Securing Investment Tax Credits For Biogas Projects Before Year End
Biogas developers looking to take advantage of the investment tax credits (ITCs) for their “qualified biogas property” under Section 48 of the Internal Revenue Code may only have until the end of 2024 to do so. Existing ITCs were extended and expanded with the Inflation Reduction Act of 2022, including the addition of “qualified biogas property” for certain property used in the conversion of biomass into methane. The taxpaying entity could potentially qualify for a base ITC of 6%, subject to increases for smaller projects with a maximum net output less than 1 megawatt of electrical or thermal energy, or projects that satisfy the prevailing wage and apprenticeship requirements, domestic content requirements or are placed in service within an energy community. With all of the bonus credits, a taxpayer could potentially increase the ITC rate to 50%.