Developing storage, generation, power-electronics, and clean-process technologies involves deep technical uncertainty about performance, efficiency, durability, and safety.
The credit is calculated on qualified research expenses (QREs) — primarily wages for engineers and technical staff who spend time on qualifying activities, plus supplies, cloud/compute, and 65% of qualified contract research.
The table below lists the business components that most often qualify, a common example, and the technical uncertainty that makes each one defensible.
| Business component | Example | Technical uncertainty |
|---|---|---|
| Battery & energy storage | New cell chemistry, battery-management system | Will it meet energy density, safety, and cycle life? |
| Solar / PV systems | New module, inverter, or tracking system | How to improve efficiency and reliability? |
| Grid & power electronics | Microgrid controls, advanced inverters | Will the system maintain stability and efficiency? |
| EV systems | Powertrain, charging, thermal/BMS | Will the design meet range, charge, and thermal targets? |
| Hydrogen & fuel cells | Electrolyzer or fuel-cell stack | Can it meet efficiency and durability targets? |
| Energy software & optimization | Demand response, generation forecasting | Which control strategy optimizes output? |
| Materials development | New catalyst, membrane, or electrode | Will the material meet performance and cost? |
| Clean-process development | Carbon capture or emissions-reduction process | Will the process perform efficiently at scale? |
A team prototypes battery-cell or thermal-management alternatives and runs controlled cycling and safety tests to resolve uncertainty about performance or durability. Experimental development may qualify when the work follows a systematic evaluation; grant or customer funding alone does not settle the funded-research question.
Installing a proven solar array, routine commissioning, or maintaining a commercial energy system generally does not test an uncertain design. Research may be excluded as funded if another party pays and bears the economic risk without the company retaining substantial rights; assess the funding and contract terms.
Find your own job titles below. Each row shows the wage category a role usually falls under and the kinds of work that typically do and do not count. Titles alone never make wages eligible; the activity must meet the four-part test.
7 of 7 roles shown
| Role | What they do | Wage category | Typically qualifies | Typically does not |
|---|---|---|---|---|
| Designs and tests how electrical power is converted and controlled. | Direct research | Experimental converter topologies, Uncertain control stability improvements +1 more | Routine equipment installation, Known component substitutions +1 more | |
Typically qualifies
Typically does not
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| Tests materials and cell designs against storage performance needs. | Direct research | Experimental electrode formulations, Cell degradation investigations +1 more | Routine acceptance testing, Production sampling alone +1 more | |
Typically qualifies
Typically does not
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| Develops mechanical and thermal systems for energy equipment. | Direct research | Uncertain cooling designs, Experimental mechanical configurations +1 more | Routine maintenance, Known enclosure modifications +1 more | |
Typically qualifies
Typically does not
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| Builds control logic for energy devices and connected systems. | Direct research | Experimental grid-response algorithms, Uncertain device coordination methods +1 more | Standard controller settings, Routine firmware updates +1 more | |
Typically qualifies
Typically does not
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| Tests methods for producing fuels, materials or clean-energy products. | Direct research | Pilot process experiments, Uncertain catalyst or separation methods +1 more | Routine plant operation, Commercial production +1 more | |
Typically qualifies
Typically does not
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| Prepares trial systems and records experimental performance. | Direct support | Instrumenting qualifying trials, Preparing experimental cells +1 more | Routine certification administration, Service visits +1 more | |
Typically qualifies
Typically does not
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| Directly supervises engineers and scientists running experiments. | Direct supervision | First-line supervision of qualifying research, Review of technical alternatives +1 more | Fundraising, General plant management +1 more | |
Typically qualifies
Typically does not
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Wage categories follow IRC Section 41. Only the portion of time spent on qualified research counts, and the percentage must be documented.
Illustrative example using sample figures. Your actual credit depends on your facts; see Form 6765 and consult a tax professional.
The IRS requires qualifying research to satisfy four tests. Here's how they typically map for this industry:
The activity aims at improving a product, process, software, or technique used in the business — not just a business outcome.
The work relies on principles of engineering, computer science, biology, chemistry, or another hard science to resolve uncertainty.
There was genuine uncertainty at the outset about whether — or how — the component could be built or improved.
The team evaluated alternatives: A/B tests, prototypes, benchmarks, simulations, or iterative design-build-test cycles.
Take these into a 15-minute conversation with your team.
The last question matters most. Customer-funded work and work performed outside the US are generally excluded. Funded work is excluded to the extent your business does not bear the financial risk or does not retain substantial rights in the results.
No. Environmental benefits or participation in an energy incentive do not establish research-credit eligibility. The development must independently meet the research requirements.
Potentially, when technical uncertainty is addressed through testing alternatives. Routine equipment selection, installation and operation are different from qualifying development.
Activities at a pilot plant may include qualifying experiments, but not every plant cost qualifies. Separate research work and eligible expenses from equipment costs and ordinary production.
Funding agreements must be reviewed for economic risk and retained research rights. Work can be excluded as funded research, so do not assume all grant-supported development is eligible.
Tests used to resolve technical uncertainty may be relevant to qualified research. Routine certification checks or administrative compliance work do not qualify simply because they are required.
Keep experimental plans, prototype revisions, performance data, pilot logs and supported time allocations. Retain funding agreements and distinguish development costs from other incentive calculations.
Most companies underestimate what they can claim. Our study covers every qualifying role, every component, and every year still open for amendment.
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