Treasury overloaded by renewable energy low-income tax credit applications - pv magazine USA
Treasury overloaded by renewable energy low-income tax credit applications - pv magazine USA
The U.S. Department of Treasury said it has received a massive influx of applications for the Energy Community tax credit adder designated for renewable energy projects under the Inflation Reduction Act (IRA).
Treasury said that it is overwhelmed by the number of applications, and that the volume of project capacity exceeds the allocation for Energy Community credit next year by as much as 400%.
The Inflation Reduction Act of 2022 includes a 30% investment tax credit for the cost of developing renewable energy resources, provided developers meet labor requirements. Another 10% adder is applied to projects in low-income communities.
Treasury reported that in the initial 30-day application window, the Low-Income Bonus Credit Program received more than 46,000 applications for new solar and wind projects. This represents 8 GW of capacity, while the 2023 allocation for credits is 1.8 GW. Another 1.8 GW is allocated for 2024.
The tax credit applications show that billions of dollars of renewable energy projects are actively being developed across the U.S.
As demand exceeds available tax credit allocations, Treasury will prioritize projects owned by nonprofits, local or Tribal governments, or worker cooperatives. A lottery system may be used to allocate any remaining credits.
An Energy Community mapping tool from the U.S. Department of Energy can be found here.
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