The Inflation Reduction Act (IRA) of 2022 has been a huge topic of discussion within the renewable energy industry since it became law in August 2022. It invests close to $370 billion into clean energy technologies, supply chains, and infrastructure to help lower energy costs and expand the use of clean energy all over the US. For commercial and industrial solar installations, many of these tax credits and funding programs are essential to bring project costs down and entice more facilities to adopt solar. Colite Technologies’ off-grid renewable lighting systems are also eligible for these incentives and look great paired with rooftop solar!

Many of the IRA provisions are broadly defined or are new programs that require set up. Therefore, until those provisions are clarified by the Treasury Department, there is no clear process for application or award – making most of the incentives unavailable for current renewable energy projects. This page is intended to be a high-level resource of select pieces of the law relevant to commercial and industrial applications, and to keep up with new updates as guidance is released by the Treasury Department. Click the resource links for more detailed information in each section and consult with your accounting team to understand how the IRA would apply to your business, specifically.

Keep checking back for new information and contact us if you would like to speak to one of our specialists! We’re constantly following new developments in the renewable energy space and are able to help you make sense of all the recent changes.

These two additional blog posts may also be of interest: 


The most valued portion of the Inflation Reduction Act for commercial and industrial solar projects is the business Investment Tax Credit (ITC). The IRA has increased the credit amount to 30% and extended it until 2032 or when energy sector emissions reach 25% of 2022 levels, whichever comes first. At that point, the tax credit will phase down over multiple years. The ITC becomes technology netural, opening it up to a wider variety of clean energy technologies including battery storage, and is now eligible to be transferred and received as a direct payment for certain entities.

The table below shows a summary of the ITC and potential bonus adders if a project meets certain requirements. The bonuses are stackable – meaning if the project meets multiple requirements, you can claim multiple bonuses. This brings the total maximum credit potential to 70%!

ITC table post IRA

Transferability & Direct Pay

Two new features – Credit Transfer and Elective Pay – of the IRA allows more customers to take advantage of various clean energy tax credits. This is especially helpful to non-taxed entities and businesses that may not have a high tax liability achieve the same savings as other taxed businesses.

Both credit transfer and elective pay require pre-filing registration to be completed online. The registration will provide a registration number for each project and that number is required for the tax return submitted to claim the credit.

  • Credit Transfer (referred to as transferability): Allows entities that qualify for a tax credit but are not eligible to use elective pay to transfer all or a portion of the credit to a third-party buyer in exchange for cash. The buyer and seller would negotiate and agree to the terms and pricing.
    • If you are eligible for elective pay, you are not eligible for credit transfer.
    • Cannot transfer credit related solely to a bonus credit. For example, the portion of an eligible tax credit related to the Domestic Context Bonus cannot be transferred separately from the rest of the eligible tax credit.
    • Can transfer credit generated by a single property to multiple unrelated parties. In this case, you only need one registration number for the property – simply give the same number to each party receiving transfer.
    • Both parties must complete a transfer election statement and submit it with their respective tax return(s).
  • Elective Pay (referred to as direct pay): Entities that do not pay federal income taxes are eligible to receive the credit amount as tax refund. Elective pay treats the tax credit as a payment of federal income tax and since the entity does not owe any federal income tax, it is considered an overpayment and is refunded.
    • Eligible entities:
      • Tax exempt organizations – public charities, private foundations, social welfare organizations, labor organizations, religious or apostolic organization
      • State and local governments, US territories and their political subdivisions, agencies and instrumentalities of states or political subdivisions
        • Includes water districts, school districts, economic development agencies, public universities, hospitals, etc.
      • Native American tribal governments
      • Alaska Native Corporations
      • Tennessee Valley Authority
      • Rural electric cooperatives

Starting in 2024, taxpayers choosing elective pay must ensure their project meets domestic content requirements to receive the full incentive amount. If the requirement is not met, the ITC amount will decrease as follows:

  • 2024 – 90% of direct pay amount
  • 2025 – 85% of direct pay amount
  • 2026 and after – 0% of direct pay amount

More Information: 

Prevailing Wage & Apprenticeship

A prevailing wage is the combination of the basic hourly wage rate and any fringe benefits rate, paid to workers in a specific classification of laborer or mechanic in the area where construction, alteration, or repair is performed, as determined by the Secretary of Labor in accordance with subchapter IV of chapter 31 of title 40 of the United States Code, also known as the Davis-Bacon Act.

