‘‘(iii) in the case of tier 3 technology, 
20 percent, 
‘‘(iv) in the case of tier 4 technology, 
10 percent, and 
‘‘(v) in the case of any other such 
technology, zero percent. 
‘‘(B) TECHNOLOGY TIERS.— 
‘‘(i) IN
GENERAL.—For purposes of 
this paragraph— 
‘‘(I) TIER 1 TECHNOLOGY.—The 
term ‘tier 1 technology’ means any en-
ergy storage technology for which the 
market penetration level for the cal-
endar year preceding the calendar 
year in which construction of such 
technology began is less than 0.75 
percent. 
‘‘(II) TIER 2 TECHNOLOGY.—The 
term ‘tier 2 technology’ has the same 
meaning given the term ‘tier 1 tech-
nology’ under subclause (I), except 
that ‘at least 0.75 percent but less 
than 1.5 percent’ shall be substituted 
for ‘less than 0.75 percent’. 
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‘‘(III) TIER
TECHNOLOGY.— 
The term ‘tier 3 technology’ has the 
same meaning given the term ‘tier 1 
technology’ under subclause (I), ex-
cept that ‘at least 1.5 percent but less 
than 2.25 percent’ shall be substituted 
for ‘less than 0.75 percent’. 
‘‘(IV) TIER
TECHNOLOGY.— 
The term ‘tier 4 technology’ has the 
same meaning given the term ‘tier 1 
technology’ under subclause (I), ex-
cept that ‘at least 2.25 percent but 
less than 3 percent’ shall be sub-
stituted for ‘less than 0.75 percent’. 
‘‘(ii) 
MARKET
PENETRATION 
LEVEL.—For purposes of this subpara-
graph, the term ‘market penetration level’ 
means, with respect to any calendar year, 
the amount equal to the greater of— 
‘‘(I) the amount (expressed as a 
percentage) equal to the quotient of— 
‘‘(aa) the total nameplate 
capacity 
(expressed 
in 
megawatts) of energy storage 
technology in operation within 
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the United States at the begin-
ning of such calendar year (as 
determined by the Secretary on 
the basis of data reported by the 
Energy Information Administra-
tion), divided by 
‘‘(bb) the total domestic 
electricity production nameplate 
capacity 
(expressed 
in 
megawatts) at the close of such 
year, or 
‘‘(II) the amount determined 
under this clause for the preceding 
calendar year. 
‘‘(C) DIVISION OF TECHNOLOGY FOR PUR-
POSES OF DETERMINING TIER.— 
‘‘(i) IN
GENERAL.—For purposes of 
determining the applicable tier for any en-
ergy storage technology under subpara-
graph (B), such subparagraph shall be ap-
plied separately (and the total capacity of 
such technology shall be determined sepa-
rately) with respect to— 
‘‘(I) any such technology which is 
lithium-ion based, 
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‘‘(II) any such technology which 
uses pumped hydropower, 
‘‘(III) 
any 
such 
technology 
which— 
‘‘(aa) is not described in 
subclause (I) or (II), and 
‘‘(bb) is classified as short- 
duration storage under clause 
(ii), and 
‘‘(IV) 
any 
such 
technology 
which— 
‘‘(aa) is not described in 
subclause (I) or (II), and 
‘‘(bb) is classified as long- 
duration storage under clause 
(ii). 
‘‘(ii) CLASSIFICATION.—The Secretary 
of Energy (in consultation with the Sec-
retary) shall issue such regulations or 
other guidance as the Secretary of Energy 
determines necessary or appropriate to de-
fine the terms ‘short-duration storage’ and 
‘long-duration storage’ for purposes of 
classifying energy storage technology under 
clause (i). 
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‘‘(D) DETERMINATION OF TIER.—For pur-
poses of this paragraph, the determination as to 
whether any energy storage technology qualifies 
as a tier 1, 2, 3, or 4 technology shall be 
made— 
‘‘(i) during the year in which con-
struction of such technology begins (as de-
termined under rules similar to the rules in 
section 45U(e)), and 
‘‘(ii) based on the determinations in-
cluded in the report described in section 
45U(b)(2)(D)(i)(II) with respect to such 
calendar year. 
‘‘(E) REPORTING.—The Secretary shall, as 
part of the reports published pursuant to sec-
tion 45U(b)(2)(D)(i) and in the same manner 
as described under such section, publish the ap-
plicable market penetration level and tier for 
any energy storage technology (as determined 
separately for such technology pursuant to sub-
paragraph (C)). 
‘‘(d) SPECIAL RULES.— 
‘‘(1) CERTAIN QUALIFIED PROGRESS EXPENDI-
TURE RULES MADE APPLICABLE.—Rules similar to 
the rules of subsections (c)(4) and (d) of section 46 
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(as in effect on the day before the enactment of the 
Revenue Reconciliation Act of 1990) shall apply for 
purposes of this section. 
‘‘(2) TRANSFER OF CREDIT.— 
‘‘(A) IN GENERAL.—If, with respect to a 
credit allowed under subsection (a) for any tax-
able year, the taxpayer elects the application of 
this paragraph for such taxable year with re-
spect to all (or any portion specified in such 
election) of such credit, the eligible project part-
ner specified in such election, and not the tax-
payer, shall be treated as the taxpayer for pur-
poses of this title with respect to such credit (or 
such portion thereof). 
