November 5, 2024

Maximizing Benefits from Clean Energy Tax Credits: A Guide for Commercial Building Owners

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4 Min. Read

Major changes are coming to clean energy incentives for commercial building electrification, offering incredible savings on electrification projects. As of January 1st, 2025, two new tax credits will take effect for commercial facilities that begin construction or are placed in service.

These new clean energy tax credits, Section 48E and Section 45Y, will replace existing programs and initiatives, maximizing incentives while establishing clear energy-efficient standards for commercial buildings.

In this article, we’ll explore these new clean energy tax credits for commercial building electrification as well as discuss their impact on commercial properties interested in making improvements.

Understanding the New Clean Energy Credits for 2025

Section 48E

The Section 48E credit replaces tax incentives for investments in renewable energy, previously established under the Section 13102 credit.

The 6% base credit covers investments in solar, geothermal, small wind, energy storage, microgrid controllers, and other energy-efficient technologies. Bonus credits are also available.

Facilities meeting prevailing wage and registered apprenticeship requirements can appreciate a 5-times increase to this base credit.

Additionally, the base credit is increased by up to 10 percentage points for facilities meeting specified requirements on domestic content for steel, iron, and manufactured products.

Properties located in an energy community can also receive up to a 10 percentage point increase.

More information on additional bonus credits can be found here.

Section 45Y

For commercial facilities that produce clean energy, the Section 45Y Credit replaces the previous Section 45 credit with a base deduction of $0.003 per kWh of clean energy produced.

Commercial entities can qualify for higher credits based on the location of their community and can receive up to 5 times the base credit if they also meet wage and apprenticeship requirements, as follows:

  • Pay laborers and mechanics employed in construction, alteration, or repair no less than the applicable prevailing wage rates
  • Employ apprentices from registered apprenticeship programs for a certain number of hours

Even if these requirements are not met, other exceptions to qualify for this 5-times increase may apply:

  • Certain small facilities that produce clean energy under 1 megawatt
  • Facilities that began construction before Jan. 29, 2023

While meeting these standards can help eligible commercial properties increase their benefit, they must also follow specific recordkeeping requirements to claim these increased benefit amounts.

Existing Clean Energy Tax Credits

Commercial properties can continue taking advantage of existing tax credits, including the Energy Efficient Commercial Building Retrofit Property (EECBRP) and the Energy Efficient Commercial Building Property (EECBP) credits. These credits both offer a per-square-foot deduction based on energy savings directly resulting from improvements to HVAC systems, lighting, building envelopes, and more.

Additionally, the Alternative Fuel Vehicle Refueling Property Credit provides a 6% to 30% credit to help offset the cost of commercial EV charger installation.

How Do These Incentives Affect Commercial Buildings?

These new clean energy incentives will help reduce both initial and ongoing operational costs of commercial building electrification projects, making clean energy and energy independence more accessible

At a broader level, these credits set a standard for building electrification and energy efficiency, such as the EECBRP and EECBP credits, which are structured with increasing per-square-foot deductions based on achieving established performance thresholds.

These incentives also support and reward businesses that are already prioritizing environmental, social, and governance (ESG) goals, as well as consumers making sustainable choices.

The range of electrification technologies covered by these credits is noteworthy. Rather than rewarding businesses for adopting a single solution, savings can accumulate and help businesses offset the cost of investing in solar energy and battery storage to achieve energy independence or even generate solar energy to power workplace EV charging infrastructure.

These new tax credits mark another step toward a resilient energy future where commercial buildings function as energy producers rather than just consumers. They also encourage commercial building managers to take a proactive approach to electrification, enabling them to plan projects that stay ahead of the competition and secure partnerships with electrification contractors before demand rises even further.

Plan Your Commercial Building Electrification Project with Qmerit

With the 48E and 45Y credits set to take effect at the end of the year, taking advantage of electrification trends and implementing energy-efficient technologies and practices are more accessible than ever for commercial buildings.

As these new credits will continue to increase the demand for qualified electrification contractors, now is the perfect time to start planning projects and establishing critical partnerships as you join the energy transition and emerge as a local sustainability and technology leader in your community and industry. Qmerit can help.

As the largest and most experienced EV charger installation network in North America, Qmerit’s extensive network of qualified electrical contractors has the experience and knowledge to simplify your electrification project and streamline your energy solutions. Our dedicated team of professionals can take the heavy lifting out of selecting your technology and budgeting your projects and will help you manage the transition from start to finish to mitigate risks all along the way and ensure your installation is seamless, safe, efficient, and completed on time.

Financial incentives at the state, utility, and federal levels are evolving all the time. With years of experience navigating the available incentives and evolving requirements for qualifications, we have the expertise to help you receive every benefit you are entitled to, without the stress.

With over 450,000 EV charging stations installed, more than 81,000 solar systems integrated, and 37,000 battery storage installed, the Qmerit Installer Network leads North America in electrification. Our team is here to help you navigate all your energy transition needs.

Learn more about our turnkey solutions for Commercial Electrification Services or give us a call at (888) 272-0090 to see why we’re North America’s most trusted electrification service provider.