Who is Eligible?
Eligible projects include:
- Facilities manufacturing energy storage systems, grid modernization equipment, or components for renewable energy.
- Property that removes, uses, or sequesters carbon oxide emissions.
- Equipment for refining, electrolyzing, or blending renewable or low-carbon fuels and chemicals.
- Projects that re-equip, expand, or establish industrial facilities for critical materials processing, recycling, or decarbonization (with at least 20% GHG reduction).
How Does the Application Process Work?
- Concept Paper: Submit a concept paper to the Department of Energy.
- Full Application: If invited, submit a full application.
- Allocation Approval: If selected, receive an IRS allocation approval letter.
- Certification: Within 2 years, meet all permitting and compliance milestones, including prevailing wage and apprenticeship requirements for the bonus rate.
Key Compliance Milestones
- Prevailing Wage & Apprenticeship: Required for the 30% bonus rate.
- Permitting: Must secure all federal, state, and local permits before certification.
- Placed in Service: Must be operational within 2 years of certification.
Recent Legislative Updates
- The 48C program received additional funding for a second round, but new law restricts reallocation of revoked credits and tightens eligibility for projects with foreign entity involvement.
- Projects must comply with new “prohibited foreign entity” rules and supply chain restrictions.
- The program will sunset when funds are exhausted; no further allocations after that.
Section 45X: Advanced Manufacturing Production Credit
What is the 45X Credit?
The Section 45X Advanced Manufacturing Production Credit is a non-competitive, per-unit federal tax credit for U.S. manufacturers of eligible clean energy components. The credit is designed to boost domestic production of solar, wind, battery, and critical mineral components, supporting the U.S. clean energy supply chain.
Who is Eligible?
Eligible manufacturers include those producing:
- Solar modules, photovoltaic cells, wafers, and related components.
- Wind energy components (blades, nacelles, towers, offshore wind foundations).
- Inverters (central, commercial, distributed wind, microinverter, residential, utility).
- Qualifying battery components (electrode active materials, battery cells, modules).
- Applicable critical minerals (including metallurgical coal for steelmaking).
How Does the Credit Work?
- Per-Unit Basis: The credit is calculated based on the quantity of eligible components sold to unrelated parties.
- Domestic Production: Only U.S.-produced components qualify.
- Refundable & Transferable: The credit is transferable and refundable to companies (with pre-registration required).
- Filing: Claim the credit on your annual federal tax return, starting the year the project is operational.
Key Compliance Requirements
- No Double Dipping: Cannot claim both 45X and 48C credits for the same property.
- Foreign Entity Restrictions: New rules limit eligibility for facilities with significant foreign ownership or material assistance from “prohibited foreign entities.”
- Phase-Out: The credit begins to phase out in 2030, with wind components ineligible after 2027 and critical minerals phased out by 2034.
Recent Legislative Updates
- The latest law accelerates the phase-out for wind and critical minerals, adds metallurgical coal as an eligible mineral, and imposes stricter foreign entity and supply chain rules.
- Transferability is now prohibited to specified foreign entities.
- New cost ratio thresholds for foreign-sourced materials apply, with annual increases in domestic content requirements.
Why Work with CFO Services?
CFO Services delivers end-to-end support for both 48C and 45X credits, including:
- Eligibility analysis and supply chain review.
- Application strategy and documentation for DOE/IRS submissions.
- Guidance on prevailing wage, apprenticeship, and permitting compliance.
- Strategic advice on transferability, refundability, and compliance with foreign entity rules.
- Audit defense and ongoing compliance support.
