Credit for Renewable Electricity Production and Publication of Inflation Adjustment Factor and Reference Price for Calendar Year 2023, 40400-40401 [2023-13191]

Agencies

• Internal Revenue Service
• DEPARTMENT OF THE TREASURY

[Federal Register Volume 88, Number 118 (Wednesday, June 21, 2023)]
[Notices]
[Pages 40400-40401]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-13191]


-----------------------------------------------------------------------

DEPARTMENT OF THE TREASURY

Internal Revenue Service


Credit for Renewable Electricity Production and Publication of 
Inflation Adjustment Factor and Reference Price for Calendar Year 2023

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of publication.

-----------------------------------------------------------------------

SUMMARY: The 2023 inflation adjustment factor and reference price are 
used in determining the availability of the credit for renewable 
electricity production under section 45 (section 45 credit).

FOR FURTHER INFORMATION CONTACT: Charles Hyde, CC:PSI:6, Internal 
Revenue Service, 1111 Constitution Avenue NW, Washington, DC 20224, 
(202) 317-6853 (not a toll-free number).

SUPPLEMENTARY INFORMATION: The 2023 inflation adjustment factor and 
reference price apply to calendar year 2023 sales of kilowatt hours of 
electricity produced in the United States or a possession thereof from 
qualified energy resources.
    Inflation Adjustment Factor: The inflation adjustment factor for 
calendar year 2023 for qualified energy resources is 1.8909.
    Reference Price: The reference price for calendar year 2023 for 
facilities producing electricity from wind is 3.74 cents per kilowatt 
hour. The reference prices for facilities producing electricity from 
closed-loop biomass, open-loop biomass, geothermal energy, solar 
energy, municipal solid waste, qualified hydropower production, and 
marine and hydrokinetic renewable energy have not been determined for 
calendar year 2023.
    Phaseout Calculation: Because the 2023 reference price for 
electricity produced from wind (3.74 cents per kilowatt hour) does not 
exceed 8 cents multiplied by the inflation adjustment factor (1.8909), 
the phaseout of the credit provided in section 45(b)(1) does not apply 
to such electricity sold during calendar year 2023. For electricity 
produced from closed-loop biomass, open-loop biomass, geothermal 
energy, solar energy, municipal solid waste, qualified hydropower 
production, and marine and hydrokinetic renewable energy, the phaseout 
of the credit provided in section 45(b)(1) does not apply to such 
electricity sold during calendar year 2023.
    Inflation Reduction Act Amendments: Section 45 was amended by 
section 13101 of Public Law 117-169, 136 Stat. 1818 (August 16, 2022), 
commonly known as the Inflation Reduction Act of 2022 (IRA). The IRA 
changed the manner in which the section 45 credit amounts are 
calculated for any qualified facility placed in service after December 
31, 2021. The IRA also removed the one-

[[Page 40401]]

half reduction of the credit amount under section 45(b)(4)(A) for 
qualified hydropower facilities and marine and hydrokinetic renewable 
energy facilities placed in service after December 31, 2022. In the 
case of any qualified facility placed in service before January 1, 
2022, the section 45 credit amounts are determined under the 
calculation rules provided by the prior version of section 45.
    As amended by the IRA, section 45(b)(6)(A) provides that, in the 
case of any qualified facility that satisfies the requirements of 
section 45(b)(6)(B), the credit amount determined under section 45(a) 
(determined after the application of section 45(b)(1) through (5) and 
without regard to section 45(b)(6)) is equal to such amount multiplied 
by 5. A qualified facility satisfies the requirements of section 
45(b)(6)(B) if it is placed in service after December 31, 2021, and it 
is one of the following: (i) a facility with a maximum net output of 
less than 1 megawatt (as measured in alternating current); (ii) a 
facility the construction of which began prior to January 29, 2023, 
which is the date that is 60 days after the publication of the guidance 
with respect to the requirements of section 45(b)(7)(A) (prevailing 
wage requirements) and section 45(b)(8) (apprenticeship requirements); 
\1\ or (iii) a facility that satisfies the requirements of section 
45(b)(7)(A) and (8). The IRA also added bonus credit amounts with 
respect to qualified facilities placed in service after December 31, 
2022, that meet domestic content requirements under section 45(b)(9) 
\2\ or energy community requirements under section 45(b)(11).\3\
---------------------------------------------------------------------------

    \1\ See Notice 2022-61, 2022-52 I.R.B. 560 (Dec. 27, 2022), for 
additional information regarding the prevailing wage and 
apprenticeship requirements.
    \2\ See Notice 2023-38, 2023-22 I.R.B. 872 (May 12, 2023), for 
additional information regarding the domestic content bonus credit.
    \3\ See Notice 2023-45, released in IR-2023-118, for additional 
information regarding the energy community bonus credit.
---------------------------------------------------------------------------

