Qualifying Advanced Energy Project Tax Credit program opens full applications for Round 2
The U.S. Department of Treasury, the IRS, and Department of Energy (DOE) have announced the opening of full applications for Round 2 of the Qualifying Advanced Energy Project Tax Credit (48C) program.
The program, funded by the Inflation Reduction Act, aims to accelerate clean energy manufacturing and reduce greenhouse gas emissions across the United States by providing tax credits to eligible energy projects.
Overview of the 48C tax credit program
The Qualifying Advanced Energy Project Tax Credit (48C) program is a collaborative effort between the DOE, IRS, and Treasury Department.
It is designed to promote investments in clean energy manufacturing and reduce emissions at industrial facilities by providing a 30% investment tax credit to qualifying projects.
Round 2 of the 48C program received an overwhelming response, with more than 800 concept papers submitted, seeking nearly $40 billion in tax credits, representing $200 billion in total project investments.
Key highlights of the 48C program
- Round 2 tax credit allocation: Up to $6 billion in tax credits are available for Round 2, including approximately $2.5 billion specifically for projects in designated energy communities.
- Encouraged projects: Over 450 projects across 46 states and the District of Columbia have been encouraged to apply, representing more than $22.5 billion in requested tax credits. Of these, $4.8 billion are for projects located in historic energy communities.
- Diverse project participation: Projects span various sectors, including large, medium, and small businesses, as well as non-profits. All projects must meet prevailing wage and apprenticeship requirements to qualify for the 30% tax credit.
Application process for Round 2
The DOE and IRS notified applicants on the 48C Portal that they can now submit full applications following the concept paper stage.
Applicants who submitted a concept paper, whether they received an "encourage" or "discourage" letter, are eligible to proceed to the full application stage.
Applications must be submitted by Friday, October 18, 2024, at 11:59 pm Eastern Time.
Important steps for applicants:
- Full application submission: All applicants must use the application templates provided on the 48C Portal for submission.
- Webinar for applicants: The DOE, IRS, and Treasury Department will host a webinar for applicants on Monday, September 16, 2024, to provide guidance on the application process. A registration link will be available on the 48C landing page.
Focus on designated energy communities
A significant portion of the 48C program funding is targeted at designated energy communities – areas that have been economically impacted by the decline of coal mining and coal-fired power plants.
These areas, defined in Appendix C of IRS Notice 2024-36, are eligible for up to $2.5 billion of the $6 billion allocated for Round 2 of the tax credits.
Benefits for energy communities
- Support for revitalization: The tax credit encourages investment in energy communities to help drive economic revitalization by supporting the transition to clean energy.
- Targeted allocation: At least $4 billion of the $10 billion total funding is reserved for projects in these designated communities to maximize their economic and environmental benefits.
Importance of the 48C tax credit program
The 48C program, managed by DOE’s Office of Manufacturing & Energy Supply Chains (MESC) on behalf of the Treasury Department and the IRS, plays a crucial role in the US strategy to combat climate change by promoting clean energy and reducing industrial emissions.
This initiative supports domestic manufacturing, job creation, and economic growth while helping to achieve national greenhouse gas reduction targets.
Key program benefits:
- Encourages clean energy investments: Provides significant tax incentives to projects focused on clean energy and emission reduction.
- Promotes job creation: The requirement for prevailing wages and apprenticeship programs helps ensure that projects create quality jobs.
- Boosts economic growth: Targets economic revitalization in areas affected by the transition away from fossil fuels, particularly in historic energy communities.
Next steps for interested applicants
Applicants looking to benefit from the 48C tax credit should prepare to submit their full applications by the October 18 deadline.
Leveraging available resources, such as the upcoming webinar and application templates, will be critical for a successful submission.
For further details on the Qualifying Advanced Energy Project Credit (48C) program, visit the IRS or DOE websites and review the guidelines in IRS Notice 2024-36.
If you need more information or have specific questions, the DOE, IRS, and Treasury Department are available to assist potential applicants.