‘‘(B) ELIGIBLE PROJECT PARTNER.— 
‘‘(i) IN
GENERAL.—For purposes of 
this paragraph, the term ‘eligible project 
partner’ means, with respect to any quali-
fied emerging energy property, any person 
who— 
‘‘(I) has an ownership interest in 
such property, 
‘‘(II) provided equipment for or 
services in the construction of such 
property, 
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‘‘(III) provides electric trans-
mission or distribution services for 
such property, 
‘‘(IV) purchases electricity from 
such property pursuant to a contract, 
or 
‘‘(V) provides financing for such 
property. 
‘‘(ii) FINANCING.—For purposes of 
clause (i)(V), any amount paid as consider-
ation for a transfer described in subpara-
graph (A) shall not be treated as financing 
for qualified emerging energy property. 
‘‘(C) DEDUCTION FOR PAYMENTS IN CON-
NECTION WITH TRANSFER.—A deduction under 
part VI of subchapter B shall be allowed in an 
amount equal to the amount paid by the tax-
payer as consideration for a transfer described 
in subparagraph (A). 
‘‘(D) TAXABLE
YEAR
IN
WHICH
CREDIT 
TAKEN
INTO
ACCOUNT.—In the case of any 
credit (or portion thereof) with respect to which 
an election is made under subparagraph (A), 
such credit shall be taken into account in the 
first taxable year of the eligible project partner 
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ending with, or after, the electing taxpayer’s 
taxable year with respect to which the credit 
was determined. 
‘‘(E) LIMITATIONS ON ELECTION.— 
‘‘(i) TIME FOR ELECTION.—An elec-
tion under this paragraph to transfer any 
portion of the credit allowed under sub-
section (a) shall be made not later than the 
due date for the return of tax for the elect-
ing taxpayer’s taxable year with respect to 
which the credit was determined. 
‘‘(ii) NO FURTHER TRANSFERS.—No 
election may be made under this paragraph 
by a taxpayer with respect to any portion 
of the credit allowed under subsection (a) 
which has been previously transferred to 
such taxpayer under this paragraph. 
‘‘(F) TREATMENT
OF
TRANSFER
UNDER 
PRIVATE USE RULES.—For purposes of section 
141(b)(1), any benefit derived by an eligible 
project partner in connection with an election 
under this paragraph shall not be taken into ac-
count as a private business use. 
‘‘(G) SPECIAL RULES FOR PUBLIC PROP-
ERTY.— 
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‘‘(i) IN GENERAL.—If, with respect to 
a credit under subsection (a) for any tax-
able year— 
‘‘(I) a qualified public entity 
would be the taxpayer (but for this 
subparagraph), and 
‘‘(II) such entity elects the appli-
cation of subparagraph (A) for such 
taxable year with respect to all (or 
any portion specified in such election) 
of such credit, 
the eligible project partner specified in 
such election, and not the qualified public 
entity, shall be treated as the taxpayer for 
purposes of this title with respect to such 
credit (or such portion thereof). 
‘‘(ii) QUALIFIED
PUBLIC
ENTITY.— 
For purposes of this subparagraph, the 
term ‘qualified public entity’ means— 
‘‘(I) any State or local govern-
ment, or a political subdivision there-
of, or 
‘‘(II) an Indian tribal govern-
ment. 
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‘‘(H) PROPERTY USED BY CERTAIN TAX- 
EXEMPT ORGANIZATIONS AND GOVERNMENTAL 
UNITS.—In the case of a taxpayer making an 
election under this paragraph, the credit subject 
to such an election shall be determined notwith-
standing— 
‘‘(i) section 50(b)(3), and 
‘‘(ii) in the case of any entity de-
scribed in section 50(b)(4)(A)(i), section 
50(b)(4). 
‘‘(I) ADDITIONAL
ELECTION
REQUIRE-
MENTS.—The Secretary may prescribe such 
regulations as may be appropriate to carry out 
the purposes of this paragraph, including— 
‘‘(i) rules for determining which per-
sons are eligible project partners with re-
spect to any qualified emerging energy 
property, and 
‘‘(ii) requiring information to be in-
cluded in an election under subparagraph 
(A) or imposing additional reporting re-
quirements. 
‘‘(e) REGULATIONS.—The Secretary (in consultation 
with the Secretary of Energy and the Administrator of 
the Environmental Protection Agency) shall issue such 
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regulations or other guidance as the Secretary determines 
necessary or appropriate to carry out the purposes of this 
section, including rules for reporting— 
‘‘(1) for purposes of paragraph (2)(B)(ii) of 
subsection (c), the amount of carbon oxide captured 
by carbon capture equipment, and 
‘‘(2) for purposes of paragraph (3)(B)(ii) of 
such subsection, the capacity of energy storage tech-
nology.’’. 
(b) SPECIAL RULE FOR PROCEEDS OF TRANSFERS 
FOR MUTUAL OR COOPERATIVE ELECTRIC COMPANIES.— 
Section 501(c)(12)(I) of such Code is amended by insert-
ing ‘‘or 48D(d)(2)’’ after ‘‘section 45J(e)(1)’’. 
(c) CONFORMING AMENDMENTS.— 
(1) Section 46 of such Code is amended by 
striking ‘‘and’’ at the end of paragraph (5), by strik-
ing the period at the end of paragraph (6) and in-
serting ‘‘, and’’, and by adding at the end the fol-
lowing new paragraph: 
‘‘(7) the emerging energy technology credit.’’. 
(2) Section 49(a)(1)(C) of such Code is amend-
ed by striking ‘‘and’’ at the end of clause (iv), by 
striking the period at the end of clause (v) and in-
serting ‘‘, and’’, and by adding at the end the fol-
lowing new clause: 
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