48(e), 48E(h): Low-Income Communities Bonus Credit

Federal Agency

Sub-Department

Internal Revenue Service (IRS)

Purpose

To further incentivize to the Clean Electricity Investment Tax Credit for small-scale solar and wind facilities on Tribal land and in low-income communities.

Applicant and/or Project Eligibility Requirements

Eligible facilities are solar and wind facilities with a maximum net output of less than 5 MW, including associated energy storage technology.

Decarbonization Considerations

The program prioritizes the following goals: increasing adoption of and access to renewable energy facilities in underserved and environmental justice communities, encouraging new market participants, and providing substantial benefits to underserved communities and individuals who have been historically marginalized from economic opportunities and overburdened by environmental impacts.

Equity Considerations

The program includes specific annual carve-outs for Tribal communities as well. Low income communities can be identified using the DOE's CEJST Map: https://www.energy.gov/diversity/justice40-initiative#:~:text=The%20CEJST%20tool%20was%20designed,United%20States%20as%20disadvantaged%20communities.

Helpful Tips

Direct Pay is eligible for this credit for tax-exempt entities. To learn more about how these tax credits work for entities with and without tax liability, check out our Funding Guidance here: https://cityrenewables.org/funding-guidance/understanding-available-incentives/tax-credits-for-renewable-energy/

Other Notes

The allocation is broken up into four categories: 1. 800 MW - Located in a low-income community (10% bonus); 2. 200 MW - Located on Indian Land (10% bonus); 3. 224.8 MW - Low-income residential building project (20% bonus); 4. 900 MW - Low-income economic benefit project (20% bonus). 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 the Program Regulations and Revenue Procedure.