The Section 45Y Clean Electricity Production Credit is a technology-neutral production tax credit (PTC) added to the U.S. Internal Revenue Code by the Inflation Reduction Act (IRA) of 2022. It replaces the long-standing Section 45 PTC for facilities placed in service after December 31, 2024, and pays a per-kilowatt-hour credit for electricity produced and sold from any generating facility whose greenhouse gas emissions rate is not greater than zero.
Unlike the legacy Section 45, which enumerated eligible technologies (wind, geothermal, certain biomass, etc.), 45Y is technology-neutral: any qualifying zero-emissions source — wind, solar, hydropower, nuclear (including new and uprated capacity), geothermal, marine and hydrokinetic, and certain waste-energy recovery — can claim it, provided the emissions test is met. The Treasury and IRS publish an annual list of qualifying technologies and emissions rates.
The base credit is 0.3 cents per kWh (inflation-adjusted), rising to a bonus rate of 1.5 cents per kWh (also inflation-adjusted) if the facility meets prevailing wage and registered apprenticeship requirements, or if it is under 1 MW. Additional 10% bonus adders apply for projects meeting domestic content rules or sited in energy communities (e.g., former coal areas). The credit runs for 10 years from a facility's placed-in-service date.
45Y is designed to phase out once U.S. power-sector emissions fall to 25% or less of 2022 levels, or in 2032 — whichever is later — with a three-year ramp-down. It is paired with Section 48E, the parallel technology-neutral investment tax credit.
The credit is also notable for its transferability (Section 6418) and direct-pay (Section 6417) provisions, allowing developers without sufficient tax liability — including tax-exempt entities, states, and tribes — to monetize it. Final Treasury regulations were issued in January 2025. The credit has become a central element of U.S. climate policy and a frequent target of subsequent legislative debate.
Example
In 2025, a utility-scale solar developer in New Mexico structured its financing around the Section 45Y credit, selling the credits to a corporate buyer under the IRA's transferability rules to fund construction.
Frequently asked questions
Section 45 listed specific eligible technologies; 45Y is technology-neutral and applies to any facility with zero or negative greenhouse gas emissions placed in service after December 31, 2024.
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