Energy Credits and the BTM Offtake

Federal Credits Relevant to BTM

Section 48E - Clean Electricity Investment Credit

The post-2024 successor to the legacy ITC. Provides an investment tax credit for qualified clean electricity facilities placed in service after December 31, 2024. For a BTM offering, 48E is most directly relevant to layered solar and battery storage components of the project. Gas-fired generation does not qualify for the base 48E unless paired with carbon capture meeting the prescribed emissions threshold. Bonus adders are available for projects meeting domestic content, energy community, and prevailing wage / apprenticeship requirements.

Section 45Y - Clean Electricity Production Credit

The post-2024 successor to the legacy PTC. Per-kilowatt-hour production credit for qualifying zero-emission electricity. Like 48E, the gas-fired portion of a Smartland project does not qualify on its own; layered solar typically does. 45Y and 48E are mutually exclusive on the same facility - the project sponsor elects which credit applies.

Section 45Q - Carbon Sequestration Credit

Available where gas generation is paired with qualified carbon capture and sequestration. We track 45Q because it is the most direct federal mechanism for monetizing decarbonization investment on a gas plant, and we structure projects so a future CCS retrofit is economically evaluable when offtaker preferences and policy support align.

Section 45U - Zero-Emission Nuclear Production Credit

Per-kilowatt-hour credit for qualifying nuclear electricity production. Forward-looking for Smartland in light of our strategic partnership with Hadron Energy on micro-modular reactors, which we track as a future generation pathway.

Section 45X - Advanced Manufacturing Production Credit

Per-unit production credit for domestically manufactured clean energy components - solar panels, batteries, wind components, critical minerals. Relevant to the supply-chain side of the project, particularly for offtakers that have domestic-content commitments to honor or want to align procurement with Buy American / Trade Agreements Act expectations.

Section 6418 - Transferability

The IRA introduced a regime allowing certain energy credits to be sold for cash to unrelated taxpayers. This materially changes how an offtake is structured: a project that generates 48E or 45Y credits can monetize them through a transfer to a third-party buyer, with the proceeds either retained by the developer or shared with the offtaker depending on contract terms. Smartland structures offtakes to specify, up front, how transferable credit value is allocated.

Section 6417 - Direct Pay

Allows tax-exempt entities (federal agencies, tribes, state and local governments, public power, certain nonprofits) to receive direct cash payments in lieu of tax credits. Most directly relevant to Smartland's defense and federal-mission verticals, where direct pay can flow credit value to a federal offtaker that has no tax appetite to absorb a credit through traditional means.

Bonus Credits

• Domestic Content Bonus - additional 10% credit value where the project meets domestic-content thresholds for steel, iron, and manufactured products
• Energy Community Bonus- additional 10% where the project is sited in an energy community (former coal, oil, or gas employment areas, brownfields, or census tracts with closed coal capacity). Smartland's Ohio and West Virginia development activity is being evaluated against energy community criteria as part of site selection.
• Prevailing Wage and Apprenticeship - required to access the full 30% base credit on most clean-energy provisions; failure to meet drops the base to 6%.

Structuring Credit Value Inside the Offtake

For a procurement or finance team evaluating a Smartland offtake, the most important structural questions are:

1. Which credits will the project actually qualify for? Driven by architecture (RICE vs. CCGT), layered components (solar / storage), siting (energy community status), and supply chain (domestic content compliance).
2. Who monetizes them? The developer can retain credits, transfer them under Section 6418, or, for tax-exempt offtakers, pass them through under Section 6417 direct pay.
3. How is credit value reflected in the delivered energy price? Credits can be retained by the developer (reflected in lower required PPA price), shared with the offtaker, or fully passed through depending on contract structure.
4. What happens if credits change? Offtake terms specify which party bears the risk of legislative change, recapture, or qualification challenges.

We engineer these answers into the offtake from the term-sheet stage so they are not negotiated under deal-close pressure.