EXTENSION AND MODIFICATION OF ENERGY CREDIT.

SEC. 13102. EXTENSION AND MODIFICATION OF ENERGY CREDIT.(a) Extension of Credit.—The following provisions of section 48 are each amended by striking “January 1, 2024” each place it appears and inserting “January 1, 2025”:(1) Subsection (a)(2)(A)(i)(II). (2) Subsection (a)(3)(A)(ii).136 STAT. 1914 (3) Subsection (c)(1)(D). (4) Subsection (c)(2)(D). (5) Subsection (c)(3)(A)(iv). (6) Subsection (c)(4)(C). (7) Subsection (c)(5)(D). (b) Further Extension for Certain Energy Property.—Section 48(a)(3)(A)(vii) is amended by striking “January 1, 2024” and inserting “January 1, 2035”. (c) Phaseout of Credit.—Section 48(a) is amended by striking paragraphs (6) and (7) and inserting the following new paragraph:“(6) Phaseout for certain energy property.—In the case of any qualified fuel cell property, qualified small wind property, or energy property described in clause (i) or clause (ii) of paragraph (3)(A) the construction of which begins after December 31, 2019, and which is placed in service before January 1, 2022, the energy percentage determined under paragraph (2) shall be equal to 26 percent.” . (d) Base Energy Percentage Amount; Phaseout of Certain Energy Property.—(1) Base energy percentage amount.—Section 48(a) is amended—(A) in paragraph (2)(A)—(i) in clause (i), by striking “30 percent” and inserting “6 percent”, and (ii) in clause (ii), by striking “10 percent” and inserting “2 percent”, and (B) in paragraph (5)(A)(ii), by striking “30 percent” and inserting “6 percent”. (2) Phaseout of certain energy property.—Section 48(a), as amended by the preceding provisions of this Act, is amended by adding at the end the following new paragraph:“(7) Phaseout for certain energy property.—In the case of any energy property described in clause (vii) of paragraph (3)(A), the energy percentage determined under paragraph (2) shall be equal to—“(A) in the case of any property the construction of which begins before January 1, 2033, and which is placed in service after December 31, 2021, 6 percent, “(B) in the case of any property the construction of which begins after December 31, 2032, and before January 1, 2034, 5.2 percent, and “(C) in the case of any property the construction of which begins after December 31, 2033, and before January 1, 2035, 4.4 percent.” . (e) 6 Percent Credit for Geothermal.—Section 48(a)(2)(A)(i)(II) is amended by striking “paragraph (3)(A)(i)” and inserting “clause (i) or (iii) of paragraph (3)(A)”. (f) Energy Storage Technologies; Qualified Biogas Property; Microgrid Controllers; Extension of Other Property.—(1) In general.—Section 48(a)(3)(A) is amended by striking “or” at the end of clause (vii), and by adding at the end the following new clauses:“(ix) energy storage technology, “(x) qualified biogas property, or “(xi) microgrid controllers,” .136 STAT. 1915 (2) Application of 6 percent credit.—Section 48(a)(2)(A)(i) is amended by striking “and” at the end of subclauses (IV) and (V) and adding at the end the following new subclauses:“(VI) energy storage technology, “(VII) qualified biogas property, “(VIII) microgrid controllers, and “(IX) energy property described in clauses (v) and (vii) of paragraph (3)(A), and” . (3) Definitions.—Section 48(c) is amended by adding at the end the following new paragraphs:“(6) Energy storage technology.—“(A) In general.—The term ‘energy storage technology’ means—“(i) property (other than property primarily used in the transportation of goods or individuals and not for the production of electricity) which receives, stores, and delivers energy for conversion to electricity (or, in the case of hydrogen, which stores energy), and has a nameplate capacity of not less than 5 kilowatt hours, and “(ii) thermal energy storage property. “(B) Modifications of certain property.—In the case of any property which either—“(i) was placed in service before the date of enactment of this section and would be described in subparagraph (A)(i), except that such property has a capacity of less than 5 kilowatt hours and is modified in a manner that such property (after such modification) has a nameplate capacity of not less than 5 kilowatt hours, or “(ii) is described in subparagraph (A)(i) and is modified in a manner that such property (after such modification) has an increase in nameplate capacity of not less than 5 kilowatt hours, such property shall be treated as described in subparagraph (A)(i) except that the basis of any existing property prior to such modification shall not be taken into account for purposes of this section. In the case of any property to which this subparagraph applies, subparagraph (D) shall be applied by substituting ‘modification’ for ‘construction’. “(C) Thermal energy storage property.—“(i) In general.—Subject to clause (ii), for purposes of this paragraph, the term ‘thermal energy storage property’ means property comprising a system which—“(I) is directly connected to a heating, ventilation, or air conditioning system, “(II) removes heat from, or adds heat to, a storage medium for subsequent use, and “(III) provides energy for the heating or cooling of the interior of a residential or commercial building. “(ii) Exclusion.