clean manufacturing - advanced energy project credit

IRS launches second allocation round for section 48C advanced energy project credits

Notice 2024-36 outlines $6 billion in credits

On April 29, 2024, the IRS published Notice 2024-36, which provided further guidance and clarifications on the procedures for allocating credits under the section 48C qualifying advanced energy project credit program. This notice announces the second allocation round (Round 2) of the program, continuing the framework established by Notices 2023-18 and 2023-44, which initially set up the program with a $10 billion credit provision, including $4 billion specifically for projects in Energy Communities Census Tracts (Energy Communities). Round 2 aims to allocate the remaining $6 billion, with about $2.5 billion reserved for Energy Communities.

For Round 2, taxpayers are required to submit concept papers via the Qualified Advanced Energy Project Credit Program Applicant Portal (48C Portal), managed by the Department of Energy (DOE) by June 21, 2024. Upon submission, the DOE will review and either encourage or discourage further applications based on the project's merits. A successful concept paper leads to the submission of a joint application for DOE recommendation and IRS certification. The deadline for submitting these applications is set to 50 calendar days after DOE begins the acceptance period for the section 48C(e) application, typically shortly following the encouragement or discouragement letter from the DOE is delivered. Only applicants who submitted the concept papers can submit the section 48C(e) application. The IRS plans to finalize all decisions for Round 2 by Jan. 15, 2025.

This round follows the initial allocation where approximately $4 billion was distributed, with $1.5 billion going to projects in Energy Communities. The procedures for Round 2 largely mirror those of Round 1 but include updated appendices that supersede those from Notice 2023-44. These appendices detail necessary application information and eligibility criteria.

The updated guidelines also cover the process for projects that fail to receive an allocation in Round 1, noting that these are still eligible for consideration in Round 2. The notice emphasizes the importance of meeting the DOE's criteria for a project's commercial viability and alignment with advanced energy goals. The full implementation and regulatory details of the program, including impacts of previous legislation and specific requirements for qualifying projects, are outlined to ensure applicants understand the comprehensive framework and deadlines associated with the 48C credit allocation.

Overall, Notice 2024-36 modifies and amplifies prior notices, particularly Notice 2023-44, ensuring that applicants have clear guidance on the application process and the program's objectives aimed at promoting advanced energy projects.

Where to go from here?

While there is a tight timeline for section 48C Round 2, Baker Tilly’s team of Inflation Reduction Act (IRA) specialists can streamline the process by guiding your organization through the necessary application steps. We assist with concept paper feedback, support you in preparing the full application in the meantime, assist with the letters of encouragement review process and then manage the full application process moving forward.

Connect with our 48C and IRA specialists or learn more about Baker Tilly’s section 48C tax credit solutions.

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Section 48C tax credit solutions

Baker Tilly’s section 48C consultants pair industrial knowledge with a track record of helping clients apply for and win competitive tax credit programs. Our efforts have resulted in more than $15 billion in awarded tax credits for our clients.

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Section 48C: Credit opportunities for the energy and manufacturing industries

Watch Baker Tilly's Section 48C webinar around lessons learned for round 1 recipients and key considerations and proactive steps you can take for round 2.

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Section 48C: the $10 billion in investment tax credits every manufacturer should know about

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 in order to receive an allocation.

The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.

Robert Moczulewski
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