Key Takeaways | Renewables Tax Takeaways from the Manchin-Schumer Deal on Taxes, Climate and Energy

By and on August 2, 2022

On August 1, McDermott Partners Philip Tingle and Heather Cooper hosted a webinar to address the climate bill, dubbed the Inflation Reduction Act of 2022, which unexpectedly came back on the table on July 27. Click here for a summary of the bill.

Below are key takeaways from the presentation:

  • Last week’s surprise Congressional bill incorporates many of the same features we saw in last year’s Build Back Better bill, including an extension of the existing PTC and ITC, to be replaced by a technology-neutral PTC and ITC available for any energy producing projects or storage technology with net zero greenhouse gas emissions. Those new credits would remain in place without phase down until at least 2032.
  • If enacted, taxpayers need to consider how the proposal impacts their pipelines. Taxpayers may no longer need to worry about “begin construction” for purposes of locking in the tax credit phase-down under the current law, but will still need to think about “begin construction” rules vis a vis the new wage and apprentice requirements, and also think about placed-in-service dates for purposes of eligibility for the new domestic content bonus and transferability provisions.
  • The bill doesn’t offer the much-desired direct pay feature for most projects, but offers a transfer optionality that could dramatically change how facilities are financed. Developers will need to consider how the transfer mechanism impacts timing of getting paid for the credits, stranded depreciation, tax basis step-up valuations, and the discount rate for selling the credits, and whether it still makes sense in some cases to bring in tax equity.
  • There are lots of different incentives scattered throughout the bill and market players will need to carefully assess how these incentives may refocus how and where they build projects. For instance, new credits for storage and hydrogen, and significant credit boosts for projects in low-income, coal and other traditional energy communities.
Philip Tingle
Philip (Phil) Tingle represents energy companies such as utilities, independent power producers and financial institutions on a wide range of energy tax-related matters. He is the global head of the Firm's Energy Advisory Practice Group. Phil provides advice regarding all aspects of renewable-energy projects, including tax equity structures, refinancings, acquisitions and dispositions, restructurings and workouts. He has extensive experience with the production tax credit and with the application of renewable credits to new technologies. Moreover, he works with the investment tax credit for numerous kinds of solar projects. Read Philip Tingle's full bio.


Heather Cooper
Heather Cooper works on federal income tax matters, with a focus on energy tax issues. She represents clients in restructurings, mergers and acquisitions, and other transactional energy related matters. Heather's national practice includes advising on all aspects of renewable energy transactions such as solar and wind projects. She provides advice on tax equity structures, refinancings, acquisitions and dispositions, restructurings and workouts. Read Heather Cooper's full bio.

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