26 USC 48E - Clean electricity investment credit

U.S Code last checked for updates: May 04, 2024

§ 48E.

Clean electricity investment credit

(a)

Investment credit for qualified property

(1)

In general

For purposes of section 46, the clean electricity investment credit for any taxable year is an amount equal to the applicable percentage of the qualified investment for such taxable year with respect to—

(A)

any qualified facility, and

(B)

any energy storage technology.

(2)

Applicable percentage

(A)

Qualified facilities

Subject to paragraph (3)—

(i)

Base rate

(ii)

Alternative rate

In the case of any qualified facility—

(I)

with a maximum net output of less than 1 megawatt (as measured in alternating current),

(II)

the construction of which begins prior to the date that is 60 days after the Secretary publishes guidance with respect to the requirements of paragraphs (3) and (4) of subsection (d), or

(III)

which—

(aa)

satisfies the requirements of subsection (d)(3), and

(bb)

with respect to the construction of such facility, satisfies the requirements of subsection (d)(4),

the applicable percentage shall be 30 percent.

(B)

Energy storage technology

Subject to paragraph (3)—

(i)

Base rate

(ii)

Alternative rate

In the case of any energy storage technology—

(I)

with a capacity of less than 1 megawatt,

(II)

the construction of which begins prior to the date that is 60 days after the Secretary publishes guidance with respect to the requirements of paragraphs (3) and (4) of subsection (d), or

(III)

which—

(aa)

satisfies the requirements of subsection (d)(3), and

(bb)

with respect to the construction of such property, satisfies the requirements of subsection (d)(4),

the applicable percentage shall be 30 percent.

(3)

Increase in credit rate in certain cases

(A)

Energy communities

(i)

In general

(ii)

Applicable credit rate increase

For purposes of clause (i), the applicable credit rate increase shall be an amount equal to—

(I)

in the case of any qualified investment with respect to a qualified facility described in paragraph (2)(A)(i) or with respect to energy storage technology described in paragraph (2)(B)(i), 2 percentage points, and

(II)

in the case of any qualified investment with respect to a qualified facility described in paragraph (2)(A)(ii) or with respect to energy storage technology described in paragraph (2)(B)(ii), 10 percentage points.

(B)

Domestic content

(b)

Qualified investment with respect to a qualified facility

(1)

In general

For purposes of subsection (a), the qualified investment with respect to any qualified facility for any taxable year is the sum of—

(A)

the basis of any qualified property placed in service by the taxpayer during such taxable year which is part of a qualified facility, plus

(B)

the amount of any expenditures which are—

(i)

paid or incurred by the taxpayer for qualified interconnection property—

(I)

in connection with a qualified facility which has a maximum net output of not greater than 5 megawatts (as measured in alternating current), and

(II)

placed in service during the taxable year of the taxpayer, and

(ii)

properly chargeable to capital account of the taxpayer.

(2)

Qualified property

For purposes of this section, the term “qualified property” means property—

(A)

which is—

(i)

tangible personal property, or

(ii)

other tangible property (not including a building or its structural components), but only if such property is used as an integral part of the qualified facility,

(B)

with respect to which depreciation (or amortization in lieu of depreciation) is allowable, and

(C)

(i)

the construction, reconstruction, or erection of which is completed by the taxpayer, or

(ii)

which is acquired by the taxpayer if the original use of such property commences with the taxpayer.

(3)

Qualified facility

(A)

In general

For purposes of this section, the term “qualified facility” means a facility—

(i)

which is used for the generation of electricity,

(ii)

which is placed in service after December 31, 2024, and

(iii)

for which the anticipated greenhouse gas emissions rate (as determined under subparagraph (B)(ii)) is not greater than zero.

(B)

Additional rules

(i)

Expansion of facility; incremental production

(ii)

Greenhouse gas emissions rate

(C)

Exclusion

The term “qualified facility” shall not include any facility for which—

(i)

a renewable electricity production credit determined under section 45,

(ii)

an advanced nuclear power facility production credit determined under section 45J,

(iii)

a carbon oxide sequestration credit determined under section 45Q,

(iv)

a zero-emission nuclear power production credit determined under section 45U,

(v)

a clean electricity production credit determined under section 45Y,

(vi)

an energy credit determined under section 48, or

(vii)

a qualifying advanced coal project credit under section 48A,

is allowed under section 38 for the taxable year or any prior taxable year.

