IRS Launches Second Allocation Round for Section 48C Advanced Energy Project Credits

Notice 2024-36 outlines $6 billion in credits
Jun 5, 2024 10:00 AM ET

Authored by Robert Moczulewski, Talwinder Kang

On April 29, 2024, the IRS published Notice 2024-36, which provided further guidance and clarifications on the procedures for allocating credits under the section 48C qualifying advanced energy project credit program. This notice announces the second allocation round (Round 2) of the program, continuing the framework established by Notices 2023-18 and 2023-44, which initially set up the program with a $10 billion credit provision, including $4 billion specifically for projects in Energy Communities Census Tracts (Energy Communities). Round 2 aims to allocate the remaining $6 billion, with about $2.5 billion reserved for Energy Communities.

For Round 2, taxpayers are required to submit concept papers via the Qualified Advanced Energy Project Credit Program Applicant Portal (48C Portal), managed by the Department of Energy (DOE) by June 21, 2024. Upon submission, the DOE will review and either encourage or discourage further applications based on the project's merits. A successful concept paper leads to the submission of a joint application for DOE recommendation and IRS certification. The deadline for submitting these applications is set to 50 calendar days after DOE begins the acceptance period for the section 48C(e) application, typically shortly following the encouragement or discouragement letter from the DOE is delivered. Only applicants who submitted the concept papers can submit the section 48C(e) application. The IRS plans to finalize all decisions for Round 2 by Jan. 15, 2025.

This round follows the initial allocation where approximately $4 billion was distributed, with $1.5 billion going to projects in Energy Communities. The procedures for Round 2 largely mirror those of Round 1 but include updated appendices that supersede those from Notice 2023-44. These appendices detail necessary application information and eligibility criteria.

The updated guidelines also cover the process for projects that fail to receive an allocation in Round 1, noting that these are still eligible for consideration in Round 2. The notice emphasizes the importance of meeting the DOE's criteria for a project's commercial viability and alignment with advanced energy goals. The full implementation and regulatory details of the program, including impacts of previous legislation and specific requirements for qualifying projects, are outlined to ensure applicants understand the comprehensive framework and deadlines associated with the 48C credit allocation.

Overall, Notice 2024-36 modifies and amplifies prior notices, particularly Notice 2023-44, ensuring that applicants have clear guidance on the application process and the program's objectives aimed at promoting advanced energy projects.

Where to go from here?

While there is a tight timeline for section 48C Round 2, Baker Tilly’s team of Inflation Reduction Act (IRA) specialists can streamline the process by guiding the organization through the necessary application steps. Baker Tilly assists with concept paper feedback, supports in preparing the full application in the meantime, assist with the letters of encouragement review process and then manage the full application process moving forward.

Connect with an 48C and IRA specialists or learn more about Baker Tilly’s section 48C tax credit solutions.