Section 48C Tax Credit Aid | SeatonHill Partners | Strength in Numbers
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Section 48C
Advanced Energy Credit Explained

Renewable Energy Manufacturing Tax Credits

$10B in investment tax credits available on first-come basis
Applications open May 31, 2023, and close July 31, 2023

Unlike many of the tax credits in the Inflation Reduction Act of 2022, Section 48C Advanced Energy Credit (AEC) is a competitive tax credit program that requires manufacturers apply to receive an allocation of the funds. Program guidance released on Feb. 13, 2023, announced that manufacturers seeking this credit will be required to submit a concept paper describing their project. The application process for the first $4 billion in allocations will open May 31, 2023, and close on July 31, 2023. The remaining $6 billion of funds will be issued later.

48C Tax Credit – What Is It?

The Inflation Reduction Act of 2022 extended credits first offered through the American Recovery and Reinvestment Act of 2009, which was previously known as the Advanced Manufacturing Tax Credit (AMTC). The prior AMTC issued a 30% tax credit that was valued at $2.3 billion and was largely oversubscribed by manufacturers applications.
 

The current credit, Section 48C Advanced Energy Credit, includes $10 billion in new 30% investment tax credits, and broadens what is deemed to be eligible energy property a company can invest in to earn the credit. The credit value is 30% of the project capital investment that is deemed to be eligible energy property. Examples include projects which re-equip, expand, or establish a manufacturing facility in one of the following ways:

  1. A project which re-equips, expands, or establishes a manufacturing facility for production or recycling of property used to produce energy from certain energy areas, or designed to beneficially capture, remove, use, or sequester carbon oxide emissions.
     

  2. A project which re-equips, expands, or establishes a manufacturing facility for production or recycling of property used to produce certain energy product types used to conserve, store, energy.
     

  3. A project to produce equipment designed to refine or blend any fuel, chemical or product which is renewable or low carbon/low emission.
     

  4. A project which re-equips, expands, or establishes an industrial facility for the processing, refining, or recycling of certain critical materials (as defined by Energy Act of 2020).
     

  5. Facility manufacturing other advanced energy property designed to reduce greenhouse gas emissions including specialized components and equipment for nuclear power reactors or as may be determined by the Secretary.
     

  6. Existing facility which re equips with equipment designed to reduce greenhouse gas emissions by at least 20%+

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The credit also expands to infrastructure related to grid modernization, carbon capture, EV production and energy storage. Manufacturers in or adjacent to legacy Energy Communities have been allocated 40% of the AEC ($4 billion) that was set aside for new clean technology manufacturing facilities in these designated areas.

Manufacturing Facility

Eligibility

The tax credits awarded through Section 48C are significant and somewhat general to those in the renewable energy sector. Manufacturers can seek up to 30% of the total amount invested in facilities that build or recycle renewable energy components.

Many manufacturers may be eligible to apply for the credit as part of a current or planned project, but manufacturers need to start working now to assess eligibility and prepare application materials.

If 2009 was an indication of the popularity of these credits, funding requests could exceed available funding quickly.

Application

Because Section 48C is a competitive tax credit program, manufacturers need to apply and receive certification from the IRS for the investment tax credit allocation for their project. This means it is vital to start assessing eligibility and preparing to apply now. To get started:

  • Contact SeatonHill Partner’s Inflation Reduction Act team to learn more about Section 48C and how it may impact your business.
     

  • Start assessing overall project eligibility to apply for the tax credit.
     

  • If eligible, work with SeatonHill to prepare your application to submit for an allocation of Section 48C AEC.
     

  • Assess eligibility of other tax credits within the Inflation Reduction Act and learn how they affect your facility or your customers purchasing any of your products to use for energy projects

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SeatonHill Can Help Facilitate the 48C Credit

SeatonHill has helped manufacturers with prior energy and economic development tax credit programs.  Our primary advisory role serves clients in five main areas:

  • Determining the project type and eligibility

  • Preserving the tax credit through coordinating with vendors working on your project

  • Maximizing the tax credit earned by identifying eligible costs for submittal

  • Ensuring compliance during construction and reporting periods post construction

  • Documenting project costs to claim the tax credit on your federal tax return

Qualifying manufacturers include:

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  1. Solar companies: These companies produce solar panels and related equipment for residential, commercial, and industrial applications.
     

  2. Wind companies: These companies manufacture and install wind turbines for wind farms and other applications.
     

  3. Hydropower companies: These companies develop and operate hydropower plants and facilities.
     

  4. Bioenergy companies: These companies produce biofuels, biomass, and other types of renewable energy from organic materials.
     

  5. Energy storage companies: These companies develop and manufacture batteries and other energy storage technologies to help integrate renewable energy into the grid.
     

  6. Energy service companies (ESCOs): These companies provide energy efficiency and renewable energy solutions to commercial and industrial customers.
     

  7. Renewable energy developers: These companies develop and build renewable energy projects, including solar, wind, and hydropower facilities.
     

  8. Electric utilities: Many electric utilities are investing in renewable energy, either by developing their own projects or purchasing renewable energy from third-party developers.

Connect

Whether you need to develop a strategic business plan, improve financial reporting practices, negotiate contracts, strengthen banking relationships or expand your operation, contact us today.

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SeatonHill will provide the guidance to help you succeed at a price you can afford.

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When filling out the form, let us know what your biggest business challenges are and we will quickly put you in touch with a partner who may best understand your challenges and meet your needs.

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