(4)

Qualified interconnection property

(5)

Coordination with rehabilitation credit

(6)

Definitions

(c)

Qualified investment with respect to energy storage technology

(1)

Qualified investment

(2)

Energy storage technology

(d)

Special rules

(1)

Certain progress expenditure rules made applicable

(2)

Special rule for property financed by subsidized energy financing or private activity bonds

(3)

Prevailing wage requirements

(4)

Apprenticeship requirements

(5)

Domestic content requirement for elective payment

(e)

Credit phase-out

(1)

In general

The amount of the clean electricity investment credit under subsection (a) for any qualified investment with respect to any qualified facility or energy storage technology the construction of which begins during a calendar year described in paragraph (2) shall be equal to the product of—

(A)

the amount of the credit determined under subsection (a) without regard to this subsection, multiplied by

(B)

the phase-out percentage under paragraph (2).

(2)

Phase-out percentage

The phase-out percentage under this paragraph is equal to—

(A)

for any qualified investment with respect to any qualified facility or energy storage technology the construction of which begins during the first calendar year following the applicable year, 100 percent,

(B)

for any qualified investment with respect to any qualified facility or energy storage technology the construction of which begins during the second calendar year following the applicable year, 75 percent,

(C)

for any qualified investment with respect to any qualified facility or energy storage technology the construction of which begins during the third calendar year following the applicable year, 50 percent, and

(D)

for any qualified investment with respect to any qualified facility or energy storage technology the construction of which begins during any calendar year subsequent to the calendar year described in subparagraph (C), 0 percent.

(3)

Applicable year

(f)

Greenhouse gas

(g)

Recapture of credit

(h)

Special rules for certain facilities placed in service in connection with low-income communities

(1)

In general

In the case of any applicable facility with respect to which the Secretary makes an allocation of environmental justice capacity limitation under paragraph (4)—

(A)

the applicable percentage otherwise determined under subsection (a)(2) with respect to any eligible property which is part of such facility shall be increased by—

(i)

in the case of a facility described in subclause (I) of paragraph (2)(A)(iii) and not described in subclause (II) of such paragraph, 10 percentage points, and

(ii)

in the case of a facility described in subclause (II) of paragraph (2)(A)(iii), 20 percentage points, and

(B)

the increase in the credit determined under subsection (a) by reason of this subsection for any taxable year with respect to all property which is part of such facility shall not exceed the amount which bears the same ratio to the amount of such increase (determined without regard to this subparagraph) as—

(i)

the environmental justice capacity limitation allocated to such facility, bears to

(ii)

the total megawatt nameplate capacity of such facility, as measured in direct current.

(2)

Applicable facility

For purposes of this subsection—

(A)

In general

The term “applicable facility” means any qualified facility—

(i)

which is not described in section 45Y(b)(2)(B),

(ii)

which has a maximum net output of less than 5 megawatts (as measured in alternating current), and

(iii)

which—

(I)

is located in a low-income community (as defined in section 45D(e)) or on Indian land (as defined in section 2601(2) of the Energy Policy Act of 1992 (25 U.S.C. 3501(2))), or

(II)

is part of a qualified low-income residential building project or a qualified low-income economic benefit project.

(B)

Qualified low-income residential building project

A facility shall be treated as part of a qualified low-income residential building project if—

(i)

such facility is installed on a residential rental building which participates in a covered housing program (as defined in section 41411(a) of the Violence Against Women Act of 1994 (34 U.S.C. 12491(a)(3)),1

 So in original. Another closing parenthesis probably should precede the comma.

a housing assistance program administered by the Department of Agriculture under title V of the Housing Act of 1949, a housing program administered by a tribally designated housing entity (as defined in section 4(22) of the Native American Housing Assistance and Self-Determination Act of 1996 (25 U.S.C. 4103(22))) or such other affordable housing programs as the Secretary may provide, and

(ii)

the financial benefits of the electricity produced by such facility are allocated equitably among the occupants of the dwelling units of such building.

(C)

Qualified low-income economic benefit project

A facility shall be treated as part of a qualified low-income economic benefit project if at least 50 percent of the financial benefits of the electricity produced by such facility are provided to households with income of—

(i)

less than 200 percent of the poverty line (as defined in section 36B(d)(3)(A)) applicable to a family of the size involved, or

(ii)

less than 80 percent of area median gross income (as determined under section 142(d)(2)(B)).

(D)

Financial benefit

(3)

Eligible property

(4)

Allocations

(A)

In general

(B)

Limitation

(C)

Annual capacity limitation

(D)

Carryover of unused limitation

(i)

In general

(ii)

Carryover from section 48 for calendar year 2025

(E)

Placed in service deadline

(i)

In general

(ii)

Application of carryover

(5)

Recapture

(i)

Guidance

(Added Pub. L. 117–169, title I, § 13702(a), Aug. 16, 2022, 136 Stat. 1990.)

cite as: 26 USC 48E

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