Energy Policy Updates for 2023
America’s energy sector is undergoing the largest transformation since the automobile. Changes at both the state and federal level are offering generational opportunities and billions in incentives for farms and businesses. Here we will summarize the recent developments and dates of note.
Federal
At the federal level, the Inflation Reduction Act of 2022 (IRA) approved by Congress raised the ITC to 30% along with new adders of up to 10% each for projects that meet American made domestic content requirements or are located in an energy community located near a coal power plant.
Projects greater than 1 MW may be eligible to receive 30% ITC if the project pays workers prevailing rates during construction. Projects that do not meet prevailing wage requirements are still eligible for tax credit but at only 6%. Non-prevailing wage projects are also eligible for domestic content and energy community adders but at 2%. Projects greater than 1 MW have until January 30th to utilize safe harbor, receive 30% ITC, and avoid prevailing wage.
California
California Public Utilities Commission voted on December 18th to overhaul the state's NEM program. Power exported will no longer receive full retail credit and instead be credited at what’s called the Avoided Cost Calculator (ACC), which averages about 5 cents PG&E and SCE. The reduction in export value will impact all new NEM customers submitting applications after April 13th, 2023. Customers that already have gone solar on NEM 1 or NEM 2 have 20 years after they went online before changes impact them. New project applications after April 13th will receive 9 years of grandfathering protection versus 20.
Governor Newsom also signed AB2143, which mandates all commercial, ag and non-profit projects beginning January 1, 2024 must be built with workers receiving prevailing wage.
Also beginning in 2023, California building code now requires all nonresidential building projects to have solar and/or storage.
JKB Energy is working hard to ensure your project receives maximum federal tax credits and incentives. We encourage you to contact us early in your building project and will assist you in compliance and documentation.