How will HR 1 affect energy storage projects?

H.R. 1 significantly rolls back or repeals many of the clean energy tax credits and incentives introduced with the Inflation Reduction Act of 2022, but energy storage projects are generally not as severely impacted as wind and solar, as energy storage projects beginning construction before 2033 remain eligible for key credits.

Are feoc restrictions relevant to large-scale energy storage projects?

Our focus here is on H.R. 1’s extension and expansion of pre-existing foreign entity of concern (FEOC) restrictions for each of the tax credits most likely be relevant to large-scale energy storage projects under Sections 45Y, 48E, and 45X of the Internal Revenue Code.

Are solar and storage projects eligible for tax credits?

To be eligible for tax credits, materials from a prohibited foreign entity (PFE) must be under a certain percentage threshold. These thresholds are different for solar and storage projects and increase annually:

When will tax credits for wind and solar projects phase out?

Under the new law, tax credits for wind and solar projects phase out much sooner. To qualify, these projects must either be completed by the end of 2027 or begin construction within the next 12 months. This compressed timeline will likely force developers to accelerate their project schedules or risk losing critical tax credits.

Are solar and energy storage developers facing a complex landscape?

With the budget bill passed and new Section 232 polysilicon and AD/CVD cases making headlines, solar and energy storage developers and equipment buyers are facing an increasingly complex landscape.

What are the obbba's energy provisions?

Much of the initial commentary on the OBBBA’s energy provisions has focused on the rollback or modification of various tax credits for US consumers (e.g., Sections 25C (energy efficient home improvement credit), 25D (residential clean energy credit), 25E (used clean vehicle credit), and 45L (new energy efficient home credit)).