More information:


Taxpayers must meet all of the following requirements to qualify for the apprenticeship tax bonuses

  • Labor hour requirement: certain number of labor hours, expressed as a percentage of total labor hours, must be performed by qualified apprentices subject to ratio requirements
  • Ratio requirement: numeric ratio of apprentices to journeyworkers, as applicable determined by a Registered Apprenticeship program
  • Participation requirement: taxpayer and any contractors and subcontractors who employ four or more individuals to perform construction, alteration, or repair work must employ at least one qualified apprentice to perform such work

More information:

Domestic Content Bonus Credit

The domestic content bonus credit offers an additional 10% for solar projects that use a certain percentage of manufactured goods that are mined, produced, or manufactured in the United States. Taxpayers must certify that the projects meets the requirements by attaching a Domestic Content Certification Statement to the form submitted for the tax credit.

There are two main criteria for the bonus:

  1. All steel and iron that are structural in function must be US made, and
  2. A percentage of manufactured products must be US made, determined by the adjusted percentage

The adjusted percentage is defined by the Treasury for the following years.

  • If the project begins construction before 2025, 40% of manufactured goods must be domestically made
  • If the project begins construction during 2025, 45% of manufactured goods must be domestically made
  • If the project begins construction during 2026, 50% of manufactured goods must be domestically made
  • If the project begins construction after 2026, 55% of manufactured goods must be domestically made

To determine if a manufactured product is US made, we look at the components and disregard subcomponents. If even one component is non-US made, then the entire product is considered a non-US made manufactured product. However, you are able to receive partial credit for the domestic components within that product.

First, you must calculate the domestic cost percentage. It is important to note that the component costs in the domestic cost percentage calculation only include the direct material and labor costs associated with the component – NOT the sell price.

mathematical formula describing how to calculate the domestic cost percentage of a manufactured product for the investment tax credit domestic content bonus

Then, compare the domestic cost percentage of the project to the applicable adjusted percentage set by the Treasury. If the domestic cost percentage is greater than or equal to the adjusted percentage, then the project qualifies for the domestic content bonus credit. Be sure to include the Domestic Content Certification Statement with the tax form submission.

Additionally, certain components have been categorized by the Treasury. Below are for utility-scale PV systems and battery energy storage technology.

ITC Domestic Content Bonus - utility scale PV component category table
ITC Domestic Content Bonus - battery energy component category table

Energy Communities

The energy community bonus (10%) is available to developers for locating clean energy projects in historical energy communities. Those communities are defined below.

    • Brownfield site
    • Census tract or directly adjoining census tract where a coal mine closed after 1999, or where a coal-fired electric generating unit was retired after 2009
    • Metropolitan statistical area (MSA) or non-MSA that has (or had at any time after 2009)
      • 0.17% or greater direct employment or 25% or greater local tax revenues related to the extraction, processing, transport, or storage of coal, oil, or natural gas; AND
      • has an unemployment rate at or above the national average unemployment rate for the previous year

Treasury and IRS have partnered with the Interagency Working Group on Energy Communities to provide a mapping tool to help identify potentially qualifying energy communities

More information:

    Low-Income Communities Bonus Credit Program

    The Low-Income Communities Bonus Credit program will allocate 1.8 GW of capacity available in 2023 across four categories for solar and wind projects with maximum output of less 5 MW. The bonus credit amount varies by the project category, with categories 1 and 2 receiving 10% and categories 3 and 4 receiving 20%.

    • Category 1: Located in a low-income community (10% bonus)
      • Low-income community defined as any area with a poverty rate for at least 20% or the median family income does not exceed 80% of statewide median family income
      • 700 MW allocation for 2023 – 490MW reserved for residential behind-the-meter (BTM) and remaining 210 MW reserved for front-of-the-meter (FTM) & nonresidential projects
    • Category 2: Located on Native American land (10% bonus)
      • If a project is on Native American land and is also part of category 3 or 4, the project is considered either category 3 or 4 as applicable.
      • 200 MW allocation for 2023
    • Category 3: Qualified Low-Income Residential Building Project (20% bonus)
      • The project is installed on a residential rental building which participates in an affordable housing program and the financial benefits of electricity produced are allocated equitably among the occupants of the building
      • 200 MW allocation for 2023
    • Category 4: Qualified Low-Income Economic Benefit Project (20% bonus)
      • At least 50% of financial benefits of the electricity produced are provided to households with income of less than 200% of the poverty line or less than 80% of area median gross income
      • 700 MW allocation for 2023

    More information:

    Further Resources

    Questions? We have the answers.

    Colite Technologies’ goal is to make the switch to renewable energy as easy as possible. Our experienced team is comfortable navigating through complex industry language and intricate application processes to help you understand what incentives are available and how to leverage them to maximize your savings. We’ve helped customers apply for the ITC, MACRS, REAP grants, and SBA 504 Grow loans – we can work with you to find a program (or programs) for your project! Speak to one of our specialists to discuss a unique strategy for your facility.