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Missed the July 4 deadline? You may still qualify for federal tax credits
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CETCAP Newsletter
Federal Clean Energy
Tax Assistance Program
NEWSLETTER
August 5, 2026
Washington Department of Commerce’s Federal Clean Energy Tax Assistance Program (CETCAP) <https://links-2.govdelivery.com/CL0/https:%2F%2Firataxcredits.wa.gov%2Fhome/1/0101019fd317a1f7-06344e6d-2045-
4536-8354-260adf5f9dc2-000000/z-_OvPY4jnqdtL8iI1CcicD2stJc-ytPW-nCTiC3wmg=452> provides free, pro bono legal and filing assistance to help eligible Washington organizations learn about,
plan for, and file for elective pay (direct pay) tax credits.
Ready to learn, plan or file? Visit L4GG.org/CETCAP <https://links-2.govdelivery.com/CL0/http:%2F%2Fl4gg.org%2FCETCAP/1/0101019fd317a1f7-06344e6d-2045-4536-8354-260adf5f9dc2-000000/MC9WcMkXGdjYE1BLSe
vnKxnMEkxJpMg2DW0B8D1OC6A=452> to set up a free 30-minute call with an expert.
IN THIS ISSUE:
Missed the July 4 deadline?
Program update
Spotlight on Klickitat Valley
Upcoming events
Resources
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Missed the July 4 deadline? You may still qualify for federal tax credits
Solar and wind projects that began construction by July 4, 2026 remain on track for the full Investment Tax Credit (ITC) or Production Tax Credit (PTC), plus any bonus credits, through
the early 2030s. If a project did not meet that deadline, there is still one path forward: The project must be placed in service, meaning fully complete and operational, by December
31, 2027, to qualify for the credit.
This deadline applies specifically to solar and wind. Energy storage, geothermal, hydropower and nuclear projects are not affected and remain eligible for full credits through 2033,
with a gradual step-down through 2035. All eligible projects, excepting geothermal/ground source heat pumps, remain subject to prohibited foreign entity restrictions on sourcing.
If your organization has a solar or wind project that did not begin construction before July 4, contact CETCAP now <https://links-2.govdelivery.com/CL0/http:%2F%2Fl4gg.org%2FCETCAP/2/0101019fd317a1f7
-06344e6d-2045-4536-8354-260adf5f9dc2-000000/q_UZlLZgPuIuVm7VAUvIkMrbOsZAFcg3aFS3p10FT7I=452> to talk through your placed-in-service timeline.
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Program update
Frequently asked questions
Here are answers to the questions CETCAP hears most often right now.
Q: We received a grant for our project. Does that affect our tax credit eligibility?
A: It depends on whether the grant is restricted or unrestricted. A grant awarded broadly for clean energy projects is generally unrestricted. A grant awarded for a specific project
is restricted, and restricted funds are subject to the no excess benefit rule: The combined value of restricted funds and the elective pay credit cannot exceed the total project cost.
Whether a grant is considered restricted depends on its specific terms. Contact CETCAP to review your grant and determine how it applies.
Q: What are the filing deadlines, and can I file late or retroactively if I miss one?
A: Filings are due 4.5 months after the end of the tax year in which the project was placed in service. A six-month extension is available, but you must request it on or before the initial
deadline. If you miss a deadline, there's no way to claim the credit retroactively, so it's worth building an extra buffer into your filing calendar.
Q: How do we prove construction has begun to meet the 5% Cost Safe Harbor?
A: The beginning of construction can be established either by starting physical work of a significant nature or by paying or incurring at least 5% of the eligible equipment costs, whichever
happens first. If your organization uses cash-basis accounting, you must have already paid the expense. If you use accrual accounting, you must have a signed contract and record the
expense as a liability under generally accepted accounting principles (GAAP). The IRS has not published a list of required documents. Organizations should keep enough records to show
they meet the test they're using.
Q: Who is eligible to claim the credit, and what happens if the property is leased or sold?
A: Only the entity that owns the clean energy property may claim the credit through elective pay, and that entity is responsible for how any funds received are used. If the owner sells
the property within 5 years of placing it in service, the credit is subject to recapture, meaning some or all of it may need to be repaid to the IRS.
Q: Does battery storage qualify, and what if the battery and solar components are placed in service at different times?
