Secure your energy investment credit before the deadline
Important deadlines are approaching for businesses with solar or wind energy projects slated for deployment in 2024.
The initial application period for the Low-Income Communities Bonus Credit Program ends on June 27, 2024. If you’re investing in solar or wind projects in low-income communities, submitting your application early can help you secure a portion of the allocation.
The Low-Income Communities Bonus Credit Program
Section 48(e) of the Inflation Reduction Act introduced an increase to the energy percentage for solar and wind facilities serving low-income communities.
The Low-Income Communities Bonus Credit Program offers a 10% or 20% increase to the investment tax credit for qualified solar and wind energy facilities with a maximum net output of less than 5 megawatts (MW). To be eligible, these facilities must be located in low-income communities, on Indian land, as part of a qualified low-income residential building or as part of a qualified low-income economic benefit project.
By providing incentives for investing in qualified solar and wind energy projects, this program has the potential to drive clean energy investments, lower energy costs and create jobs in underserved communities across the nation.
The annual capacity limitation for the program is set at 1.8 gigawatts of eligible solar and wind capacity, which is divided across four distinct categories:
- Low-income communities — 800 MW allocated to facilities located in low-income communities.
- Indian lands — 200 MW allocated to facilities located on Indian lands.
- Federally subsidized residential buildings — 224.8 MW allocated to facilities that are part of federally subsidized residential buildings.
- Low-income household beneficiaries — 900 MW allocated 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 80% of the area median gross income.
Your application
Submissions for low-income communities opened on May 28, 2024. Applicants are encouraged to apply early to secure an allocation for the 2024 program year.
To help ensure fairness, applications submitted within the first 30 days (or by 11:59 p.m. ET on June 27, 2024) will be treated as if submitted simultaneously. After the initial application period, applications will be accepted on a rolling basis to the extent there is still an allocation left.
Here’s what you need to know about the application process:
- Applicants must submit detailed information for each facility, including the applicable category, ownership structure, location, size/capacity and whether they or the facility meets additional selection criteria.
- Applicants are required to complete a series of attestations and provide supporting documentation to demonstrate project maturity.
- Applicants must apply for the allocation and receive approval prior to the placed-in-service date of the qualified energy facility to receive the increase to the investment tax credit.
It’s also important to remember that the program operates within a complex regulatory framework with the Department of Energy, the Department of the Treasury and the IRS all playing pivotal roles. Applicants should stay informed about the evolving guidance, regulations and deadlines to help ensure compliance and maximize the program’s benefits.
How Wipfli can help
If you have a solar or wind project in a low-income community that is being placed into service in 2024, Wipfli is ready to help you apply for an allocation. Our dedicated team has deep knowledge of energy tax initiatives, and we stay on top of changes to help keep you updated on the latest requirements and opportunities.
Contact us to learn more about how we can help you maximize your clean energy initiatives.
