SE Engr. Solar Policy, Economics, and Sustainability 3 — Questions and Answers
Question 1: Under the Inflation Reduction Act structure, a project meeting prevailing wage and apprenticeship requirements multiplies its base ITC rate by what factor?
- 2
- 10
- 5 (Correct answer)
- 3
Correct answer: 5
The 6% base credit is multiplied by five, to 30%, when the labor requirements are met.
Question 2: How much does the domestic content bonus generally add to an IRA-era ITC for a project that meets the labor requirements?
- 10 percentage points (Correct answer)
- 20 percentage points
- 5 percentage points
- 2 percentage points
Correct answer: 10 percentage points
The domestic content adder is 10 percentage points for projects meeting the labor requirements, or 2 points otherwise.
Question 3: What does IRA 'transferability' allow a solar project owner to do?
- Carry credits back 20 years
- Convert the ITC into a grant from DOE
- Sell eligible tax credits to an unrelated taxpayer for cash (Correct answer)
- Move a credit from one project to another
Correct answer: Sell eligible tax credits to an unrelated taxpayer for cash
Section 6418 lets eligible taxpayers sell credits to unrelated buyers, usually at a discount.
Question 4: Which entity can typically use IRA 'elective (direct) pay' to receive solar credits as a cash payment?
- A residential homeowner with no tax liability
- Any for-profit C-corporation
- A foreign-owned developer
- A municipal utility or other tax-exempt entity (Correct answer)
Correct answer: A municipal utility or other tax-exempt entity
Direct pay is mainly for tax-exempt entities such as governments, tribes, and nonprofits.
Question 5: Under a typical state renewable portfolio standard (RPS), what do compliance entities usually retire to show compliance?
- Federal tax credit certificates
- Capacity tags
- Carbon offset credits
- Renewable energy certificates (RECs) (Correct answer)
Correct answer: Renewable energy certificates (RECs)
Each REC represents 1 MWh of renewable generation, and utilities retire RECs to meet RPS obligations.
Question 6: A solar REC (SREC) is created for each unit of solar generation. What is that unit?
- 1 MW of capacity
- 1 kWh
- 1 MWh (Correct answer)
- 1 GWh
Correct answer: 1 MWh
One SREC is issued for each megawatt-hour of solar electricity generated.
Question 7: Which financing mechanism lets a property owner repay solar costs through a special assessment on their property tax bill?
- Third-party PPA
- Green bond
- Solar lease
- PACE financing (Correct answer)
Correct answer: PACE financing
Property Assessed Clean Energy (PACE) loans are secured and repaid through property tax assessments.
SE Engr. Solar Policy, Economics, and Sustainability 3
Under the Inflation Reduction Act structure, a project meeting prevailing wage and apprenticeship requirements multiplies its base ITC rate by what factor?