Treasury sees heavy demand for wind, solar tax credits in poor areas

The Treasury Department said Monday that it’s seen a “remarkable” response to a clean energy tax credits program for wind and solar energy projects in low-income communities, with applications in the first month totaling more than four times the 2023 capacity for the program.

President Joe Biden’s 2022 Inflation Reduction Act created the  Low-Income Communities Bonus Credit Program, which offers 10% to 20% boost for qualified solar or wind facilities in low-income communities, on top of the existing 30% investment tax credit. To qualify, the projects need to be located in low-income communities, on tribal land, as part of affordable housing or directly benefiting low-income households.

It’s part of the Biden administration’s effort to boost clean-energy facilities in areas of the country that have struggled with poverty, high energy costs and outsized impacts from pollution and climate change.

The Inflation Reduction Act gives tax credits of up to 20%, on top of an existing 20% credit, for solar and wind projects located in low-income areas.

“One of the goals of President Biden’s Inflation Reduction Act is to ensure all Americans benefit from the growth of the clean energy economy,” said Deputy Secretary of the Treasury Wally Adeyemo in a statement. “Sky-high demand for this new program shows that communities that have long been held back by lack of investment will see significant benefits from these resources.” 

Treasury and the Department of Energy, which are overseeing the program, finalized rules in August and began accepting applications for the 2023 allocation on Oct. 19. In the first 30 days they received 46,000 for new wind and solar projects, representing more than 8 gigawatts of proposed capacity. 

The DOE will review the applications and make recommendations to the IRS, which will allocate up to 1.8 gigawatts of solar and wind capacity per year.

Applications for the 2023 program year are still being accepted on a rolling basis through early 2024.

The Inflation Reduction Act allocates roughly $400 billion over 10 years to support climate provisions and features a lengthy list of tax incentives for public and private entities to finance clean energy projects. Among the incentives are direct-pay tax credits and the ability to transfer tax credits, both of which benefit public entities that have no tax liability. Many of the subsidies are given as tax incentives to spur growth of renewable energy projects.

The law allows tax-exempt and governmental entities, some for the first time, to receive elective or direct payments for 12 clean energy tax credits, including tax credits for electric vehicles, charging stations, as well as major investment and production tax credits.

Articles You May Like

Solicitor municipal advisors on watch with new MSRB Rule G-46 in place
Scholz promises inquiry after Russia publishes tapped military discussions
Biden rebukes Israel over Gaza aid and says US will begin airdrops
Macron reaches for ‘whatever it takes’ on Ukraine
Midwest’s public colleges and universities face state funding cutbacks