Yes, energy storage tax credits can be sold or transferred to other entities. The Inflation Reduction Act of 2022 allows certain clean energy tax credits, including those for energy storage facilities, to be transferred or sold for cash. This provision enhances the financing options for energy storage projects by enabling sponsors to monetize their credits without needing external equity investments.
The transferability of tax credits, such as the Investment Tax Credit (ITC), provides flexibility for developers and allows them to sell credits directly to buyers, bypassing complex tax equity structures. This change has significantly expanded the market for financing clean energy projects, including energy storage facilities.
However, while energy storage credits can be transferred, they must comply with specific guidelines and regulations set by the Internal Revenue Service and the Treasury Department, including conditions related to prevailing wage and apprenticeship requirements.
Additionally, it’s important to note that only the ITC generated in the year the project is placed in service can be transferred, not credits for qualified production expenditures that are part of multi-year construction timelines.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/can-energy-storage-tax-credits-be-sold-or-transferred-to-other-entities/