—The term ‘thermal energy storage property’ shall not include—“(I) a swimming pool,136 STAT. 1916 “(II) combined heat and power system property, or “(III) a building or its structural components. “(D) Termination.—The term ‘energy storage technology’ shall not include any property the construction of which begins after December 31, 2024. “(7) Qualified biogas property.—“(A) In general.—The term ‘qualified biogas property’ means property comprising a system which—“(i) converts biomass (as defined in section 45K(c)(3), as in effect on the date of enactment of this paragraph) into a gas which—“(I) consists of not less than 52 percent methane by volume, or “(II) is concentrated by such system into a gas which consists of not less than 52 percent methane, and “(ii) captures such gas for sale or productive use, and not for disposal via combustion. “(B) Inclusion of cleaning and conditioning property.—The term ‘qualified biogas property’ includes any property which is part of such system which cleans or conditions such gas. “(C) Termination.—The term ‘qualified biogas property’ shall not include any property the construction of which begins after December 31, 2024. “(8) Microgrid controller.—“(A) In general.—The term ‘microgrid controller’ means equipment which is—“(i) part of a qualified microgrid, and “(ii) designed and used to monitor and control the energy resources and loads on such microgrid. “(B) Qualified microgrid.—The term ‘qualified microgrid’ means an electrical system which—“(i) includes equipment which is capable of generating not less than 4 kilowatts and not greater than 20 megawatts of electricity, “(ii) is capable of operating—“(I) in connection with the electrical grid and as a single controllable entity with respect to such grid, and “(II) independently (and disconnected) from such grid, and “(iii) is not part of a bulk-power system (as defined in section 215 of the Federal Power Act (16 U.S.C. 824o)). “(C) Termination.—The term ‘microgrid controller’ shall not include any property the construction of which begins after December 31, 2024.” . (4) Denial of double benefit for qualified biogas property.—Section 45(e) is amended by adding at the end the following new paragraph:“(12) Coordination with energy credit for qualified biogas property.—The term ‘qualified facility’ shall not include any facility which produces electricity from gas produced by qualified biogas property (as defined in section 48(c)(7)) if a 136 STAT. 1917 credit is allowed under section 48 with respect to such property for the taxable year or any prior taxable year.” . (5) Public utility property.—Paragraph (2) of section 50(d) is amended—(A) by adding after the first sentence the following new sentence: “At the election of a taxpayer, this paragraph shall not apply to any energy storage technology (as defined in section 48(c)(6)), provided—”, and (B) by adding the following new subparagraphs:“(A) no election under this paragraph shall be permitted if the making of such election is prohibited by a State or political subdivision thereof, by any agency or instrumentality of the United States, or by a public service or public utility commission or other similar body of any State or political subdivision that regulates public utilities as described in section 7701(a)(33)(A), “(B) an election under this paragraph shall be made separately with respect to each energy storage technology by the due date (including extensions) of the Federal tax return for the taxable year in which the energy storage technology is placed in service by the taxpayer, and once made, may be revoked only with the consent of the Secretary, and “(C) an election shall not apply with respect to any energy storage technology if such energy storage technology has a maximum capacity equal to or less than 500 kilowatt hours.” . (g) Fuel Cells Using Electromechanical Processes.—(1) In general.—Section 48(c)(1) is amended—(A) in subparagraph (A)(i)—(i) by inserting “or electromechanical” after “electrochemical”, and (ii) by inserting “(1 kilowatt in the case of a fuel cell power plant with a linear generator assembly)” after “0.5 kilowatt”, and (B) in subparagraph (C)—(i) by inserting “, or linear generator assembly,” after “a fuel cell stack assembly”, and (ii) by inserting “or electromechanical” after “electrochemical”. (2) Linear generator assembly limitation.—Section 48(c)(1) is amended by redesignating subparagraph (D) as subparagraph (E) and by inserting after subparagraph (C) the following new subparagraph:“(D) Linear generator assembly.—The term ‘linear generator assembly’ does not include any assembly which contains rotating parts.” . (h) Dynamic Glass.—Section 48(a)(3)(A)(ii) is amended by inserting “, or electrochromic glass which uses electricity to change its light transmittance properties in order to heat or cool a structure,” after “sunlight”. (i) Coordination With Low Income Housing Tax Credit.