Major developments aimed at tackling energy inequality are happening. The Biden administration is significantly boosting incentives and resources to drive clean energy deployment in underserved communities across America.
The U.S. Department of the Treasury and Internal Revenue Service announced today that applications will open on May 28 for the second year of the Low-Income Communities Bonus Credit Program – a key provision of President Biden’s Inflation Reduction Act providing up to a 20 percentage point tax credit boost for solar and wind projects located in low-income areas.
Deputy Treasury Secretary Wally Adeyemo said:
“This groundbreaking incentive created by President Biden’s Inflation Reduction Act is creating jobs and opportunity while lowering energy costs for communities that were long underinvested in.”
“In the program’s first year, we saw sky-high demand for these clean energy investments.”
Boosting Capacity and Equity Provisions
Program Enhancements for 2024:
- Over 2.1 gigawatts of total capacity available, up from 1.8 GW in 2023
- 325 additional megawatts rolling over from very high first-year demand
- Expanded eligibility criteria and subcategories for equitable distribution
- At least 50% of capacity reserved for projects meeting additional criteria
Targeting Low-Income Residential Areas
The program allocates federal tax credits to qualifying solar and wind facilities under 5 megawatts located in low-income residential areas, on tribal lands, or providing direct economic benefits to lower-income households. It aims to lower energy burdens while catalyzing private investment in historically underserved communities.
Ensuring Investments Reach Most In Need
This second program year also incorporates key enhancements based on lessons learned in 2023. Most notably, at least half of the available credits in each category are now reserved for projects meeting additional socioeconomic and community benefit criteria beyond just geographic location.
“The program’s impact will grow even more in its second year thanks to the increased available capacity and new provisions to ensure investments reach the communities most in need of affordable clean power,”
said Senior White House Climate Advisor John Podesta.
Turbocharging Clean Energy Investment
This incentive structure has already turbocharged private capital flowing into community solar projects, rooftop installations, microgrids and more across America’s urban cores and rural towns. According to a recent Princeton study, low-income areas received over 5 times more proposed solar investments in 2023 compared to 2022 baselines.
Concerns Over Equity Remain
However, some environmental justice advocates argue the program’s impact has been inequitably distributed so far, with wealthier communities capturing a disproportionate share of the tax credits. The new 50% set-aside aims to address those concerns.
“While a step in the right direction, we need to see much more from this administration in terms of actually delivering affordable clean energy to the frontline communities who have disproportionately borne the brunt of fossil fuel pollution for decades,”
said Juan Jhones-Lugo, Energy Justice Director at The Oak Collective.
Helping Families Navigate Incentives
The Treasury Department will host a public webinar on May 16 providing additional details and guidance ahead of the May 28 application opening date. All submissions within the first 30 days will be treated equally to ensure fair access.
But beyond the tax credits themselves, the Biden administration is deploying a multi-pronged strategy to ease clean energy access and lower costs for American families – especially in underserved communities.
Multi-Faceted Approach
Key Administration Clean Energy Cost-Saving Initiatives:
- $20 billion Greenhouse Gas Reduction Fund to finance community lending
- State home energy rebate programs launching this summer, worth up to $8,000 per household
- Expanded tax credits of 30% for residential solar, heat pumps, efficiency upgrades
- Nonprofit coalition campaigns for consumer education and awareness
- Renewed focus on bridging financing gaps for low and middle-income families
Driving Affordability and Sustainability
“We’re using every tool available to help families across America save money by tapping into affordable clean energy,” Adeyemo stated. “From generous tax credits to innovative financing, this is a top priority for the Biden economic agenda.”
As climate impacts escalate and energy costs remain volatile, the administration is betting its “whole-of-government” push can finally unleash clean energy’s promise of lower utility bills, efficiency gains, and greener communities from coast to coast.
Access the latest program details, state-by-state information on incentives, and guidance for applicants at www.irs.gov/lowincomecredit.
Sources: THX News, The US Treasury & The White House.
