1 of 2 | Eligible communities may qualify for tax credits for wind and solar energy under provisions outlined by the Treasury Department and the Internal Revenue Service. File photo by Pat Benic/ UPI | License Photo
Aug. 10 (UPI) -- Eligible low-income communities may get up to a 20% increase in tax credits for qualified solar and wind energy facilities, the U.S. Treasury Department said Thursday.
The Treasury Department, in coordination with the Internal Revenue Service, said the aim of the relief program is to bring new market participants into the clean energy sector by providing tax credits.
"This new bonus incentive through the Inflation Reduction Act will drive investment to underserved communities to ensure they benefit from lower energy costs and reduced pollution and health hazards," said Deputy Secretary of the Treasury Wally Adeyemo.
The agencies on Thursday released final rules and procedural guidance for the program allocating 1.8 gigawatts of capacity available through four categories of solar or wind facilities with a maximum output of less than five megawatts, the Treasury Department said.
The IRS said it would allocate as many as 700 megawatts to facilities in low-income areas, 2000 to facilities on Indian land, 200 megawatts to federally- subsidized residential buildings and 700 megawatts for facilities where at least 50% of financial benefits of the electricity produced would go to households with incomes below 200% of the poverty line ore below 80% of area median gross income.
Applications will open in the fall and awards will be made by the end of the year.
The Inflation Reduction Act, signed last August, dedicated more than $370 billion toward lowering energy costs and incentivizing private investments in clean energy projects.
Similar guidance from Treasury and the IRS in June extended to non-profits, state and local governments, as well as tribal entities. Treasury Secretary Janet Yellen said it would be a "force multiplier" in terms of advancing a low-carbon economy.
President Joe Biden wants a carbon pollution-free power sector by 2035 and net-zero vehicle emissions by no later than 2050. Early this year, he announced new partnerships with ride-sharing companies to boost electric vehicle use throughout the United States after the Environmental Protection Agency proposed strict new limits on tailpipe emissions and a requirement that more than half of new vehicles manufactured in the United States be fully electric by 2032.
A monthly market report from the Energy Department shows renewable forms of energy will account for about 25% of what's on the grid next year, with much of the gains coming from solar power.