Section 13103 of the IRA increases the amount of the section 48 investment tax credit for certain qualified solar or wind facilities for which the Internal Revenue Service (“IRS”) makes an allocation of “environmental justice solar and wind capacity.” Facilities are eligible for an allocation if located in a low-income community or on Indian land or are developed as part of a qualified low-income residential building project or a qualified low-income economic benefit project. The investment tax credit is increased by 10 to 20 percentage points for facilities with an allocation.
The Treasury Department is required to establish a program to allocate amounts of environmental justice solar and wind energy capacity to qualifying facilities within 180 days of enactment of the IRA. The IRS may then make allocations for calendar years 2023 and 2024 in accordance with the program.
Eligible Entities:
Environmental Justice Considerations:
Faciilties qualify for the credits if they are located in a low-income community, on Indian land, or are developed as part of a qualified low-income residential building project or a qualified low-income economic benefit project.
Current Status:
Trump Administration Actions:
Implementation Status at End of Biden Administration:
The IRA increased section 48 tax credits by 10-20% for renewable energy facilities in low-income and environmental justice communities. Treasury announced final rules and procedural guidance specifically for the section 48E(h) Clean Electricity Low-Income Communities Bonus Credit Amount Program. Application dates have been set for 2025 and 2026. Clean Energy Investment Credits, of which section 48E is a part, are set to phase out by 2032 or when electricity sector greenhouse gas emissions are reduced to 25% of 2022 emissions.
Biden Administration Actions:
- Treasury Releases Report Showing $3.5 Billion in Solar Investments in Low-Income Communities [09/04/2024]
- Treasury Releases 2024 Program Guidance on Low-Income Communities Bonus Credit [03/29/2024]
- Treasury Announces Application for Low-Income Communities Bonus Credit to Open October 19 [09/27/2023]
- Treasury Releases Final Rule and Guidance on ITC Low-Income Communities Bonus Credit [08/10/2023]
- Treasury Publishes Notice of Proposed Rulemaking on the Low-Income Communities Energy Investment Credit [06/01/2023]
- Treasury Issues Guidance on Low-Income Community Bonus ITC Program [02/13/2023]
Program Stakes:
A Treasury analysis shows that 49,000 approved applications (out of 54,000 total applications) spurred $3.5 billion in investment, powered 1.5 gigawatts of expected energy capacity, and are expected to generate $270 million to offset energy costs annually. The Congressional Budget Office’s estimate for future section 13103 bonus credits is included in estimates for sections 13101 and 13102.