    The IRA amended the phaseout of the section 45 credit for wind 
facilities under section 45(b)(5) such that it does not apply to 
facilities placed in service after December 31, 2021. The IRA also 
added a new phaseout of the section 45 credit under section 45(b)(10) 
in the case of qualified facilities placed in service after December 
31, 2022, for taxpayers making an elective payment election under 
section 6417. The IRA also amended the credit amount reduction under 
section 45(b)(3) in the case of qualified facilities the construction 
of which began after August 16, 2022.
    The IRA amended section 45(d)(4) to restore the section 45 credit 
for electricity produced in solar energy facilities in the case of 
qualified facilities placed in service after December 31, 2021, and the 
construction of which begins before January 1, 2025. Effective for 
facilities placed in service after December 31, 2022, the IRA amended 
the definition of marine and hydrokinetic renewable energy under 
section 45(c)(10) and the definition of a marine and hydrokinetic 
renewable energy facility under section 45(d)(11). The IRA extended 
certain deadlines in the definitions under section 45(d) for wind 
facilities, closed-loop biomass facilities, open-loop biomass 
facilities, geothermal facilities, landfill gas facilities, trash 
facilities, qualified hydropower facilities, and marine and 
hydrokinetic renewable energy facilities.
    Credit Amount for a Qualified Facility Placed in Service before 
January 1, 2022: As required by section 45(b)(2), the 1.5 cent amount 
provided in section 45(a)(1) is adjusted by multiplying such amount by 
the inflation adjustment factor for the calendar year in which the sale 
occurs. If any amount as increased under section 45(b)(2) is not a 
multiple of 0.1 cent, such amount is rounded to the nearest multiple of 
0.1 cent. In the case of electricity produced in open-loop biomass 
facilities, landfill gas facilities, trash facilities, qualified 
hydropower facilities, and marine and hydrokinetic renewable energy 
facilities, section 45(b)(4)(A) requires the amount in effect under 
section 45(a)(1) (before rounding to the nearest 0.1 cent as required 
by section 45(b)(2)) to be reduced by one-half.
    Under the calculation required by section 45(b)(2), the credit for 
renewable electricity production for calendar year 2023 determined 
under section 45(a) is 2.8 cents per kilowatt hour on the sale of 
electricity produced in any qualified facility placed in service before 
January 1, 2022, from the qualified energy resources of wind, closed-
loop biomass, and geothermal energy, and 1.4 cents per kilowatt hour on 
the sale of electricity produced in any qualified facility placed in 
service before January 1, 2022, from the qualified energy resources of 
open-loop biomass, landfill gas, trash, qualified hydropower, and 
marine and hydrokinetic renewable energy.
    Credit Amount for a Qualified Facility Placed in Service after 
December 31, 2021: As required by section 45(b)(2), the 0.3 cent amount 
provided in section 45(a)(1) is adjusted by multiplying such amount by 
the inflation adjustment factor for the calendar year in which the sale 
occurs. If the 0.3 cent amount as adjusted for inflation is not a 
multiple of 0.05 cent, the amount is rounded to the nearest multiple of 
0.05 cent. In the case of electricity produced in open-loop biomass 
facilities, landfill gas facilities, trash facilities, qualified 
hydropower facilities, and marine and hydrokinetic renewable energy 
facilities, section 45(b)(4)(A) requires the amount in effect under 
section 45(a)(1) (determined before rounding as required by section 
45(b)(2)) to be reduced by one-half.
    Under the calculation required by section 45(b)(2), the credit for 
renewable electricity production for calendar year 2023 determined 
under section 45(a) is 0.55 cents per kilowatt hour on the sale of 
electricity produced in any qualified facility placed in service after 
December 31, 2021, from the qualified energy resources of wind, closed-
loop biomass, geothermal energy, and solar energy, and 0.3 cents per 
kilowatt hour on the sale of electricity produced in any qualified 
facility placed in service after December 31, 2021, from the qualified 
energy resources of open-loop biomass, landfill gas, trash, qualified 
hydropower, and marine and hydrokinetic renewable energy.
    Credit Amount for Qualified Hydropower Facilities and Marine and 
Hydrokinetic Renewable Energy Facilities Placed in Service after 
December 31, 2022: Under the calculation required by section 45(b)(2), 
the credit for renewable electricity production for calendar year 2023 
determined under section 45(a) is 0.55 cents per kilowatt hour on the 
sale of electricity produced in any qualified facility placed in 
service after December 31, 2022, from the qualified energy resources of 
qualified hydropower and marine and hydrokinetic renewable energy.

(Authority: 45(e)(2)(A) (26 U.S.C. 45(e)(2)(A)) of the Internal 
Revenue Code.)

Christopher T. Kelley,
Special Counsel to the Associate Chief Counsel (Passthroughs and 
Special Industries).
[FR Doc. 2023-13191 Filed 6-20-23; 8:45 am]
BILLING CODE 4830-01-P