Clean Electricity Production Tax Credit (Section 45Y)
Internal Revenue Service
1.5¢/kWh for 10 years
10-year per-kWh credit for clean power
The technology-neutral successor to §45, this federal production tax credit pays a per-kilowatt-hour credit for electricity produced by any zero-greenhouse-gas facility placed in service after December 31, 2024. The base rate is 0.3 cents/kWh (inflation-adjusted), rising to 1.5 cents/kWh with prevailing wage and apprenticeship compliance. Domestic content and energy community bonus adders apply. Unlike the §48E ITC (a one-time credit on installed cost), §45Y pays annually for 10 years of electricity production — typically favoring larger, long-operating projects like wind farms. FEOC restrictions on critical mineral sourcing apply starting January 1, 2026. IMPORTANT — OBBBA WIND/SOLAR CLIFF: The OBBBA (signed July 4, 2025) terminates §45Y for wind and solar facilities if construction begins after July 5, 2026 AND the facility is placed in service after December 31, 2027. Other zero-GHG technologies (geothermal, nuclear, hydroelectric, fuel cells, wave/tidal) are unaffected by this OBBBA provision and remain eligible under §45Y.
- Funding type
- Tax Credit
- Level
- Federal
- Amount
- Base rate: 0.3 cents/kWh (inflation-adjusted annually by CPI). Full rate: 1.5 cents/kWh with prevailing wage and apprenticeship compliance. Bonus adder — domestic content: +10% of applicable credit amount. Bonus adder — energy community: +10% of applicable credit amount. Credit paid for 10 years from placed-in-service date. IRA §45Y applies to facilities beginning construction after December 31, 2024.
- Realistic amount
- A 10 MW wind farm producing 35,000 MWh/yr with prevailing wage earns approximately $525,000/yr (1.5¢ × 35M kWh), or $5.2…
- Deadline
- Ongoing — claimed annually on federal tax return for each year of the 10-year credit window. No sunset date; phases down using same grid-intensity trigger as §48E (later of 2032 or when US electricity grid reaches 75g CO2/kWh).
- Status
- active
- States
- Nationwide
- Payment model
- tax offset
Who qualifies
- Qualifying facility: any electricity generating facility with zero greenhouse gas emissions placed in service after December 31, 2024 — technology-neutral (wind, solar, geothermal, hydroelectric, nuclear, fuel cells, landfill gas, wave/tidal, others with zero GHG)
- Construction must begin after December 31, 2024 (facilities starting construction before that date use §45 PTC instead)
- Full 1.5¢/kWh rate requires prevailing wage and apprenticeship compliance for all construction workers, and for alteration/repair workers throughout the 10-year credit window
- 0.3¢/kWh base rate applies if prevailing wage/apprenticeship requirements are not met — a 5x reduction
- Facilities <1 MW output qualify for the full 1.5¢/kWh rate without prevailing wage compliance
- Tax-exempt entities may receive the credit as cash via elective pay (§6417) for each year they earn it
- For-profit taxpayers may transfer (sell) the annual credit to third-party buyers under §6418
- Domestic content bonus: +10% if ≥40% of steel/iron/manufactured products are US-made (threshold rising to 55% by 2027)
- Energy community bonus: +10% if facility is sited in a brownfield, coal-closure community, or high-fossil-fuel-employment area
- Starting January 1, 2026: FEOC restrictions apply to critical minerals used in qualifying equipment — sourcing from China, Russia, North Korea, or Iran may reduce credit eligibility for affected components
- OBBBA WIND/SOLAR RESTRICTION: Wind and solar facilities that begin construction after July 5, 2026 are NOT eligible for §45Y if placed in service after December 31, 2027. Wind/solar developers must begin construction by July 5, 2026 to preserve full eligibility. Geothermal, nuclear, and other zero-GHG technologies are unaffected.
What it covers
Eligible expenses
- Electricity produced by any qualifying zero-GHG facility during the 10-year credit window
- Wind-generated electricity (offshore and onshore)
- Solar-generated electricity (PV and concentrating solar thermal)
- Geothermal electricity generation
- Nuclear power generation
- Hydroelectric power (qualifying run-of-river and impoundment facilities)
- Landfill gas, municipal solid waste, and biomass facilities with zero net GHG (life cycle basis)
Ineligible expenses
- Electricity produced from facilities with any GHG emissions (excludes natural gas, coal, oil peakers)
- Production from facilities beginning construction before January 1, 2025 (use §45 PTC instead)
- Electricity not sold to an unrelated party (self-consumption may limit credit — verify with IRS guidance)
- Production in years 11+ after placed-in-service date (credit window is exactly 10 years)
- Electricity generated outside the United States
How to apply
-
1
Confirm zero-GHG technology qualification and construction start date
Verify the generating technology produces electricity with zero lifecycle GHG emissions. Confirm construction begins after December 31, 2024. Document the beginning-of-construction date using physical work or 5% safe harbor methods.
~2 hrs
-
2
Determine ITC (§48E) vs PTC (§45Y) election
Model the ITC vs PTC comparison for your project. ITC = one-time credit on installed cost (30% base). PTC = recurring credit on production (1.5¢/kWh) for 10 years. PTC typically wins for high-capacity-factor projects (wind, nuclear, geothermal) with long operating lives. The election is irrevocable — consult a tax advisor before filing.
~4 hrs
-
3
Establish prevailing wage compliance program
Obtain Davis-Bacon wage determinations from the Department of Labor for the project county. Ensure all construction workers and, for the 10-year credit window, all alteration/repair workers are paid prevailing wages. Implement apprenticeship ratio tracking. Compliance applies throughout the credit window — one violation can retroactively drop the entire year's credit to the base rate.
~8 hrs
-
4
Register for direct pay or credit transfer (annually)
Tax-exempt entities file annual elective pay elections before each return due date. For-profit transferors register with IRS annually and execute new transfer agreements for each year's credit with buyers. Annual process — not a one-time setup.
~4 hrs
-
5
Claim credit on annual return (Form 8835)
Complete IRS Form 8835 (Renewable Electricity Production Credit) — §45Y uses the same form infrastructure as §45. Calculate total kWh produced during the tax year by the qualifying facility. Apply applicable rate (base or full) and bonus adder percentages. Repeat annually for 10 years.
~5 hrs
PTC beats ITC for wind and nuclear at utility scale — 10 years of per-kWh payments compound significantly for high-capacity-factor assets. But the prevailing wage compliance must hold for the full 10-year window, not just construction. One non-compliant repair crew in year 7 retroactively drops that year's credit to 0.3¢/kWh.
Deadline & timing
§45Y applies to qualifying facilities that begin construction after December 31, 2024. The 10-year credit window runs from the placed-in-service date. Phase-down of the credit begins the later of 2032 or when the IRS/DOE declare the grid-intensity trigger is met — at which point new facilities entering service face reduced credit rates. Facilities already in service continue earning their full rate for their remaining 10-year window. OBBBA WIND/SOLAR CLIFF: The OBBBA (signed July 4, 2025) terminates §45Y for wind and solar facilities that begin construction after July 5, 2026 for property placed in service after December 31, 2027. Wind and solar developers must begin construction by July 5, 2026 to preserve §45Y eligibility. This cliff does NOT apply to other zero-GHG technologies (geothermal, nuclear, hydro).
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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.