The complexity of a new federal program intended to boost clean energy projects by offering direct payments to tax-exempt organizations has features that make it difficult for those organizations to benefit from it, McGuireWoods San Francisco associate Marc Nickel told E&E News in a Dec. 8, 2023, story.
E&E News reports that the opportunity for direct payments for energy tax credits created by the Inflation Reduction Act allows nontaxpaying entities, like cities and charities, to receive payments of at least 30% of the cost of clean energy projects developed and owned by nonprofits. But those organizations have little or no tax experience and are finding it hard to clear all hurdles necessary to qualify for the funds, particularly the requirement that projects be built with American-made materials.
Nickel, a tax attorney who previously held in-house positions at a large public utility and at the largest rooftop solar installer in the United States, told E&E News that there are unanswered questions about the made-in-America rules required to receive a full payment beginning in 2024, but the challenges facing the program may be surmountable.
“If the situation is you have to build this with enough domestic content, otherwise your opportunity is at zero, that could be a potentially huge chilling effect if you don’t know exactly what the domestic content parameters are,” Nickel said. “I do think eventually it will be quite straightforward. I just think it’s not quite straightforward yet.”