project. Eligible projects include:
- Investments that re-equip an industrial or manufacturing facility with equipment designed to reduce CO2 emissions by more than 20%.
- Investments that establish, re-equip, or expand an industrial facility for the production or recycling of equipment such as solar panels, wind turbines, hydroelectric turbines, fuel cells, electric grid modernization equipment, and certain electric or fuel cell vehicles.
- Investments that establish, re-equip, or expand an industrial facility for the processing, refining, or recycling of critical materials.
What Is Available?
Section 48C allocates $10 billion in competitively awarded tax credits. The initial funding round includes $4 billion of advanced energy credits, with approximately $1.6 billion reserved for projects located in coal census tracts. Applications for the first round of allocations open May 31, 2023, and close July 31, 2023.
Competition for Section 48C credits is expected to be intense given the limited allocations. When the program was first introduced in 2009, applications exceeded available funding by more than three to one. To secure your company’s 48C allocation, it is imperative to begin assessing eligibility and preparing to apply now.
- Contact Ryan’s Section 48C Advisory team to learn more about 48C.
- Start assessing overall project eligibility for 48C credits.
- Prepare and submit your application for a 48C allocation.
- Assess your eligibility for other tax credits within the IRA and learn how Ryan can help your organization maximize all available tax benefits.