What Is the Investment Tax Credit (ITC)?

The ITC is the workhorse incentive of US solar and storage finance: a credit worth a percentage of a project's capital cost, claimed in the year the project enters service. The IRA set the base at 30% for projects meeting prevailing-wage and apprenticeship requirements, with bonus 'adders' for domestic content, energy-community siting, and low-income service that can push the total meaningfully higher. Standalone storage became ITC-eligible for the first time under the IRA.

Because most developers lack the tax bill to absorb the credit, an entire tax-equity financing industry exists to monetize it — joined since the IRA by transferability, which lets developers sell credits for cash. Deadlines, phase-downs, and safe-harbor rules around the ITC drive real construction behavior: qualifying-in-time regularly decides whether marginal projects get built.