Inflation Reduction Act (IRA) -
Federal Investment Tax Credits (ITC)
for Solar & Storage Projects


 

The ETB team has extensively studied the new tax credit provisions within the IRA to understand
how they will affect the economics of projects and to determine strategies for project developers
and asset owners to fully capitalize on this historic legislation. 

 

Leverage ETB to Capitalize on the IRA

The solar and storage industry's leading developers and asset owners utilize ETB's suite of software tools to develop and deploy projects more profitably.
 

• Identify and optimize the savings and economics of PV + ESS projects
• Identify the best standalone ESS projects
• Model the economics for any variation of ITC or PTC incentive in ETB Developer
• Optimize eligible ITC Adders: domestic content, energy communities, low income
• Quantify the marginal economics of retrofitting ESS onto existing PV projects

 

 

Tax Credit Provisions within the IRA


Signed into law on August 16, 2022 by President Biden, the IRA delivers $369 billion towards clean energy and carbon reduction investments over the next 10 years. Over $160 billion of which comes in the form of tax credits for renewable energy. Here’s a summary of the key tax credit provisions within the IRA:  

10-year extension. Extends the ITC at 30% through 2032. In 2033, ITC steps down to 26%, and 22% in 2034.  

Standalone storage ITC. Standalone ESS projects with a minimum capacity of 5 kWh are now eligible for the 30% ITC.  

Prevailing wage and apprenticeship requirements. Introduces new construction labor requirements to qualify for the full 30% rate.  

Direct-pay provision. Enables certain tax-exempt customers, including state and local government, to receive a direct cash payment in lieu of tax credits. 

Production Tax Credit (PTC).  Establishes a PTC for solar PV projects that can be taken in lieu of the ITC.  

ITC Adders. Additional 10% ITC adder credits for: (i) domestic content, (ii) energy community, and (iii) low-income communities.  

Transferability. Starting in 2023, entities will be allowed to transfer their tax credits to a third-party. 

 

See our blog for more information on the IRA and its key provisions:
Standalone Energy Storage – Investment Tax Credit (ITC) in the Inflation Reduction Act of 2022: What You Need to Know.

• Boost the economics of PV+ESS projects with the now 30% ITC, compared to 26% (2022) or 22% (2023).
• The new 30% standalone storage ITC will open up new markets that were previously uneconomical. 
• Removing the ‘charge from PV’ requirement enables ESS to operate more optimally and improve value capture on certain projects. 
• Direct pay provision will enable tax-exempt entities to monetize the ITC directly themselves. 

Source: (NREL) Identifying Potential Markets for Behind-the-Meter Battery Energy Storage: A Survey of U.S. Demand Charges

IRA:  Energy storage & solar tax credits.  How do they affect your project's economics?

We summarize the key tax credit provisions within the IRA and the impact they will have on projects. We deep dive into the economics of standalone storage projects taking the new 30% ITC, reviewing project economics, and discussing what state markets are now viable for standalone projects.

Webinar slide deck