More than 46,000 applications were submitted for new energy facilities in low-income communities, including as part of affordable housing, reported the Treasury Department and the Internal Revenue Service.

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The huge demand was seen in the initial application period for the Inflation Reduction Act's Low-Income Communities Bonus Credit Program. The initiative provides a 10- or 20-percentage point boost to the Investment Tax Credit for qualified solar or wind facilities in low-income communities.

The applications represent more than 8 gigawatts of generation capacity, or the equivalent power used by 800 million LED lightbulbs. This is more than four times the total capacity available for the 2023 program, reported the federal agencies.

The new program aims to encourage participation by the institutions and communities most impacted by energy insecurity by setting aside 50% of the program’s capacity for projects that meet additional criteria. Approximately one-quarter of the applications in the first 30 days were for new solar and wind energy facilities meeting additional criteria, indicating they are located in low-income areas where households spend the highest percent of their income on energy, and/or have had the lowest levels of historical investment, or are owned by emerging market participants, such as tribal enterprises; tax-exempt entities including nonprofits, local, or tribal governments; consumer or worker cooperatives; and emerging renewable energy companies.

As provided in previous guidance, the program allocates 1.8 gigawatts of capacity available through competitive application for the 2023 program across four categories of qualified solar or wind facilities with maximum output of less than 5 megawatts.

The IRS previously announced its intention to allocate up to:

  • 700 megawatts to facilities located in low-income communities;
  • 200 megawatts to facilities located on Indian lands;
  • 200 megawatts to facilities that are part of federally subsidized residential buildings, including housing supported by the low-income housing tax credit and Section 8; 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.

Applications for the 2023 program year are still being accepted on a rolling basis, and applications submitted in categories with remaining capacity will be considered through early 2024. Updates about how much capacity is available by category can be accessed via a new dashboard on the Department of Energy website.