What the Inflation Reduction Act Means for Solar:

HOW MUCH DID THE INFLATION REDUCTION ACT OF 2022 PROVIDE LPO FOR ISSUING NEW LOANS?

IRA appropriates approximately $11.7 billion in total for LPO to support issuing new loans. In 2022 The President Biden administration passed a bill known as the (IRA) H.R. 5376 – Inflation Reduction Act of 2022. The bill covers multiple topics, including healthcare, corporate taxes, staging at the IRS, and most importantly to Helio GreenTech and potential solar energy customers related legislation for the renewable energy sector, especially solar.

The Act also enhances the ITC for certain projects placed into service after December 31, 2022. In the case of the PTC, the credit can increase if the solar projects meet certain requirements. If a project uses domestically produced materials, such as steel and iron (100% U.S.-made), and the total materials for the project are at least 40% U.S.-made, the project will qualify for a 10% increase in the ITC.

In previous years it would be hard to buy a BRAND NEW HOME with solar, but the ITC provision creates a new marketplace for tax credits. It is projected that third parties may pay 92 cents on the dollar for a tax credit; in that case, the developer would receive 90 cents. The difference would go to the market maker on the transaction. There’s still some nuances to figure out in getting solar to be installed on new home construction with delvelopers in the Kansas City market with utility providers such as Evergy, Ameren and Independence Power and Light. However, as for the ITC solar tax credit itself, Helio would love to work with developers who may wish to seek ITC insurance that includes the original ITC amounts and determination of eligibility for the third party.

The IRA, Inflation Reduction Act of 2022 helps keep the cost of solar lower than the average electric bill it’s replacing in both Kansas and Missouri as well as most other states in the United States. The The Inflation Reduction Act will decrease consumer energy costs, increase energy security, and help reduce greenhouse gas emissions. The combined investments in the Budget Reconciliation bill will reduce an estimated 40% emissions and represent the biggest climate investment in history.

What about my not-for profit organization or church?

Prior to the passage of the IRA, only taxpaying entities were entitled to the benefits that come with qualified solar projects, such as bonus depreciation and the ITC. Entities not subject to taxation, such as cities, counties, school districts, municipal utilities, churches, and other 501(c) organizations, could not take advantage of the solar benefits.

Now if you have a church that wants to go solar Helio GreenTech can help install your solar project and your church or other 501(c) tax-exempt entities can receive the benefits of the ITC through a “direct pay” option in lieu of tax credits. Under the direct pay program, the tax-exempt organization would claim the ITC on its 2023 Form 990, which would generate the refund from the IRS.

Solar production currently accounts for just 3% of the electrical production in the U.S., but 49 states require all electric utilities to use renewable sources for 30-35% of their energy production by 2035. We have a long way to go.