IRC §48C ADVANCED ENERGY PROPERTY CREDIT ALLOCATIONS AND IRS CERTIFICATION PROCESS AFTER OBBB
Tri-Merit
Sr. Director, Renewable Energy Tax Credits
Overview
The recently enacted Budget Reconciliation Bill of 2025 (commonly called the “One Big Beautiful Bill”) included a little-noticed change that applies to the program for recipients of an investment tax credit allocation for an IRC §48C Qualifying Advanced Energy Project. The change affects the pool of $10 billion in credits authorized for this purpose.
Under the original IRA version of the 48C program, there is one important condition to receiving the credit. This requirement is that the taxpayer’s project must receive IRS certification of compliance with all conditions within 2 years of receiving the awarded allocation. This certification would be granted after the taxpayer submits substantiating documentation to DOE and IRS for review. Round 1 recipients would presumably have until March 29, 2026, and Round 2 recipients would likewise have until January 10, 2027, to meet the certification requirements. Under the original IRA provisions, if a taxpayer failed to obtain this certification, the award would have been returned to the $10 billion pool for reallocation. If a project is certified by IRS the taxpayer then has another 2 years from the date of certification to place the project into service.
One Big Beautiful Bill and 48C
The 48C reallocation rule changed with the enactment of the One Big Beautiful Bill, effective July 4, 2025, with the addition of just one word, “not,” to the original statute. An allocation award that the recipient fails to obtain certification for by the respective date for their round will now expire. Therefore, failure to obtain certification will not result in the allocation being returned to the 48C credit pool, and it will not be available for future awards. The significance to award recipients who have not yet certified their project is that it could be subject to lapse if DOE and IRS are not satisfied that all conditions have been met by the respective deadline.
Effectively, the worst-case scenario is that there may be a risk of awards under the 48C program being canceled if the necessary certification requirements are not met. This risk is particularly acute for projects that may not fully align with the current administration’s priorities.
Taxpayers should be aware of this possibility and pay particular attention to the requirements and obligations they have to perform, collect, and deliver the substantiation to support their awards. Starting sooner is better. A few areas of elevated concern in the certification process are related to compliance with the Prevailing Wage & Apprenticeship rules and ensuring that no significant changes have occurred to the project following the filing of the Concept Paper and Application. There are remediation procedures available for either situation, and so knowing of any issues in advance is something a taxpayer will want to be apprised of as early in the process as possible to give adequate time to address any issues or potential problems.
Certification Requirements and Process
Certification would not be expected to be a problem if your project meets the material submissions at the previous Concept Paper and Application stages. In addition to significant changes or PWA issues, other areas of concern include obtaining permits to commence construction, providing documents to support metrics and production capacity, job creation, reducing GHG emissions, and the overall commercial viability of the project, as per the Application.
Allocation Awardees will get detailed submission requirements delivered through the 48C portal when you initiate the Certification process. This is the process as detailed in the DOE 48C Applicant User Guide. In addition to the DOE User Guide, the certification and remedy process is detailed in IRS Notice 2023-44 and Appendix B, as well as Notice 2024-36 and Appendix B.
Tri-Merit Can Help
Tri-Merit provides project management and advisory services to 48C Awardees. One of our Energy Credit experts will be happy to consult with you at no charge to help your company evaluate this issue and assess your certification progress to date. Our project management team can also assist and fully support your certification, validation, and credit transfer process if that is part of your overall plan.
