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TToday, the U.S. Treasury Department and the Internal Revenue Service (IRS) released guidance providing additional information regarding bonuses for clean energy projects and facilities under the Inflation Control Act (IRA). This bonus is designed to help energy communities take advantage of the economic benefits of the clean energy boom by creating clean energy jobs and reducing energy costs.
“Today’s guidance should provide clarity for companies planning to invest and help them move forward with their investments.”
— Wally Adeyemo
Deputy Secretary of the Treasury
“President Biden’s Inflation Control Act will spur investment in new clean power to communities that have been on the front lines of energy production, creating jobs and lowering utility costs.” Wally Adeyemo said the US Deputy Secretary of the Treasury. “Today’s guidance should provide clarity for companies planning to invest and help them move forward with their investments.”
Developers can receive up to a 10 percentage point bonus on top of the Investment Tax Credit (ITC) and a 10% increase in the Production Tax Credit (PTC). ITC and PTC Energy Community Bonuses are available to developers who find projects in historic energy communities.
What is an energy community?
Under the IRA, there are three ways a region can qualify as an energy community.
- Coal closure: Census tracts or immediately adjacent census tracts with coal mines closed after 1999 or coal-fired electric generating units retired after 2009 qualify as energy communities.
- Statistics field: The bonus also goes to areas with higher-than-average unemployment rates due to large fossil fuel jobs and local tax revenues. To qualify for the bonus, a metropolitan statistical area (MSA) or non-metropolitan statistical area (non-MSA) must have, recently had, or has at least 25 percent direct employment of at least 0.17 percent. There must be local tax revenue. Processing, transportation, and storage of coal, oil, and natural gas, and an unemployment rate greater than or equal to the national average unemployment rate for the previous year.
- Brownfield: Brownfield sites (land contaminated with hazardous materials or other pollutants) also qualify as energy communities.
New guidance for the energy community
The Treasury Department and the IRS issued initial guidance regarding bonuses to the energy community in April 2023. The new guidance addresses several issues raised by stakeholders.
This notice introduces two additional North American Industry Classification System (NAICS) codes, 2212 (Natural Gas Distribution) and 23712 (Oil and Gas Pipeline and Related Structure Construction), for purposes of determining eligibility under Add to the definition of “fossil fuel employment.” Categories of statistics area.
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This notice includes an appendix listing additional MSAs and non-MSAs that will qualify as energy communities in 2023 after including two additional NAICS codes. Also listed are companies that meet historic fossil fuel employment levels and may qualify in the future, depending on local unemployment rates, after including two additional NAICS codes .
Changes in offshore wind projects
Today’s guidance also requires that an offshore wind facility expand its nameplate capacity to additional assets, namely Supervisory Control and Data Acquisition System (SCADA) equipment owned by the offshore wind project owner and installed at eligible ports. It is also recognized that this can be caused by This change reflects the fact that onshore SCADA equipment in ports is essential to offshore wind projects and that offshore wind projects involve significant investment and create jobs at these ports for the duration of the project, which will contribute to the energy community. is a bonus goal.
Additionally, this guidance provides that if a project has multiple interconnection points, based on this guidance, those projects must be It is clear that you can pay attention to
Check out all the latest economic developments, corporate relocation, corporate expansion, and site selection news related to clean energy and renewable energy.
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