Federal program seeks to boost solar, wind energy in low-income communities

The U.S. Department of the Treasury and Internal Revenue Service (IRS) issued guidance this week for the 2024 program year of the Low-Income Communities Bonus Credit Program.

This program, created by the Inflation Reduction Act, provides a 10 or 20-percentage point boost to the Investment Tax Credit for qualified small solar or wind facilities in low-income communities, on Indian land, as part of affordable housing developments, and benefitting low-income households. It seeks to increase investment in clean energy facilities in low-income communities; encourage new market participants in the clean energy economy; and provide benefits to individuals and communities that have been historically marginalized from economic opportunities and overburdened by environmental impacts.

In the first year of the program the administration received more than 46,000 applications within the first 30 days from communities across the country.

“The first year of implementation saw sky-high demand for solar and wind power investments in underserved communities, and we expect that momentum to continue this year,” U.S. Deputy Secretary of the Treasury Wally Adeyemo said. “These investments are creating jobs and lowering energy costs in communities that have long been held back by lack of investment, as well as providing new opportunities for small businesses in these communities to benefit from the growth of the clean energy economy.”

The program annually allocates 1.8 gigawatts of capacity through a competitive application across four categories of qualified solar or wind facilities with maximum output of less than five megawatts. The procedural guidance outlines the allocations for the 2024 program, including:

• 600 megawatts to facilities located in low-income communities;
• 200 megawatts to facilities located on Indian lands;
• 200 megawatts to facilities that are part of federally-subsidized residential buildings;
• 800 megawatts 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.

Also, at least 50 percent of the capacity of each category will be reserved for projects meeting certain ownership and/or geographic selection criteria as outlined in Treasury and IRS guidance. It will open for applications during the second quarter of 2024.