b'70 INDUSTRY INSIDERNew U.S. Tax Incentivesfor Renewable Energy ProjectsOn Aug. 16, 2022, PresidentDirect PayBiden signed the InflationThe direct pay provision was addedCorey Harper has Reduction Act (IRA) (H.R.5376).specifically for tax-exempt entities andworked in aviation The IRA will put $386 billion into climategovernmental units, including airports.consulting for more than and energy programs over a 10-year20 years and has been As a unit of government, an airport canleading Veregys airport timeframe. This legislation will have ause these tax credits, own the renewablesustainability projects significant impact on the environment,technology, and, in turn, better control onsince May 2019. Veregy U.S. manufacturing and job creation.how clean energy projects are financedis a national energy service company with Although funded through the federaland procured. Previously, only taxpayinga direct market focused on aviation. government, the IRA is not managedentities could take advantage of federal through FAA grant programs. tax credits for renewable energy. ForAirport budgets continue to bethe first time in history, the playing fieldinstead of a flat project cost percentage, stretched as energy prices rise. Thisis level! Direct pay opens the door forthe credit is based on the annual energy leaves little to no funding to invest inprojects to be owned directly by airportsproduction of the system. Under PTCs, sustainability initiatives that airportswithout utilizing private funding firmsan organization receives up to 2.6 cents desire but are unable to implementto monetize incentives. Direct paymentper kWh annually for a 10-year period. due to budget constraints and otherapplied through Investment Tax CreditTypically, PTCs become more attractive capital prioritization. The IRA provides(ITC) and Production Tax Credit (PTC)than ITCs for larger utility-scale projects financial incentives for an array ofprograms, applies to projects beginningbut should be analyzed for savings renewable technologies to local unitsafter Dec. 31, 2022, and requires creditscomparison.of government such as airports toreceived in the year the project is placed accelerate their sustainability and net- in service.Adders and Multiplierszero initiatives and reduce operatingThe IRA created a mechanism for budgets. Perhaps the most significantInvestment Tax Creditsadders and multipliers that theoretically addition is the direct pay option for tax- The IRA updates and replaces the currentcould resultin up to 70% total savings exempt entities, allowing them to receiveITC system (slated to expire in 2023)under the ITCs, with similar adjustments direct reimbursement in the form of awith a new, more generous credit. Infor PTCs. direct pay tax incentive. The initial 30%calendar year 2022, the ITC was a flatThe base rate, adders and multipliers incentive will allow airports throughout26% and was only applicable to tax- all have independent criterion the U.S. to revisit implementingpaying entities. The new ITC has beenrequirements. Consulting with a qualified renewable energy and battery storage atincreased to 30% for projects undercompany is highly recommended to record-low costs. 1MW and for larger projects that meetdetermine eligibility parameters. Electric While final guidance from the Treasuryspecific labor requirements. ITCs are avehicle (EV) and EV charging projects do Department is pending, some detailsone-time payment option and typicallynot follow the ITC or PTC formulas. can be spoken to now. will be more attractive for net metering metered usage reduction comparedStay InformedRenewable Technologies to the Production Tax Credit optionFinal guidance on the IRA is anticipated Included in the IRA:described below. in March 2023. For additional resources and guidance, visit: https://veregy.com/ Solar Production Tax Creditsfederal-funding/ and https://www.irs.gov/ Battery Storage PTCs, like ITCs, were extended andinflation-reduction-act-of-2022.Geothermal replaced current incentives. However,EV and EV ChargingWind Fuel Cell Combined Heat and Power Hydrogen Production Biogas Conversion HydropowerJanuary | February 2023AirportImprovement.com'