The US Department of Energy (DOE) unveiled a groundbreaking tax incentive program on October 19th. This initiative, known as the “Low-Income Communities Bonus Credit Program,” is designed to support solar and wind projects in low-income communities, underserved areas, and Tribal lands.
Under this new program, eligible solar and wind projects with a capacity of less than 5MWac will receive a substantial bonus in addition to the existing Investment Tax Credit (ITC) provided by the Inflation Reduction Act (IRA). The bonus amounts to either a 10 or 20 percentage point increase, depending on the project's eligibility. This boost aims to encourage renewable energy development in communities that have historically faced energy disparities.
The total eligible capacity for this program is an impressive 1.8 gigawatts (GW) annually, signifying the DOE's commitment to driving clean energy adoption in underserved regions. It's worth noting that the ITC already offers a 30% credit for developers and residential installers, with additional incentives for projects located in areas historically reliant on coal and those emphasizing domestic content.
Jennifer M. Granholm, the Secretary of Energy, expressed her enthusiasm for this initiative, stating, “When combined with other incentives, wind and solar projects in low-income communities could receive as much as a 70% credit.” This boost in financial support is expected to make renewable energy more affordable and accessible to communities, leading to their revitalization and aligning with the broader government's goal of supporting low-income and Tribal communities in their transition to cleaner energy sources.
To ensure the efficient implementation of the program, the DOE will administer the bonus credit on behalf of the Internal Revenue Service and Treasury. Initial applications for the year 2023 will be accepted for a 30-day window, with subsequent applications considered on a rolling basis. This initiative falls under the purview of the Biden-Harris administration's “Investing In America” agenda, emphasizing a holistic approach to address energy inequality and promote sustainability across the nation.