A: Battery storage generally qualifies under Section 48E as a form of electrical generation. If a battery is capable of operating independently and has permission to operate from the
utility, it can be placed in service and its credit may be claimed, even if the paired solar array is not yet complete. Note that CETCAP addresses federal tax credits and does not typically
cover Washington state sales tax questions. Consult your accountant on state sales tax exemptions separately.
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Spotlight
Klickitat Valley Health builds a cleaner, more resilient future
Klickitat Valley Health (KVH) is a rural critical access hospital in Goldendale. Between 2022 and 2027, KVH is completing a phased set of energy resilience projects: microgrid development
combining solar and battery storage, ground-source heat pump retrofitting, a central utility plant upgrade, a hydrogen fuel cell installation, energy efficiency retrofits, and 10 new
EV charging stations.
With an estimated total cost of $16 million across all phases, KVH worked with CETCAP to determine elective pay eligibility, prepare filings, and complete a cost segregation analysis.
That work is expected to result in an estimated $5-6 million in tax credits for the hospital.
"Elective pay finally makes clean energy real for rural hospitals. Without it, our hydrogen fuel cell wouldn’t have been feasible," said Jonathan Lewis, Director of Support Services
at KVH.
KVH expects a 30% efficiency increase at its central utility plant and a 93% reduction in natural gas use from the ground-source heat pump. The hospital also anticipates 10 temporary
construction jobs, one new full-time operations and maintenance position, and greater public trust and clean energy visibility across rural Washington.
Read the full story <https://links-2.govdelivery.com/CL0/https:%2F%2Fwww.commerce.wa.gov%2Fklickitat-valley-health-builds-a-cleaner-more-resilient-future-with-cetcap-support%2F/1/0101019fd317a1f7-063
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Events
* CETCAP office hours: Join us weekly for a live overview of available clean energy tax credits from our partners at Lawyers for Good Government, and ask questions about your projects.
Join us on the second Wednesday of each month. <https://links-2.govdelivery.com/CL0/https:%2F%2Fzoom.us%2Fmeeting%2Fregister%2FtwECkSqXRU2MLsrZGzLWfA/1/0101019fd317a1f7-06344e6d-2045-4536-8354-260ad
f5f9dc2-000000/cCDRVJzk_zgbE58lBaAmZow5hTLFBQOKmf-sX5OpI4E=452>
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Resources
* <https://links-2.govdelivery.com/CL0/https:%2F%2Fwww.lawyersforgoodgovernment.org%2Felective-pay-ira-tax-incentives/1/0101019fd317a1f7-06344e6d-2045-4536-8354-260adf5f9dc2-000000/SyJG4KLMx1_qwAMJ-l
i7fo8IR937Uree7xthSC1Kerc=452> Elective Pay & IRA Tax Incentives Resources <https://links-2.govdelivery.com/CL0/https:%2F%2Fwww.lawyersforgoodgovernment.org%2Felective-pay-ira-tax-incentives/2/010101
9fd317a1f7-06344e6d-2045-4536-8354-260adf5f9dc2-000000/MvowtEl9oNX77gV9Jk_dcOwirEXwCaJcn2i10T5Eb-Y=452> <https://links-2.govdelivery.com/CL0/https:%2F%2Fwww.lawyersforgoodgovernment.org%2Felective-p
ay-ira-tax-incentives/3/0101019fd317a1f7-06344e6d-2045-4536-8354-260adf5f9dc2-000000/L85OrkSqboyFD0tNLFhIVEWYnVSw_Fw8Y0p-SAtYcNI=452>
* 18 Months on the clock: How states can maximize solar before the placed in service deadline <https://links-2.govdelivery.com/CL0/https:%2F%2Fwww.statesupportcenter.org%2F18-months-on-the-clock-how-
states-can-maximize-solar-before-the-placed-in-service-deadline/1/0101019fd317a1f7-06344e6d-2045-4536-8354-260adf5f9dc2-000000/808SrmQwFhTrmvUUZf6fJS1NSU5gNLkyQosnE6V-1OI=452> : Learn
about strategies for getting projects placed in service before the December 31, 2027, deadline.
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CETCAP is supported with funding from Washington’s Climate Commitment Act (CCA). The CCA supports Washington’s climate action efforts by putting cap-and-invest dollars to work reducing
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