Renewable Electricity Production Tax Credit (Section 45 PTC)
Internal Revenue Service
~$0.0275/kWh (10 years)
Get paid per kWh of renewable electricity
A federal per-kilowatt-hour tax credit for electricity produced and sold from qualifying renewable energy facilities over a 10-year period beginning on the date the facility is placed in service. The 2024 inflation-adjusted base rate is approximately $0.0028/kWh — but facilities meeting prevailing wage and apprenticeship requirements earn a 5x multiplier bringing the effective rate to approximately $0.0275/kWh. Eligible technologies include wind, closed-loop biomass, open-loop biomass, geothermal, solar, small irrigation power, landfill gas, hydropower, and marine/hydrokinetic. Facilities cannot claim both §45 PTC and §48 ITC on the same property. The IRA extended §45 through 2024 (§45Y, the technology-neutral successor, applies to facilities placed in service after December 31, 2024).
- Funding type
- Tax Credit
- Level
- Federal
- Amount
- Inflation-adjusted base rate approximately $0.0028/kWh (2024); with prevailing wage and apprenticeship compliance (5x multiplier), approximately $0.0138/kWh — further adjusted for inflation to approximately $0.0275/kWh for facilities meeting all requirements. Rates adjust annually by GDP implicit price deflator, rounded to nearest 0.05 cent. Credit runs for 10 years from placed-in-service date. Facilities placed in service after December 31, 2024 use §45Y (Clean Electricity PTC) with identical rate structure.
- Realistic amount
- A 10 MW wind farm producing 35,000 MWh/year with prevailing wage compliance earns approximately $962,500/year (35,000,00…
- Deadline
- Ongoing — credit earned each year for 10 years following placed-in-service date. §45 applies to facilities placed in service on or before December 31, 2024. For facilities placed in service after December 31, 2024, §45Y (Clean Electricity PTC) is the operative section with identical rate structure.
- Status
- active
- States
- Nationwide
- Payment model
- tax offset
Who qualifies
- Must own a qualifying renewable energy facility placed in service in the United States
- Eligible energy resources: wind, closed-loop biomass, open-loop biomass, geothermal energy, solar energy, small irrigation power, municipal solid waste (landfill gas), qualified hydropower, marine and hydrokinetic renewable energy
- Must produce electricity from the qualifying facility and sell it to an unrelated person — electricity consumed by the owner does not qualify
- 10-year credit window begins on the date the facility is originally placed in service
- Full ~$0.0275/kWh rate requires prevailing wage and apprenticeship compliance throughout construction, alteration, and repair. Apprenticeship requirement: not less than 10–15% of total labor hours by qualified apprentices (% depends on construction commencement date). Non-compliant facilities receive the base rate (~$0.0028/kWh, approximately 1/5 of full rate)
- Cannot claim both §45 PTC and §48 ITC on the same facility — election must be made between the two (solar and geothermal in particular must choose)
- Tax-exempt entities, states, tribes, and rural cooperatives may elect direct pay under §6417
- For-profit taxpayers may transfer (sell) the credit to unrelated third-party buyers under §6418
- Elective pay for §45 is not restricted to tax-exempt entities — the statute allows for-profit taxpayers to elect payment under §6417 for renewable electricity production; domestic content requirements phase in from 2024 onward for those elections
What it covers
Eligible expenses
- Electricity produced from qualifying energy resources listed in §45(c) — credit is based on production output, not capital costs
- Qualified hydropower: incremental output increases at existing hydro facilities from efficiency improvements also qualify
- The credit applies to kWh metered and sold to an unrelated utility, grid operator, or power purchaser
Ineligible expenses
- Electricity consumed by the facility owner (self-consumption doesn't qualify — only electricity sold to unrelated persons)
- Electricity from facilities that also claimed §48 ITC on the same property (mutual exclusivity election applies)
- Production from wind facilities experiencing phase-down reductions based on construction start date (2016–2022 vintage wind may receive reduced credits)
- Electricity produced from fossil fuel combustion (coal, oil, natural gas, propane)
- Open-loop biomass produced from municipal solid waste co-fired with fossil fuels beyond allowed ratios
How to apply
-
1
Select PTC vs ITC (§45 vs §48) and facility structure
Determine whether §45 PTC or §48 ITC maximizes value for your project. PTC favors high-capacity-factor facilities with long operating lives (wind, geothermal); ITC favors higher-capital-cost, lower-output facilities (solar, storage). Cannot claim both on the same facility. Model cash flows across the 10-year window for each option.
~8 hrs
-
2
Confirm placed-in-service date and applicable statute (§45 vs §45Y)
Verify the facility's placed-in-service date. Projects placed in service on or before December 31, 2024 use §45; projects after that date use §45Y (identical rate structure). For wind projects, assess whether construction commencement date triggers any phase-down.
~3 hrs
-
3
Implement prevailing wage and apprenticeship compliance
Obtain Davis-Bacon prevailing wage determinations for the project county from the Department of Labor. Require certified payroll from all construction contractors and subcontractors. Monitor apprenticeship ratios throughout construction. Without compliance, the credit drops to approximately 1/5 of the full rate.
~15 hrs
-
4
Elect direct pay or plan credit transfer structure
Tax-exempt entities and government bodies file elective pay election. For-profit project owners assess whether to retain credits, transfer them, or use a tax equity partnership structure (the traditional pre-IRA approach for developers lacking tax appetite). Credit transfers under §6418 provide immediate liquidity at approximately 90–96 cents on the dollar.
~10 hrs
-
5
Track production, file Form 8835 annually for 10 years
Metered electricity production records are required for each tax year throughout the 10-year window. Complete IRS Form 8835 (Renewable Electricity Production Credit) annually. Credit is earned in the year the electricity is produced and sold — not when the facility is built.
~6 hrs
Industry & certifications
NAICS codes: 221114, 221115, 221116, 221117, 221118
The PTC vs ITC decision is project-specific — model both. Wind typically favors PTC (high capacity factor, 10-year window outperforms 30% upfront ITC). Solar has historically favored ITC but PTC can win for utility-scale projects. Never assume ITC wins for solar without modeling.
Deadline & timing
§45 and §45Y use the same rate structure and credit mechanics. The distinction matters for compliance purposes but not for credit value. Wind facilities placed in service before 2022 may face phase-down reductions (20–60%) depending on construction start date between 2016–2022. Biomass facilities have a 5-year credit window instead of 10 years for certain configurations.
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Last reviewed 2026. GrantCompass is an independent funding-discovery tool and is not affiliated with any government agency. Always confirm details on the official program page.