In the Biden administration’s final weeks, the Treasury Department finalized long-awaited technology-neutral tax credits. The rules, which remain close to what was proposed in May, will replace and expand upon the popular solar and wind tax credits.
Dubbed the Clean Electricity Investment and Production Tax Credits — or 45Y and 48E, respectively — the new structure was created by 2022’s Inflation Reduction Act. They will cover solar and wind, in addition to hydropower, nuclear, geothermal, and more emerging technologies like marine and hydrokinetic energy.
Another change: stand-alone storage will now be eligible for the ITC, which is one of the central reasons that Rodrigo Inurreta Acero, who leads federal affairs for EDP Renewables North America told Latitude Media last summer that the new rules will offer more flexibility.
The changes in how federal tax credits are administered, he said “might be the single most consequential and beneficial change introduced by the IRA for our industry.” And the Rhodium Group’s May 2024 analysis described the tech-neutral credits as “the foundation of U.S. electric power decarbonization,” delivering between 300 million and 400 million tons of emissions reductions compared to no tax credits in 2035.
Since finalization, the clean energy industry has largely echoed this enthusiasm — with the notable exception of the hydrogen fuel cell industry association, which is reportedly concerned that most fuel cells will not qualify.
The lucrative credits offer at least a $30 credit for every megawatt-hour of clean power a plant produces, or a 30% credit on a project’s total costs if all conditions are met. The Department of Energy’s analysis estimates that the credits will save up to $38 billion on electricity bills by 2030.
The rules will apply to projects breaking ground this year — and the existing ITC and PTC will sunset. 45Y and 48E will remain in place until 2033, provided Congress doesn’t dismantle them in the meantime.
In the weeks after incoming President Donald Trump’s election and the GOP’s sweep of Congress, speculation kicked up about what parts of the IRA are likely to survive versus be scrapped. (House Speaker Mike Johnson has said he plans to take a “scalpel and not a sledgehammer” to the Biden administration’s signature climate and clean energy law.)
The tech-neutral credits, which at the time had yet to be finalized, are generally assumed to have low political risk — though not as low as, say, the nuclear PTC.
On the one hand, Alfred Johnson, CEO and founder of transferable tax credit marketplace Crux, said that the tech-neutral tax credits would be relatively insulated from politics, simply because they have so many stakeholders in so many industries.
“The politics of the tech-neutral credits are different from the politics of any of these underlying technology-based credits,” he told Latitude Media in November.
That said, the fact of the ITC’s popularity in particular may also be a strike against it, said Power Brief CEO and founder Jason Clark, who created a matrix of IRA tax credits and their political risk with Republicans. GOP lawmakers are looking to cut funding, and the ITC is likely to be more expensive than the PTC. “At least from what they are using as their baseline, they see a higher utilization of the tech neutral ITC,” he told Latitude Media at the time.
