16851_Authority_Aug_2023

42 The Authority | AUGUST 2023 apprenticeship requirements are met. If a project’s nameplate capacity is under 1 MW-AC the project defaults to the 30% maximum bonus amount. If, however, a project is over 1 MW- AC, a project must meet the pub- lished guidelines on prevailing wage and apprenticeship, otherwise it is only subject to a 6% credit amount. The general requirement to meet prevailing wage and apprenticeship requirements centers on the contrac- tors, or subcontractors and mechanics employed by the taxpayer being paid the prevailing wage in the region the project is constructed and that quali- fied apprenticeship requirements are also incorporated into construction. The other new wrinkle under the Inflation Reduction Act is the ability to capture different adders depending on project specifics. For qualifying projects, there are several ten percent “adder” credits that can be “stacked on top of the existing base tax credit (30% for meeting prevailing wage and apprenticeship requirements, or 6% if not). These adders include a 10% bonus credit for utilizing “domestic content” on projects, another 10% for siting in “energy areas,” and then either a 10% or 20% adder for building in certain low-income areas. All the definitions to meet necessary qualifi- cations to capture additional adders are still being classified, so it is critical to evaluate site specific characteristics in detail when evaluating if it will be possible to capture adders for any given project. By implementing direct pay, tax- exempt organizations now have a significant opportunity to benefit from the Investment Tax Credit through the pursuit of qualifying renewable energy projects with the fundamental change to the structure of the ITC. Qualified tax-exempt organizations are outlined in the Inflation Reduction Act as the following: tax-exempt organizations, state and local governments, the Ten- nessee Valley Authority, Indian tribal governments, Alaska native corpora- Corporate Office: 949 Easton Road Warrington, PA 18976 215-343-5700 630 Freedom Business Center Third Floor King of Prussia, PA 19406 610-572-7093 105 Raider Boulevard Suite 206 Hillsborough, NJ 08844 908-874-7500 433 Lancaster Avenue Suite 200 Malvern, PA 19355 610-489-5100 tions, and cooperative corporations providing electric energy to rural areas. These entities are now directly incen- tivized to invest in renewable energy to achieve their net zero emissions targets and create sustainable communities. Historically, many renewable projects would not have been pursued by tax exempt entities as ownership oppor- tunities. The hope is that this will begin to change now that direct pay allows for tax exempt entities to take full advantage of the credits appli- cable under the Inflation Reduction Act. At a minimum, there needs to be consideration by tax exempt entities to evaluate if direct pay is applicable, or financially viable. The inclusion of direct pay does now give tax-exempt organizations an opportunity for equal presence in sustainability efforts by offering direct payments in lieu of a tax credits. This leveling of the playing field hopefully will open many more opportunities for tax exempt entities, which will in turn lead to a more sus- tainable future. S Continued from page 23.