Treasury announces tax credit bonus for renewables in low-income areas

by Zack Budryk - 08/10/23 8:45 AM ET

Land-based windmills turn in the wind in Atlantic City, N.J., on April 28, 2022. On July 3, 2023, Atlantic Shores, the approved developer of New Jersey's third offshore wind farm, said it, too, wants a tax break or other financial assistance, hinting that its project might not be able to be done without the kind of assistance New Jersey lawmakers granted the week before to a competitor, Orsted, which has approval to build two of the state's three approved offshore wind farms. (AP Photo/Wayne Parry) — Land-based windmills turn in the wind in Atlantic City, N.J., on April 28, 2022. AP Photo/Wayne Parry)

A proposed rule from the Biden administration would add an increase of up to 20 percentage points to the tax credit for solar and wind facilities in low-income areas.

Treasury Department officials told reporters on a call Wednesday that the initiative, called the Low-Income Communities Bonus Credit program, will spread 1.8 gigawatts of electric capacity available for 2023 across four categories.

Eligible categories include 700 megawatts to facilities in low-income neighborhoods; 200 to facilities on tribal land; 200 to facilities located in federally-subsidized housing; and 700 to facilities that generate electricity where at least half of the financial benefit goes to households under 200 percent of the poverty line.

The department is set to open applications for the program in the fall, with the award disbursal process beginning by the end of 2023. Any unused electrical capacity will be rolled over into 2024, and the IRS may shift capacity between the categories in the event of overprescription.

“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,” Deputy Treasury Secretary Wally Adeyemo said in a statement. “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.”

The announcement comes near the anniversary of the Inflation Reduction Act, President Biden’s signature renewable energy and climate package, the source of the funds for the credit.

The administration has sought to boost renewables such as solar and wind in a bid to meet its ambitious emissions reductions targets.

On Wednesday, Biden jabbed at Rep. Lauren Boebert (R-Colo.) for voting against the Inflation Reduction Act when discussing a pending wind facility in Boebert’s district, calling her “the very quiet Republican lady.”

Tags Joe Biden Lauren Boebert Wally Adeyemo