The new prevailing wage and apprenticeship requirements for energy storage projects, as part of the Inflation Reduction Act (IRA), are designed to ensure that workers in the clean energy sector, including those involved in energy storage, are paid prevailing wages and that projects involve a significant number of apprentices. These requirements apply to various clean energy tax incentives, including energy storage projects that qualify under Section 48E. Here are the key aspects:
Prevailing Wage Requirements
- Payment of Prevailing Wages: Taxpayers must pay wages at rates determined by the Department of Labor (DOL), consistent with the Davis-Bacon Act, for construction, alteration, or repair of qualified facilities.
- Duration of Application: For energy storage projects under Section 48E, prevailing wages must be paid during construction and for five years after the property is placed in service.
Apprenticeship Requirements
- Labor Hours Requirement: A minimum percentage of labor hours must be performed by qualified apprentices:
- 10% for construction starting before 2023,
- 12.5% for construction starting in 2023, and
- 15% for construction starting in 2024 or later.
- Ratio Requirement: The taxpayer must meet the applicable apprentice-to-journeyworker ratio as established by the registered apprenticeship program.
- Participation Requirement: Any taxpayer, contractor, or subcontractor employing four or more individuals during the project must hire at least one qualified apprentice.
Exceptions
- One Megawatt Exception: Projects with a capacity of less than one megawatt do not need to meet these requirements.
- Beginning of Construction Exception: Projects that began construction before January 29, 2023, are exempt.
Documentation and Compliance
Taxpayers must collect and retain substantial documentation to demonstrate compliance, including payroll records and other data showing adherence to both prevailing wage and apprenticeship requirements. Project labor agreements (PLAs) are encouraged as a strategy to ensure compliance. Strong recordkeeping is critical, and the IRS emphasizes that this will be an enforcement target.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/what-are-the-new-prevailing-wage-and-apprenticeship-requirements-for-energy-storage-projects-2/