—Paragraph (3) of section 50(c) is amended—(1) by striking “and” at the end of subparagraph (A), (2) by striking the period at the end of subparagraph (B) and inserting “, and”, and (3) by adding at the end the following new subparagraph:136 STAT. 1918 “(C) paragraph (1) shall not apply for purposes of determining eligible basis under section 42.” . (j) Interconnection Property.—Section 48(a), as amended by the preceding provisions of this Act, is amended by adding at the end the following new paragraph:“(8) Interconnection property.—“(A) In general.—For purposes of determining the credit under subsection (a), energy property shall include amounts paid or incurred by the taxpayer for qualified interconnection property in connection with the installation of energy property (as defined in paragraph (3)) which has a maximum net output of not greater than 5 megawatts (as measured in alternating current), to provide for the transmission or distribution of the electricity produced or stored by such property, and which are properly chargeable to the capital account of the taxpayer. “(B) Qualified interconnection property.—The term ‘qualified interconnection property’ means, with respect to an energy project which is not a microgrid controller, any tangible property—“(i) which is part of an addition, modification, or upgrade to a transmission or distribution system which is required at or beyond the point at which the energy project interconnects to such transmission or distribution system in order to accommodate such interconnection, “(ii) either—“(I) which is constructed, reconstructed, or erected by the taxpayer, or “(II) for which the cost with respect to the construction, reconstruction, or erection of such property is paid or incurred by such taxpayer, and “(iii) the original use of which, pursuant to an interconnection agreement, commences with a utility. “(C) Interconnection agreement.—The term ‘interconnection agreement’ means an agreement with a utility for the purposes of interconnecting the energy property owned by such taxpayer to the transmission or distribution system of such utility. “(D) Utility.—For purposes of this paragraph, the term ‘utility’ means the owner or operator of an electrical transmission or distribution system which is subject to the regulatory authority of a State or political subdivision thereof, any agency or instrumentality of the United States, a public service or public utility commission or other similar body of any State or political subdivision thereof, or the governing or ratemaking body of an electric cooperative. “(E) Special rule for interconnection property.—In the case of expenses paid or incurred for interconnection property, amounts otherwise chargeable to capital account with respect to such expenses shall be reduced under rules similar to the rules of section 50(c).” . (k) Energy Projects, Wage Requirements, and Apprenticeship Requirements.—Section 48(a), as amended by the preceding provisions of this Act, is amended by adding at the end the following new paragraphs:136 STAT. 1919 “(9) Increased credit amount for energy projects.—“(A) In general.—“(i) Rule.—In the case of any energy project which satisfies the requirements of subparagraph (B), the amount of the credit determined under this subsection (determined after the application of paragraphs (1) through (8) and without regard to this clause) shall be equal to such amount multiplied by 5. “(ii) Energy project defined.—For purposes of this subsection, the term ‘energy project’ means a project consisting of one or more energy properties that are part of a single project. “(B) Project requirements.—A project meets the requirements of this subparagraph if it is one of the following:“(i) A project with a maximum net output of less than 1 megawatt of electrical (as measured in alternating current) or thermal energy. “(ii) A project the construction of which begins before the date that is 60 days after the Secretary publishes guidance with respect to the requirements of paragraphs (10)(A) and (11). “(iii) A project which satisfies the requirements of paragraphs (10)(A) and (11). “(10) Prevailing wage requirements.—“(A) In general.—The requirements described in this subparagraph with respect to any energy project are that the taxpayer shall ensure that any laborers and mechanics employed by the taxpayer or any contractor or subcontractor in—“(i) the construction of such energy project, and “(ii) for the 5-year period beginning on the date such project is originally placed in service, the alteration or repair of such project, shall be paid wages at rates not less than the prevailing rates for construction, alteration, or repair of a similar character in the locality in which such project is located as most recently determined by the Secretary of Labor, in accordance with subchapter IV of chapter 31 of title 40, United States Code. Subject to subparagraph (C), for purposes of any determination under paragraph (9)(A)(i) for the taxable year in which the energy project is placed in service, the taxpayer shall be deemed to satisfy the requirement under clause (ii) at the time such project is placed in service. “(B) Correction and penalty related to failure to satisfy wage requirements.