Treasury and Internal Revenue Service (IRS) issued guidance (Notice 2023-18) (the Notice) providing general rules for determining the Advanced Energy Project Credit under Sec. 48C. The credit is a competitively awarded investment tax credit for clean energy and energy efficiency manufacturing projects.

Treasury and IRS plan to allocate $4 billion of credits in the first round of allocations, with approximately $1.6 billion of that allocated to projects located in specified energy community census tracts, which fall into three different classes: (1) brownfield sites, (2) locations that meet certain unemployment and tax criteria, and (3) areas that meet certain coal-related qualifications. The remaining credits will be allocated in future rounds.

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