The U.S. Department of the Treasury and the Internal Revenue Service recently introduced final rules for the Low-Income Communities Bonus Credit initiative. The program is part of President Joe Biden's Inflation Reduction Act, according to an Aug. 10 Treasury news release.

"One of the goals of Bidenomics is to ensure all Americans benefit from the growth of the clean energy economy,” Deputy Secretary of the Treasury Wally Adeyemo said in the release. “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 and health hazards. Treasury has worked to get this program off the ground as quickly as possible, and in partnership with the Department of Energy, will be opening the application process and making awards to projects earlier than initially anticipated.” 

This program enhances the Investment Tax Credit by up to 20% for eligible solar and wind projects in low-income areas, with the goal of expanding the scope of clean energy in disadvantaged communities, the release reported.

The Low-Income Communities Bonus Credit initiative will allocate 1.8 gigawatts of capacity for 2023 across four solar/wind categories. These encompass facilities in low-income communities, native lands, federally-subsidized residential buildings and those benefiting households below specified income thresholds, the release said.

The IRS can allocate up to 700 megawatts to facilities in low-income communities; 200 megawatts to facilities on native land; 200 megawatts to federally-subsidized residential buildings, including housing supported by the Low-Income Housing Tax Credit and Section 8 of the Housing Act; and 700 megawatts to facilities where at least 50% of the financial benefits of the electricity produced go to households with incomes below 200% of the poverty line or below 80% of area median gross income, the release reported.

The application process, opening in fall, will lead to awards later in the year, according to the release.

The Treasury's partnership with the DOE aims to expedite project initiation. The DOE has also launched a program landing page and will collaborate with Treasury and the IRS to provide further details on application materials and dates in the upcoming weeks, the release reported.