In our recent webinar, "Accessing Key IRA Subsidies: Transferability, GGRF, and Tax Credit Adders," our experienced professionals provided indispensable strategies. Whether you're seeking to maximize your project's potential or capitalize on the latest subsidies and incentives, this discussion offered practical guidance to help ensure success in today's complex clean energy funding maze. 

Here are the key takeaways that can help transform your projects’ future:

1. Optimizing the Low-Income Adder

   The low-income adder, also known as the low-income community bonus credit, gives developers an opportunity to boost their investment tax credit rates substantially. Developers can raise the base rate from 6% to 30% by meeting prevailing wage and apprenticeship requirements. This adder offers an additional 10% or 20% increase, resulting in 40% or 50% credit rates. Developers must apply to access this adder, with eligibility limited to investment tax credits and specific project types such as small windows and solar projects under five megawatts AC. Projects incorporating storage components may qualify under conditions, mainly if the clean energy asset charges the storage by at least 50%. The adder has four categories, with the first two providing a 10% credit increase and the latter offering a 20% boost, culminating in a credit rate of 50%. Additional selection criteria, such as ownership and geographic factors, are crucial in prioritizing applications and navigating the competitive landscape. Developers must strategically leverage these criteria to enhance their project's chances of securing the low-income adder and maximizing benefits. 

2. Maximizing Opportunities with GGRF Programs

   The Greenhouse Gas Reduction Fund (GGRF) presents a prime opportunity for stakeholders to engage in projects to reduce emissions and promote sustainability. Established under the Inflation Reduction Act, the NCIF, CCA, and Solar for All programs have substantial budgets. The NCIF allocated $14 billion to three national nonprofits, while the CCA supports hub nonprofits with $6 billion. Understanding priority project categories, spanning from small-scale generation to zero-emission transportation and housing decarbonization, is crucial. Stakeholder engagement is vital for accessing funding and shaping projects. Projects must demonstrate financial need and align with priorities. Financial assistance is available in various forms, including debt and equity. The Solar for All program provides $7 billion in grants and guidance for low-income solar projects. Stakeholders must position themselves strategically to capitalize on GGRF opportunities and drive sustainability. 

3. Leveraging Prevailing Wage for Renewable Energy Projects

   Understanding and meeting prevailing wage and apprenticeship (PWA) requirements is crucial for stakeholders. The Inflation Reduction Act offers a significant opportunity, boosting tax credits from 6% to 30% upon fulfilling PWA criteria for applicable projects, marking a fivefold increase. Despite the complexity, adhering to PWA standards guarantees eligibility for enhanced tax credits on applicable projects and advocates for fair compensation practices. Accurate documentation of PWA compliance is essential to avoid penalties, incurred interest, and a requirement to backpay workers. Stakeholders must prioritize compliance activities and meticulous documentation to capitalize on the full potential of PWA-aligned projects and mitigate the risk of non-compliance jeopardizing the project's financial health – the rewards of compliance with PWA guidelines for applicable projects far exceed the cost of an effective compliance program.  

4. Understanding Domestic Content Requirements

   Adhering to domestic content requirements can feel like navigating a maze with moving walls. Clients often assume that purchasing U.S.-manufactured components, such as inverters, guarantees eligibility for a domestic content bonus credit. However, compliance extends beyond individual components to encompass the entire project. Another area of confusion lies in distinguishing between steel and iron used in product manufacturing versus structural steel and iron, each subject to distinct criteria. While some manufacturers may willingly disclose information, others remain opaque, complicating compliance assessments. When information isn’t available, one might need to make conservative assumptions about the manufacturer’s data, which can result in a lower domestic content percentage. That's why conducting a thorough analysis and working closely with manufacturers to tackle these complexities is crucial; Therefore, analysis and collaboration with manufacturers are essential.

5. Transferability and How it’s Playing Out

   With the Inflation Reduction Act, you are no longer required to be a direct owner of a renewable energy project to benefit from the federal tax credits. Since additional guidance was provided in June 2023, the transferability market has started to grow. Buyers of tax credit include global and regional banks, insurance companies and/or corporates. Buyers and sellers of tax credits are often connected through traditional tax equity providers, investment bankers, aggregators, online platforms, and/or professional relationships. Tax credit buyers are focused on mitigating their risk, which is apparent in the due diligence process. Tax insurance has played a role in the transferability market in order to mitigate buyers’ risk and is used for some projects. It can streamline execution in certain circumstances or significantly slow the closing process depending on what is insured. However, sellers are most focused on pricing as well as standardizing the due diligence. The key drivers of transferability pricing mirror the traditional tax equity market and include – but are not limited to – the type of credit, technology, sponsor financial strength, and size of the transaction. We anticipate the transferability market will continue to grow as more entities become more educated about the market.

IRA Subsidies: Stay in the Know

These insights offer just a glimpse into the wealth of knowledge our webinar provides. We’re committed to equipping you with the tools and understanding to overcome the complexities of project funding. If you have more questions and seek further clarity, let's continue the dialogue and explore how we can help you find the answers to your projects' success.