The US Inflation Reduction Act of 2022 (the “IRA”) established a credit Section 45X of the Internal Revenue Code for the US production and sale of eligible components of clean energy technologies, which include qualifying solar energy components (such as solar modules and photovoltaic cells), wind energy components (such as blades, nacelles, towers, offshore wind foundations and related offshore wind vessels), battery components (such as battery cells, battery modules and electrode active material) and applicable critical minerals (including lithium, nickel and aluminum)1 (the “45X Credit”). The credit is available when eligible components are produced by a taxpayer and sold to an unrelated person, in each case as part of the taxpayer’s trade or business. The amount of the credit varies among eligible components, all of which, except for applicable critical minerals, are subject to a phase-out starting 2030 and sunset at the end of 2032. The 45X Credit is eligible to be sold to unrelated parties for cash and there is also a direct pay option under which qualifying taxpayers may receive a refund from the US government (for up to five years in the case of non-tax-exempt taxpayers).
Read more
