In a significant move aligning with President Biden’s “Investing in America” agenda, a cornerstone of his economic strategy, the U.S. Department of Energy (DOE), U.S. Department of the Treasury, and Internal Revenue Service (IRS) have jointly unveiled the Low-Income Communities Bonus Credit Program. This program, supported by the Inflation Reduction Act, is set to revolutionize access to cost-effective clean energy projects in underserved communities by offering a historic tax incentive for solar and wind ventures nationwide. This program is part of the Biden-Harris Administration’s commitment to environmental justice and equity, embodying the most substantial tax incentive in U.S. history to boost clean energy investments in low-income communities, Tribal Land, and affordable housing.
U.S. Secretary of Energy Jennifer M. Granholm emphasized the significance of this initiative, stating, “President Biden’s Investing in America agenda includes historic incentives designed to drive clean energy investments to underserved communities. When combined with other incentives, wind and solar projects in low-income communities could receive as much as a 70% credit. The Low-Income Communities Bonus Credit program will help community-based projects deliver direct benefits to families, making solar and wind energy more affordable and more accessible — revitalizing communities and exemplifying our whole-of-government effort to support low-income and Tribal communities in their energy transition efforts.”
Commencing today, eligible organizations and entities can access this groundbreaking program through the newly launched applicant portal. The DOE is currently accepting applications during the initial 30-day application window for the 2023 program year. After this initial window, applications for 2023 will be considered on a rolling basis. Detailed information regarding program capacity, eligibility, and allocation processes can be found in the IRS Final Regulations and Revenue Procedure 2023-27.
The Low-Income Communities Bonus Credit Program offers a 10 or 20 percentage point credit increase to the investment tax credit for qualified solar or wind energy facilities with a capacity of less than five megawatts (AC). The program provides for the allocation of up to 1.8 gigawatts of eligible solar and wind capacity in credits annually. This initiative, established by the Treasury and the IRS under section 48(e), aims to promote cost-effective clean energy investments in low-income communities, on Indian land, as part of affordable housing developments, and for the benefit of low-income households.
The administration of the Low-Income Communities Bonus Credit Program falls under DOE’s Office of Economic Impact and Diversity on behalf of the Treasury and IRS. The program’s objectives include enhancing access to clean energy in low-income communities, encouraging the participation of new market players, and benefiting individuals and communities that have suffered from adverse health or environmental effects or faced limited economic opportunities. This program is structured to ensure that underserved communities meet specific eligibility criteria to receive allocation capacity. It also simplifies the application process by offering a user-friendly platform and various program resources to alleviate the application burden on communities.