by Connor Carroll
The prevailing wage and apprenticeship (PWA) requirements were introduced as part of the Inflation Reduction Act (IRA) of 2022 to incentivize clean energy projects and job creation in the US. PWA are conditions that can enhance the value of clean energy tax credits within the IRA. The 45Q Carbon Capture and 45V Hydrogen tax credit sections of the IRA include PWA incentives that multiply the original credit value up to 5x if the appropriate conditions are met (2).
PWA requirements can be broken down into two separate parts:
A. Prevailing wage requirements must be met for any laborer or mechanic that is employed during construction or employed to operate equipment tied to credit generation. The hourly wage requirements are dependent on the type of work performed and the location of the facility and/or equipment. The Secretary of Labor determines the prevailing wages in accordance with subchapter IV of chapter 31 of title 40 of the US code (1). Entities can use SAM.gov to look up the prevailing wage requirements for their area, a user guide to help navigate this website has been published here by the Department of Labor.
B. Apprenticeship requirements can be found in Title 26 section 45(b)(8) of the US Code. This section states that qualified apprentices must be used to meet between 10 and 15 percent of the total labor hours for construction, alteration, or repairs (3). The required percentage is dependent on the year construction commences, see table below (3).
The apprenticeship requirements extend beyond the project team to contractors and subcontractors, which must employ at least one qualified apprentice if they have four or more employees working on project construction (3).
Entities claiming to meet the PWA requirements will have to submit information annually. This annual attestation may include wages paid and hours worked for laborer and mechanic classifications, labor hours for classified apprentices, among other information (1).
EcoCira can help evaluate, submit and maintain the PWA requirements necessary to maximize the clean energy tax credits for your project(s).
References:
- Instructions for Form 8933 (12/2023) | Internal Revenue Service. www.irs.gov. https://www.irs.gov/instructions/i8933#:~:text=A%20summary%20of%20major%20changes%20to%20section%2045Q.
- Prevailing Wage and the Inflation Reduction Act | U.S. Department of Labor (dol.gov)
- 26 U.S. Code § 45 – Electricity produced from certain renewable resources, etc. | U.S. Code | US Law | LII / Legal Information Institute (cornell.edu)
Helpful Links:
Frequently asked questions about the prevailing wage and apprenticeship under the Inflation Reduction Act | Internal Revenue Service (irs.gov)