—Rules similar to the rules of section 45(b)(7)(B) shall apply. “(C) Recapture.—The Secretary shall, by regulations or other guidance, provide for recapturing the benefit of any increase in the credit allowed under this subsection by reason of this paragraph with respect to any project which does not satisfy the requirements under subparagraph (A) (after application of subparagraph (B)) for the period described in clause (ii) of subparagraph (A) (but which does not cease to be investment credit property within the meaning of section 50(a)). The period and 136 STAT. 1920 percentage of such recapture shall be determined under rules similar to the rules of section 50(a). “(11) Apprenticeship requirements.—Rules similar to the rules of section 45(b)(8) shall apply.” . (l) Domestic Content; Phaseout for Elective Payment.—Section 48(a), as amended by the preceding provisions of this Act, is amended by adding at the end the following new paragraphs:“(12) Domestic content bonus credit amount.—“(A) In general.—In the case of any energy project which satisfies the requirement under subparagraph (B), for purposes of applying paragraph (2) with respect to such property, the energy percentage shall be increased by the applicable credit rate increase. “(B) Requirement.—Rules similar to the rules of section 45(b)(9)(B) shall apply. “(C) Applicable credit rate increase.—For purposes of subparagraph (A), the applicable credit rate increase shall be—“(i) in the case of an energy project which does not satisfy the requirements of paragraph (9)(B), 2 percentage points, and “(ii) in the case of an energy project which satisfies the requirements of paragraph (9)(B), 10 percentage points. “(13) Phaseout for elective payment.—In the case of a taxpayer making an election under section 6417 with respect to a credit under this section, rules similar to the rules of section 45(b)(10) shall apply.” . (m) Special Rule for Property Financed by Tax-exempt Bonds.—Section 48(a)(4) is amended to read as follows:“(4) Special rule for property financed by tax-exempt bonds.—Rules similar to the rule under section 45(b)(3) shall apply for purposes of this section.” . (n) Treatment of Certain Contracts Involving Energy Storage.—Section 7701(e) is amended—(1) in paragraph (3)—(A) in subparagraph (A)(i), by striking “or” at the end of subclause (II), by striking “and” at the end of subclause (III) and inserting “or”, and by adding at the end the following new subclause:“(IV) the operation of a storage facility, and” , and (B) by adding at the end the following new subparagraph:“(F) Storage facility.—For purposes of subparagraph (A), the term ‘storage facility’ means a facility which uses energy storage technology within the meaning of section 48(c)(6).” , and (2) in paragraph (4), by striking “or water treatment works facility” and inserting “water treatment works facility, or storage facility”. (o) Increase in Credit Rate for Energy Communities.—Section 48(a), as amended by the preceding provisions of this Act, is amended by adding at the end the following new paragraph:“(14) Increase in credit rate for energy communities.—136 STAT. 1921 “(A) In general.—In the case of any energy project that is placed in service within an energy community (as defined in section 45(b)(11)(B), as applied by substituting ‘energy project’ for ‘qualified facility’ each place it appears), for purposes of applying paragraph (2) with respect to energy property which is part of such project, the energy percentage shall be increased by the applicable credit rate increase. “(B) Applicable credit rate increase.—For purposes of subparagraph (A), the applicable credit rate increase shall be equal to—“(i) in the case of any energy project which does not satisfy the requirements of paragraph (9)(B), 2 percentage points, and “(ii) in the case of any energy project which satisfies the requirements of paragraph (9)(B), 10 percentage points.” . (p) Regulations.—Section 48(a), as amended by the preceding provisions of this Act, is amended by adding at the end the following new paragraph:“(15) Regulations and guidance.—The Secretary shall issue such regulations or other guidance as the Secretary determines necessary to carry out the purposes of this subsection, including regulations or other guidance which provides for requirements for recordkeeping or information reporting for purposes of administering the requirements of this subsection.” . (q) Effective Dates.—(1) In general.—Except as provided in paragraphs (2) and (3), the amendments made by this section shall apply to property placed in service after December 31, 2021. (2) Other property.—The amendments made by subsections (f), (g), (h), (i), (j), (l), (n), and (o) shall apply to property placed in service after December 31, 2022. (3) Special rule for property financed by tax-exempt bonds.—The amendments made by subsection (m) shall apply to property the construction of which begins after the date of enactment of this Act.