The project owner must ensure laborers employed by the contractors and subcontractors are paid prevailing wages both during construction and for any repairs or alterations needed during the applicable tax credit period. The credit amount can be increased by a factor of five if the project meets prevailing wage and apprenticeship requirements (the "Wage and Apprenticeship Requirements"), as determined by Department of Labor standards. Similar to the BBBA, the IRA proposes a set "base" rate for certain renewable energy tax credits, which can be adjusted for inflation. New Rate Structure Wage and Apprenticeship Requirements "Direct pay" provisions available to certain entities and with respect to certain tax credits.New mechanism that allows for the direct transfer or sale of renewable tax credits to third parties.New "manufacturing production" Tax credit for producers of eligible project components.New tax credit for zero emission nuclear power production.New tax credit for clean hydrogen production.New "technology neutral" PTCs and investment tax credits ("ITC"s).Expansion and increased value of tax credits for carbon capture.New ability to take the production tax credit ("PTC") for solar deals.Extension of wind and solar tax credits.New tax credit rate structure based on compliance with new wage and apprenticeship requirements, with bonus tax credits available for projects meeting domestic content requirements, projects located in certain low-income areas, or projects in so-called "energy communities".
Major provisions and developments include the following, which are described in additional detail below: The following is a high-level summary of some of the most impactful renewables and energy transition tax provisions in the IRA. While the provisions addressing climate and energy programs are similar to predecessor provisions in the Build Back Better Act (the "BBBA"), there are several new provisions that the industry has only begun to digest. Specifically, the IRA includes significant tax credit incentives for a variety of renewable energy resources that could revolutionize the tax landscape and pace of investment in energy transition. The Inflation Reduction Act of 2022 (the "IRA"), signed into law on August 16, 2022, is already causing shock waves in the renewables industry and energy transition space.
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