INFLATION REDUCTION ACT OF 2022
how the INFLATION REDUCTION ACT BENEFITS COMMERCIAL SOLAR AND BATTERY STORAGE
The Inflation Reduction Act was signed into law in August 2022. The following summary highlights some of the major benefits regarding commercial solar and battery storage projects.
Bombard Renewable Energy qualifies as a union contractor for the prevailing wage and apprentice requirements in this act.
Significant changes and opportunities
- Non-profit organizations can sell Investment Tax Credits to other organizations with tax appetites.
- Renewable Energy Credits (RECs) are being sold and traded more than ever. They can fetch as much as $10 per credit (1 MWh=1 REC) in Nevada and even more nationally.
Investment Tax Credit
- Up-front credit given to an organization with a legitimate tax appetite to offset tax burden.
- Adjusted from 26% to 30%.
- Extended to 2032.
- Projects over 1MW AC must follow prevailing wage and apprentice standards to take advantage of full 30%.
- Cannot be combined with Production Tax Credit.
Production Tax Credit
- Recognized by IRS over a 10-year period.
- Adjusted every year to accommodate for inflation.
- Currently worth 2.6 cents (at 100% PTC) per kilowatt hour produced by solar.
- Must follow prevailing wage and apprentice standards to maximize this incentive.
- Cannot be combined with Investment Tax Credit.
Commercial battery storage
- 30% Investment Tax Credit is available for projects from 5 kWh to less than 1 MW AC output.
- Must follow prevailing wage and apprentice standards.
Adders*
- Domestic Content Bonus Credit. An additional 10% adder will be applied if the project uses steel/iron produced 100% in the USA. In addition, the remaining products used need to be at least 40% produced in the USA.
- Energy Community Bonus Credit. Brownfield sites. Refer to the EPA definition of brownfield site.
- Low-Income Communities. Projects in low-income communities or on American Indian land and qualified low-income residential building projects qualify for an additional 10% adder.