Clean Electricity Investment Tax Credit (Section 48E)
Internal Revenue Service
6%–50%+ of project cost
Tech-neutral 30% ITC for clean power
The technology-neutral successor to §48, this federal investment tax credit applies to clean electricity facilities and energy storage placed in service after December 31, 2024. Any generator producing zero greenhouse gas emissions qualifies — no pre-approved technology list. The base rate is 6% (or 30% with prevailing wage/apprenticeship compliance, or for projects under 1 MW). Bonus adders for domestic content (+10%), energy community (+10%), and low-income community (+10–20%) can stack on top. Tax-exempt entities claim via elective pay (direct pay); for-profit taxpayers may transfer (sell) the credit. FEOC restrictions on battery components apply starting January 1, 2026. IMPORTANT — OBBBA (July 2025) sharply accelerated the credit's end for wind and solar: wind and solar facilities placed in service after December 31, 2027 do not qualify unless construction began on or before July 4, 2026. Other clean-electricity technologies (storage, geothermal, nuclear, hydro) retain the longer phase-out timeline.
- Funding type
- Tax Credit
- Level
- Federal
- Amount
- 6% base rate (without prevailing wage/apprenticeship) or 30% with prevailing wage/apprenticeship compliance (or projects <1 MW output). Bonus adders stack on top: +10% domestic content, +10% energy community siting, +10–20% low-income community (solar/wind ≤5 MW only). Maximum theoretical combined rate: ~50% with all adders and prevailing wage. Energy storage qualifying if ≥5 kWh capacity.
- Realistic amount
- A 500 kW solar+storage system costing $1.5M with prevailing wage compliance typically yields a $450,000 credit (30%). A…
- Deadline
- Ongoing — claimed on annual tax return (Form 3468). Wind and solar face an accelerated OBBBA cutoff (must be placed in service by Dec 31, 2027 unless construction began by July 4, 2026); other clean-electricity technologies phase down starting the later of 2032 or when the US 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 — no approved technology list (solar, wind, geothermal, hydroelectric, nuclear, fuel cells, marine/tidal, landfill gas, municipal solid waste, others)
- Energy storage property: ≥5 kWh capacity, used in connection with a clean electricity facility or standalone grid storage
- Construction must begin after December 31, 2024 (facilities starting construction before Jan 1, 2025 use §48 instead)
- Full 30% rate requires prevailing wage compliance for all construction, alteration, and repair workers for 5 years post-commissioning — OR project output must be <1 MW (AC)
- 6% base rate applies to projects ≥1 MW that do not meet prevailing wage/apprenticeship requirements
- Tax-exempt entities (governments, §501(c) nonprofits, tribal governments, rural cooperatives) may claim via elective pay under §6417
- For-profit taxpayers may transfer (sell) the credit to unrelated third parties under §6418
- Starting January 1, 2026: energy storage property is subject to FEOC restrictions — battery components and critical minerals from China, Russia, North Korea, or Iran reduce or eliminate the storage portion of the credit
- Bonus adder — domestic content: ≥40% US-manufactured steel/iron/manufactured products (rising to 55% by 2027)
- Bonus adder — energy community: facility sited in a brownfield, coal-closure community, or high-fossil-fuel-employment MSA
- Bonus adder — low-income community: available only for solar/wind ≤5 MW, requires DOE allocation (limited annual capacity)
What it covers
Eligible expenses
- Equipment purchase and installation costs for qualifying zero-GHG electricity generators
- Energy storage property (batteries, thermal storage) with ≥5 kWh capacity — standalone or co-located
- Interconnection costs for facilities ≤5 MW
- Engineering, design, and commissioning costs capitalized into property basis
- Construction labor costs capitalized into the facility basis (included in credit base)
Ineligible expenses
- Facilities that produce electricity with any greenhouse gas emissions (excludes natural gas, coal, oil)
- Energy property used outside the United States
- Facilities that already received a §48 credit (§48E and §48 cannot both apply to the same property)
- FEOC-sourced battery components and critical minerals in energy storage after January 1, 2026
- Costs reimbursed by non-taxable grants or subsidized financing (reduce the credit basis proportionally)
How to apply
-
1
Confirm facility qualifies as zero-GHG electricity generator
Verify the technology produces electricity with zero lifecycle GHG emissions. This is technology-neutral — if it's not on a specific excluded list, it likely qualifies. Confirm construction begins after December 31, 2024 (distinguishing from §48). Document technical specifications.
~2 hrs
-
2
Determine credit rate and bonus adder eligibility
Assess prevailing wage and apprenticeship compliance (Davis-Bacon rates, apprentice ratios) to qualify for 30% vs 6% base. Identify bonus adder eligibility: look up energy community status via IRS/DOE mapping tools, confirm domestic content sourcing percentages, apply for low-income community allocation through DOE if a qualifying ≤5 MW solar/wind project.
~6 hrs
-
3
Check FEOC restrictions for energy storage (2026+)
For energy storage property placed in service after January 1, 2026, verify battery cells, modules, and critical minerals do not originate from Foreign Entities of Concern (FEOC: China, Russia, North Korea, Iran). FEOC-sourced components reduce or eliminate the storage-portion credit. Work with supply chain to obtain FEOC compliance certifications.
~8 hrs
-
4
Elect direct pay or plan credit transfer (if applicable)
Tax-exempt entities file elective pay election with the IRS before return due date. For-profit transferors register on IRS Transfer Portal and execute a transfer agreement with a third-party credit buyer before filing. Both paths require pre-filing IRS registration.
~6 hrs
-
5
Prepare Form 3468 and file with return
Complete IRS Form 3468 with eligible basis, credit rate, bonus adder amounts. Assemble prevailing wage payroll documentation, domestic content certifications, energy community documentation. Reduce property basis by credit amount. Coordinate MACRS bonus depreciation sequencing with tax advisor.
~10 hrs
FEOC restrictions on storage kick in January 1, 2026 — any battery system sourced from Chinese manufacturers will fail the test. Lock in supply chain FEOC certifications before construction begins, not after.
Deadline & timing
OBBBA (July 2025) sharply accelerated §48E for wind and solar: wind and solar facilities placed in service after December 31, 2027 are not eligible unless construction began on or before July 4, 2026 (twelve months after OBBBA's enactment). This is the single most important deadline for any solar or wind project — projects that cannot begin construction by July 4, 2026 should model the credit as unavailable. NON-wind/solar technologies (energy storage, geothermal, nuclear, hydropower) retain the original phase-down: it begins the later of 2032 or when the IRS and DOE determine the US electricity grid has reached 75g CO2e/kWh, then steps down 100% → 75% → 50% → 0%. FEOC (Foreign Entity of Concern) restrictions on battery/component sourcing take effect January 1, 2026.
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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.