Applications for the federal Low-Income Communities Bonus Credit program for certain clean energy projects are now open.
This groundbreaking program provides a 10 or 20-percentage point boost to the Investment Tax Credit for qualified solar or wind facilities in low-income communities. Funding for the program comes from the Inflation Reduction Act.
The goals of the program are to increase access to clean energy in low-income communities, encourage new market participants, and benefit communities that have experienced adverse health or environmental effects.
“One of the goals of President Biden’s Investing in America agenda is ensuring all Americans benefit from the growth of the clean energy economy,” Deputy Secretary of the Treasury Wally Adeyemo said. “This new bonus incentive through the Inflation Reduction Act will drive investment to underserved communities to ensure they benefit from lower energy costs and reduced pollution. This program has the potential to drive thousands of new clean energy projects each year, including projects to ensure Americans who rent or live in public housing benefit from lower energy costs.”
The Treasury Department, along with the U.S. Department of Energy, and Internal Revenue Service (IRS) are administering the program.
The program allocates 1.8 gigawatts of capacity available through competitive application across four categories of qualified solar or wind facilities with maximum output of less than five megawatts.
The IRS intends to allocate up to 700 megawatts to facilities located in low-income communities; 200 megawatts to facilities located on Indian land; and 200 megawatts to facilities that are part of federally subsidized residential buildings, including housing supported by the Low-Income Housing Tax Credit and Section 8 of the Housing Act. Also, 700 megawatts will be allocated to facilities where at least 50 percent of the financial benefits of the electricity produced go to households with incomes below 200 percent of the poverty line or below 80 percent of area median gross income.
Depending on the availability of capacity, applications for the 2023 program are expected to be accepted through early next year.