U.S. Treasury Reports $3.5 Billion in Solar Investments Lowering Energy Costs for Low-Income Communities

The U.S. Department of the Treasury has released a report showcasing the success of the 2023 program year for the Inflation Reduction Act’s Low-Income Communities Bonus Credit Program. This initiative, which is a key part of the Biden-Harris Administration's economic agenda, is designed to reduce energy costs for underserved communities and promote clean energy adoption.

Billions Invested in Solar Power for Underserved Communities

Approximately $3.5 billion in investments have been made through the Low-Income Communities Bonus Credit Program, funding solar installations expected to generate close to 2 billion kWh of clean electricity each year. This is equivalent to the total annual energy use of around 200,000 average-sized U.S. households, or approximately $270 million in electricity savings annually.

U.S. Deputy Secretary of the Treasury Wally Adeyemo emphasized the significance of these investments, stating, “$3.5 billion in public and private investment is flowing into communities that are too often left out and left behind, thanks to Biden-Harris Administration investments in clean energy projects.” He added that these projects are already making an impact by lowering costs, shielding families from energy price fluctuations, and fostering new opportunities in the clean energy economy.

Key Projects Supporting Low-Income Communities

In the program’s first year, funding was allocated to a variety of solar energy projects, including:

• Over 48,000 residential solar energy systems aimed at reducing household electricity costs for both single-family and multifamily homes.

• Nearly 100 new solar energy facilities on Indian lands.

• Over 800 solar energy projects for affordable housing developments serving thousands of low- and middle-income families.

• More than 300 community solar projects, where at least 50% of the energy’s financial benefits are passed on to low-income households.

Addressing Energy Inequality and Expanding Clean Energy Access

The Low-Income Communities Bonus Credit Program was established under Section 48(e) of the Internal Revenue Code. Its primary goal is to stimulate clean energy investments in underserved and low-income areas, including Indian land and affordable housing developments. Low-income families often face energy burdens up to three times higher than the national average, meaning they spend a significantly higher percentage of their income on energy costs. The program aims to alleviate these disparities while promoting clean energy adoption.

Section 48(e) provides an additional incentive by increasing the standard energy investment tax credit for qualifying facilities by 10 to 20 percentage points. This boost has been a strong motivator for developers and investors to prioritize solar projects that directly benefit low-income communities.

Robust Demand and Future Expansion of Clean Energy Programs

The program saw overwhelming demand in its first year, with over 54,000 applications submitted from 48 states, the District of Columbia, Puerto Rico, American Samoa, the Northern Mariana Islands, and the U.S. Virgin Islands. This exceeded the available 1.8 gigawatts of solar and wind generation capacity by more than four times. Following a thorough review process, the IRS awarded allocations to over 49,000 energy facilities across the country, prioritizing those projects offering the greatest financial relief to households.

The success of the program has been further demonstrated by the concentration of awards in areas experiencing high energy costs or persistent poverty. This indicates the program's efficacy in providing energy savings and expanding solar adoption in historically underserved areas.

Following the release of this impact report, the Treasury also announced a Notice of Proposed Rulemaking for the Clean Electricity Low-Income Communities Bonus Credit Amount Program under Section 48E(h). This new provision will extend similar benefits to additional clean energy technologies, such as hydropower and geothermal, further broadening the scope of renewable energy solutions available to low-income communities.