We are beginning to see projects that produce hydrogen, so it would seem timely to provide our view on the IRS guidance. The IRS released proposed guidance on 12/22/23 regarding tax credits for the production of qualified clean hydrogen.

Section 45V provides that the term ‘‘qualified clean hydrogen production facility’’ means a facility means hydrogen that is produced through a process that results in a lifecycle GHG emissions rate of not greater than 4 kilograms of CO2e per kilogram of hydrogen and produced in the United States or a United States territory. A qualified clean hydrogen production facility must meet the prevailing wage and apprenticeship requirements of sections 45V(e).
Our interpretation of the complex regulations provides three main take-home messages:

1. The regulations are complex and dense, far more so than solar or wind power generation projects. Any developer contemplating a hydrogen project must undertake a detailed line-by-line analysis to determine if their project fulfills the requirements of the regulations.
2. The clearest path to compliance is to generate hydrogen via electrolysis powered by new sources of solar energy. It is not acceptable to take current solar projects off the grid and convert them to hydrogen production.
3. The use of landfill gas, and possibly other sources of methane captured to prevent leakage into the atmosphere, may be eligible for tax credits but the regulations are still being formulated. Traditional natural gas will not be supported as a source of hydrogen.

The guidance is complex and requires the developer’s insightful analysis before beginning the project to determine if assumptions meet IRS requirements. For the press summary of the guidance, please click here » GO.

For the full proposed guidance outlined, please click here » GO.

We have a long history in energy project finance and are experienced in securing financing for engineered systems. We believe that there are multiple market applications for commercial & industrial-scale hydrogen projects and we are prepared to work with you to bring such projects to completion.

We are aggressively seeking to finance or acquire 1Q 2024 NTP and COD projects, either individually or preferably a portfolio of projects for:

1. School, University, and not-for-profit host solar/BESS projects: 250 kW and greater.
2. Municipal or small utility solar/BESS projects: 250 kW - 20MW with signed PPAs and completed interconnect agreements.
3. C & I solar/BESS projects: 250 kW and greater.
4. Utility-scale projects: 20MW or larger with signed PPAs and completed interconnect agreements.
5. Solar thermal projects for hot water supply.
6. Distributed hydrogen projects.

If needed, we can work with you to finish developing the project(s) and use your EPC or we can provide one to assure compliance with the labor requirements of the Inflation Reduction Act.