Inflation Reduction Act: Direct Pay Tax Incentives and Grants for Qualifying Utility Projects

The Inflation Reduction Act (IRA), signed August 2022, brought sweeping changes to how water and wastewater utilities evaluate project opportunities as United States continues to push the energy transition.The IRA is the largest energy incentive legislative effort in U.S. history, providing unique opportunities for public and private utilities. For the first time, tax-exempt organizations can obtain tax credit funding through direct payments - for qualifying clean energy or efficiency projects. These tax credits can total as much as 50% or more of the qualifying project costs. Many utilities are already taking advantage of these tax incentives which can reduce local funding requirements. Qualifying project examples are solar for water or wastewater treatment plants, waste energy recovery for wastewater treatment plants and more. Sustainability projects for utilities which qualify for the IRA tax credits include biogas, solar, clean hydrogen, wind, hydro, electric vehicles and more. In certain circumstances the cost of the equipment, such as biogas at wastewater treatment plants, is only a small portion of the eligible property for the tax credits. This presentation will provide an overview of the IRA, the utility sector's approach and general trends related to the IRA in the early stages including the significant requirements related to maximizing the credit amount. Relevant lessons learned and case studies in the first year of this impactful legislation will also be shared. [u]Learning objectives[/u] Participants of this educational session will be able to: 1. Outline current tax incentive opportunities pertaining to utilities 2. Understand examples of qualifying projects 3. Determine qualifying projects for one's utility