PosiGen Addresses the Additional Guidance on Low-Income Communities Bonus Credit Program
“PosiGen is grateful to the Department of the Treasury, the Department of Energy, the White House Office of Clean Energy Innovation and Implementation, and all others who have had a hand in developing the Additional Guidance on Low-Income Communities Bonus Credit Program that was released on May 31, 2023. The proposed rules reflect a great deal of hard work, and include elements responsive to the suggestions and concerns of stakeholders. We look forward to continuing that engagement ahead of the program opening later this year. We are committed to doing our part to ensure that this important program is successful in bringing increased deployment of solar to underserved communities.”
Background on the Low-Income Communities Bonus Credit Program
The Low-Income Communities Bonus Credit (LIC) program was created through the Inflation Reduction Act and provides an additional 10% or 20% bonus credit to the Section 48 investment tax credit. The primary objective of the LIC is to expand access to both rooftop and community solar in communities that have historically been underserved. The program will also support projects that are more challenging to develop including community-owned or non-profit projects, projects on affordable multi-family housing, and projects on Tribal land.
Unlike other tax credits in the Inflation Reduction Act, the LIC has an annual program of capacity of 1.8 gigawatts and will be administered by the Department of Energy in coordination with the Treasury. Importantly, this bonus credit is not available to residential solar systems where the homeowner owns the system. It is available to residential solar systems that are owned by a third-party through a lease or power purchase agreement. This third-party ownership structure has made solar more accessible and affordable for low-and-moderate income households.
The LIC program’s Initial Guidance was issued on February 13, 2023, which provided a high level overview of the program structure. It also established a target of opening the program for applications for certain projects in the third quarter of 2023. The White House, Treasury, and Department of Energy then listened to feedback from a wide range of stakeholders as it developed more detailed guidance on project eligibility and the application process. The release of the Additional Guidance provides much greater detail on the program which will help solar companies prepare for the program. It is still expected that the program will still open in the third quarter of 2023.
PosiGen, as a strong advocate for renewable energy equity, extends its gratitude to the Treasury, DOE, and the White House for their efforts. By addressing industry concerns and incorporating important revisions, the Additional Guidance enhances the program's effectiveness in supporting solar deployment in underserved communities. We believe that this initiative will play a crucial role in accelerating access to solar in low-income communities across the country, fostering a more sustainable and inclusive energy future for all.
ResourcesAdditional Guidance: https://public-inspection.federalregister.gov/2023-11718.pdf