May 29, 2024

The Internal Revenue Service (IRS) announced a proposed rule – which will publish in the Federal Register on June 3, 2024 – entitled “Section 45Y Clean Electricity Production Credit and Section 48E Clean Electricity Investment Credit.” Under the Inflation Reduction Act, taxpayers may be eligible for a credit on electricity produced from a qualified clean electricity facility (i.e., wind, solar, nuclear) under the Section 45Y credit or may be eligible for a credit for a qualified investment in a qualified clean electricity facility or energy storage technology under the Section 48E credit.

Specifically, the proposed rule will provide guidance for these taxpayers on several issues, including: (1) calculating the amount of credit under Section 45Y or Section 48E; (2) defining qualified facilities and energy storage technology; (3) describing property included in a qualified facility and energy storage technology; (4) describing property that is an integral part of a qualified facility and energy storage technology; (5) defining metering devices; (6) explaining rules on the general application of the credit (i.e., rules related to the expansion of a facility); (7) explaining rules regarding the rapture of the credit; (8) defining greenhouse gas emissions and emission rates as well as the effects of carbon capture; and (9) listing certain qualified facilities that have a qualifying greenhouse gas emissions rate and explaining the path other facilities can take to obtain a provisional emissions rate.

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