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R&D Tax Credit for Energy / CleanTech

Solar, battery, grid, EV, hydrogen & storage; control systems, materials, thermal & monitoring software.

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How the R&D credit applies to Energy / CleanTech

Energy and cleantech R&D spans hardware and software: solar, battery, grid, EV, hydrogen, and storage development, plus the control systems, materials science, and thermal/monitoring software that support them.

Both the physical engineering and the embedded/control software commonly qualify, often as separate business components.

Work that often qualifies in Energy / CleanTech

Typical qualifying roles

Electrical Engineer Power Electronics Engineer Materials Scientist Controls/Embedded Engineer Mechanical/Thermal Engineer R&D Engineer Software Engineer

Wages for time these roles spend on qualified research may count toward your credit.

Example credit scenario

Illustrative first-year ASC calculation

Qualified W-2 wages$550,000
Supplies$100,000
Cloud & computer rental$20,000
Contractor research spend$120,000
↳ 65% statutory haircut (IRC §41(b)(3))$78,000
Total QRE$748,000
Illustrative first-year ASC credit (6%) ≈ $44,880

Illustrative example using sample figures. Your actual credit depends on your facts; see Form 6765 and consult a tax professional.

The four-part test — applied to Energy / CleanTech

The IRS requires qualifying research to satisfy four tests. Here's how each typically maps in this industry:

Permitted purpose

The activity aims at improving battery energy density or cycle life.

Technological in nature

The work relies on electrical engineering and materials science.

Elimination of uncertainty

Unknown whether a chemistry will hit targets safely.

Process of experimentation

Teams use prototype cells, cycle testing, and simulation.

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