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Who Has The Power? U.S. PV Power Potential Vs. Actual Solar Usage

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Institutional Investors

  • Utility-scale solar photovoltaic (PV) in a key focal point for institutional investors.

  • Market acceptance by commercial lenders of utility-scale solar photovoltaic (PV) and bankability of such projects[1]

  • Increasing shift towards zero carbon emission electricity generation

  • Supply-demand disequilibrium for investment that contributes to climate change mitigation[2]


  • Corporates are seeking ambitious pathways to achieve net-zero targets[3],[4].


With 71,000 megawatts of utility-scale PV projects installed in the United States, prices are now competitive with all other forms of electricity generation. Utility-scale solar PV has become a significant part of the U.S. energy mix[5].

The United States Department of Energy Loan Program Office (‘LPO’) guaranteed $16.1bn in loans to 25 utility-scale solar PV projects under Section 1705 of the American Recovery and Reinvestment Act of 2009 (‘ARRA’). LPO guarantees under ARRA and the subsequent solar projects have led to:

  • $1.0bn in of global cumulative investment flows into renewable energy since 2010

  • 39.2mn cumulative tons of CO2 emissions avoided

  • Market acceptance by commercial lenders of utility-scale solar photovoltaic (PV) and bankability of projects

The Inflation Reduction Act (‘IRA’) retains the Internal Revenue Service (‘IRS’) Code Section 48 Investment Tax Credit (‘ITC’) for solar generation projects and reestablishes an opportunity to claim a 30% tax credit[6]. The entire 30% rate is considered a “bonus rate” that taxpayers are entitled to if the project is under 1MW of generation output. Otherwise, a base ITC rate of 6% applies to solar generation[7]. Section 48 ITC applies to solar projects that begin construction before the end of 2024[8].

The IRA adds Section 48E of the ITC for solar and other projects that generate carbon-free energy in service after December 31, 2024[9]. The base rate/bonus rate structure of Section 48 remains in 48E. Taxpayers will be able to claim a 30% bonus for solar projects are they are a form of zero carbon emission electricity generation[10].

To qualify for the 30% bonus rate under Sections 48 and 48E, solar generation projects must satisfy the prevailing wage and apprenticeship (‘PWA’) requirements[11]. The PWA ensure that workers on solar generation projects are paid fair wages and that a certain percentage of the workforce consists of qualified apprentices. These requirements are in effect for all projects that begin construction on or after Jan. 29, 2023, unless they are smaller-scale projects of under 1MW of capacity.

Additional provisions of the Inflation Reduction Act (‘IRA’) include:

  • 10% Adder for Energy Communities: an additional 10% ITC for Solar generation projects placed in service after Dec. 31, 2022, and located within an “energy community”[12].

  • Adders for Solar in Low-Income Communities: Projects that receive an allocation of a 1.8 GW environmental justice capacity limitation can receive an additional 10% credit if located in a low-income community or on Indian land, or an additional 20% credit if such project is part of a qualified low-income residential building project or qualified low-income economic benefit project.

  • Section 25D Tax Credit for Homeowner-Owned Solar Energy Property: a reinstatement of a full credit value and extension of the credit for a 12-year period. For installations completed after December 31, 2021, the solar credit under Section 25D has increased from 26% to 30% (from 26%). The 30% credit is effect until Dec. 31, 2032, and will drop to 26% in 2033, 22% in 2034 and to 0% in 2035 and thereafter.

[1] Nuveen Green Capital. (2022). C-PACE for Solar and Renewables. Available here. [2] Climate Bonds Initiative. (30 November 2022). Sustainable Debt Market: Summary: Q3 2022. Available here. [3] Network for Greening the Financial System. (7 September 2022). Not Too Late: Confronting the Growing Odds of a Late and Disorderly Transition. Available here. [4] Glasgow Financial Alliance for Net-Zero. (1 September 2022). Expectations for Real-Economy Transition Plans. Available here. [5] United States Department of Energy (‘DOE’). Loan Program Office. (2022). The Inflation Reduction Act of 2022. Available here. [6] United States Department of the Treasury. (2022). FACT SHEET. Treasury, IRS Open Public Comment on Implementing the Inflation Reduction Act’s Clean Energy Tax Incentives. Available here. [7] United States Internal Revenue Service. (22 December 2022). Frequently Asked Questions About Energy Efficient Home Improvements and Residential Clean Energy Property Credit. Available here. [8] United States Internal Revenue Service. (2018). 26 U.S. Code § 48: Energy Credit. Available here. [9] Congressional Research Service. (23 April 2021). Internal Revenue Code (IRC) Section 48: Investment Tax Credit (‘ITC’). Available here. [10] McGuireWoods. (6 February 2023). Inflation Reduction Act Extends and Modifies Tax Credits for Solar Projects. Available here. [11] United States Internal Revenue Service. Federal Register. (30 November 2022). Prevailing Wage and Apprenticeship Initial Guidance Under Section 45(b)(6)(B)(ii) and Other Substantially Similar Provisions. Available here. [12] Defined to include i) a brownfield site; ii) a census tract or any adjoining tract in which a coal mine closed after December 31, 1999, or a coal-fired electric power plant was retired after December. 31, 2009; and iii) an area that has (or, at any time during the period beginning after December. 31, 1999, had) significant employment or local tax revenue related to the extraction, processing, transport or storage of coal, oil or natural gas.

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