The U.S. Department of Energy (DOE) has announced the opening of the Low-Income Communities Bonus Credit Program, a new tax incentive program aimed at promoting affordable clean energy initiatives in underserved communities. In collaboration with the U.S. Department of the Treasury and the Internal Revenue Service (IRS), the DOE seeks to foster solar and wind projects in low-income communities across the United States.
According to a press release by the DOE, the program, which was established under the Inflation Reduction Act, supports the Biden-Harris Administration's Justice40 commitments to equity and environmental justice. It is described as the most significant tax incentive in U.S. history to promote clean energy investments in low-income communities, on Tribal Land, and within affordable housing.
The DOE's Office of Economic Impact and Diversity will oversee the Low-Income Communities Bonus Credit Program for the Treasury and IRS. The program aims to enhance clean energy access in low-income areas, promote new market entrants, and provide support to individuals and communities affected by health or environmental challenges and limited economic prospects.
U.S. Secretary of Energy Jennifer M. Granholm emphasized the significance of the program, 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."
Under the Low-Income Communities Bonus Credit Program, solar and wind projects below 5 megawatts will receive a tax credit enhancement of 10-20%. The program allocates credits for up to 1.8 gigawatts of eligible capacity annually. The initial application window for the 2023 program year will span 30 days, with a subsequent rolling submission process for applications thereafter.
With the launch of the Low-Income Communities Bonus Credit Program, the DOE aims to promote clean energy investments in low-income communities, foster environmental justice, and support the transition to affordable and sustainable energy sources.
