Today, the U.S. Department of the Treasury and the Internal Revenue Service (IRS) unveiled important guidance on the Investment Tax Credit (ITC) under Section 48 of the Internal Revenue Code. This guidance, issued in response to President Biden's Inflation Reduction Act, aims to stimulate investment in clean energy projects and provide much-needed clarity and certainty for businesses.

Deputy Secretary of the Treasury, Wally Adeyemo, emphasized the importance of this guidance in sustaining the investment and job growth fostered by the Inflation Reduction Act. By offering clarity to companies seeking financing for clean energy projects, this guidance enables them to make informed decisions and contribute to the creation of well-paying jobs across the country, while enhancing the nation's energy security.

John Podesta, Senior Advisor to the President for Clean Energy Innovation and Implementation, expressed confidence that the Inflation Reduction Act has already spurred a significant clean energy investment boom in America. He further highlighted the positive impact of the new guidance from the Treasury on the Investment Tax Credit, providing clean energy developers with added clarity and boosting confidence in their ongoing progress.

The Notice of Proposed Rulemaking (NPRM) addresses several key issues related to the eligibility of clean energy projects for the ITC. It brings clarity to the qualification of power conditioning and transfer equipment such as subsea export cables used in offshore wind projects, as well as specific power conditioning equipment utilized in onshore substations.

Furthermore, the NPRM proposes rules that pertain to standalone battery storage eligibility for the ITC. This aligns with a crucial provision in the Inflation Reduction Act, supporting the development of long-duration energy storage at utility-scale. Such advancements are essential to ensuring reliable power delivery during the transition to renewable energy sources such as wind and solar.

In addition, the NPRM presents guidelines concerning the inclusion of interconnection-related property costs for lower-output clean energy installations. This encompasses the expenses associated with necessary upgrades to local transmission and distribution networks to facilitate the connection of clean energy sources. These modifications address a significant change in the Inflation Reduction Act, aiming to streamline the process, reduce costs, and prevent delays for smaller clean energy installations from accessing the grid and commencing power generation.

Lastly, the NPRM proposes updates to technical definitions and rules, further solidifying clarity and certainty for developers of clean energy projects.

The guidance unveiled by the U.S. Treasury and the IRS is expected to foster increased investment in clean energy projects across the nation. By offering clarity on the Investment Tax Credit, businesses are empowered to make strategic decisions that drive clean energy growth, job creation, and contribute to a more sustainable future.

The NPRM is currently open for public comment, encouraging input from stakeholders and experts in the clean energy sector. The Treasury and the IRS remain committed to promoting clean energy innovation and facilitating the transition to a greener and more resilient energy landscape.

With this new guidance in place, the United States is poised to further position itself as a global leader in clean energy investment and development, contributing to a cleaner and more sustainable future.