S. 4175 — A bill to amend the Internal Revenue Code of 1986 to extend the clean electricity production credit and the clean electricity investment credit based on increases in the price of, and demand for, electricity, and for other purposes.

This section revises phase-out and termination rules for the clean electricity production credit (sec. 45Y), clean electricity investment credit (sec. 48E), energy efficient home improvement credit (sec. 25C), and residential clean energy credit (sec. 25D) (i.e., tax credits established by the Inflation Reduction Act to incentivize zero-emission electricity generation, related investments, home energy efficiency improvements, and residential clean energy property) to delay or renew them upon a Secretary of the Treasury determination of a "price or demand increase year." A price or demand increase year is a calendar year, per Energy Information Administration data in the Electric Power Annual, in which the national average price of electricity to ultimate customers in all sectors exceeds the prior year's by more than 2 percent or total annual electricity sales to such customers (in megawatt-hours) exceed the prior year's; the Secretary must make this determination for 2025 before January 1, 2027, and for later years before January 1 following publication of the relevant report. Specifically, the section (1) for secs. 45Y and 48E, replaces fixed phase-out rules with an "applicable year" for credit amount calculation defined as the later of 2032 or six years after a price or demand increase year (with phase-out deemed at 100 percent during any interim six-year period following such a year if already in phase-out), and (2) for secs. 25C and 25D, suspends prior termination dates for the first two calendar years after a price or demand increase year determination. (Thus, the credits may extend beyond their original phase-out or termination—typically after 2032 for production and investment credits—contingent on annual electricity price or demand growth.)

This section eliminates the denial of the clean electricity production credit and clean electricity investment credit for wind and solar leasing arrangements by striking the relevant restrictions. The amendments apply to taxable years beginning after the date of enactment.