US Treasury Advances Equitable Access to Solar Energy
On Monday, February 13th, the U.S. Department of Treasury (Treasury) released initial guidance for the Inflation Reduction Act’s (IRA) Low-Income Communities Bonus Credit Program for solar tax credits through the Investment Tax Credit (ITC). National Housing Trust applauds this initial step toward implementing a first-of-its-kind program that centers equity in deploying clean energy.
The IRA created a boost of 10-20 percentage points to the ITC credit for solar and wind facilities of less than 5 MWs installed in low-income communities. Up to 1.8 GWs of bonus credit capacity will be allocated to facilities that fall into one of four categories: those located in a low-income community, those located on Indian land, projects that are part of a federally subsidized multifamily building, or ones that are categorized as a low-income economic benefit project where at least 50% of the financial benefits of the electricity produced goes to households with incomes below 200% of the poverty line or below 80% of area gross median income.
While we await subsequent guidance with more details on the program design and applicant selection criteria, the guidance released on Monday is a positive step forward and consistent with the spirit of comments NHT submitted to the Treasury in November.
- First, the guidance ensures that affordable multifamily housing can fairly compete for the bonus tax credits by reserving 200 MWs of the 1.8 GWs total credit allocation for facilities that are part of qualified low-income buildings. This is critical, because financing and installing solar in affordable multifamily housing can be more complex and challenging than other building types. We estimate that 200 MWs will potentially benefit approximately 66,000 affordable multifamily households (assuming 3 kW per household).
- Second, the guidance supports access to solar energy benefits for renters and other households who don’t have the agency or the means to install solar at their properties. The guidance reserves 700 MWs for solar facilities that are part of projects that provide direct economic benefits to low-income households, including community solar. We estimate that 700 MWs of community solar will potentially benefit approximately 233,000 households.
- Third, the guidance outlines potential applicant selection criteria that advances equitable outcomes, including incentivizing projects that are owned or developed by community-based and mission-driven organizations and that provide substantial benefits to low-income communities and individuals marginalized from economic opportunities.
NHT appreciates the thoughtfulness that went into developing this initial guidance and looks forward to continued dialogue with Treasury as additional program details are finalized. We urge Treasury to both release additional guidance about the application requirements as expeditiously as possible and open the application period up as soon as possible to enable project developers to begin preparing project submittals.
NHT’s portfolio-level solar program has partnered with affordable housing owners across the country to co-develop, finance, and support the installation of 13MW of renewable energy projects. We have the experience and expertise in a wide variety of services that support the planning, installation, and maintenance of solar systems. Visit our website to learn more about our services.
Senior Director of Sustainability Policy