Application period for environmental justice solar and wind capacity limitation program opens October 19

The U.S. Department of the Treasury, U.S. Department of Energy (DOE), and IRS today announced that applications for the “Low-Income Communities Bonus Credit program”—the program under section 48(e) to allocate environmental justice solar and wind capacity limitation with respect to certain solar and wind facilities placed in service in connection with low-income communities—will open on October 19, 2023.

According to the Department of Energy webpage, applications submitted within the first 30 days will be treated as submitted on the same date and at the same time. Applications submitted after the first 30 days will be considered on a rolling basis. Depending on volume of applications, DOE plans to accept applications for the 2023 program year through early 2024—but applicants may want to submit their applications within the first 30 days.

Today’s Treasury release explains that the program, established under H.R. 5376 (commonly called the “Inflation Reduction Act of 2022” (IRA)), provides an increase of 10% or 20% to the investment tax credit for qualified solar or wind facilities in low-income communities. 

The annual Bonus Credit capacity limitation is divided across four facility categories as follows:

For the 2023 program year, at least 50% of the capacity of each category will be reserved for projects meeting certain ownership and/or geographic selection criteria as outlined in previously released guidance. Among others, qualified facilities owned by certain tax-exempt entities—including charities described in section 501(c)(3) and State and Tribal government entities—would meet the ownership selection criteria.

To provide information about the application process, the Treasury Department and the Department of Energy will be launching the program help desk and hosting a webinar about the application process on September 29, 2023. A recording of the webinar will be available for those who are not able to attend on that date. Additional materials to help applicants prepare their submissions are available on the Department of Energy landing page.

The Treasury Department and IRS launched the program in February 2023 under Notice 2023-17, which provided initial program guidance for potential applicants for allocations of calendar year 2023 capacity limitation. Read TaxNewsFlash

The Treasury and Department then published proposed regulations in June 2023, supplementing the guidance provided in Notice 2023-17 to outline the specific application procedures, additional allocation criteria, and applicable definitions, among other information, necessary to submit an application to request an allocation of the capacity limitation for calendar year 2023 under the program. Read TaxNewsFlash

The proposed regulations were finalized in August 2023, with the final regulations [PDF 429 KB] providing the four project categories under which facilities apply for an allocation, and other guidance.

The Treasury and Department and IRS also released Rev. Proc. 2023-27 [PDF 159 KB] in August 2023, providing procedural and clarifying guidance applicable to the program.

Read TaxNewsFlash