On August 30, the U.S. Department of the Treasury (Treasury) and the Internal Revenue Service (IRS) issued a Notice of Proposed Rulemaking (NPRM) for 48E(h), the Clean Electricity Low-Income Communities Bonus Credit Program, created by the Inflation Reduction Act. The program promotes cost-saving clean energy investments located in low-income communities, on Indian lands, within affordable housing or directly benefitting low-income households.
The proposed rules mark a major step forward for the implementation of the Biden-Harris Administration’s Investing in America agenda, lowering costs for underserved communities and households and helping ensure that they share in the benefits of the growth of the clean energy economy.
The 48E(h) Clean Electricity Low-Income Communities Bonus Credit Program builds on the first-of-its-kind Low-Income Communities Bonus Credit Program, also known as 48(e). The transition from 48(e) to 48E(h) opens the program to additional clean energy technologies beyond wind and solar such as hydropower and geothermal. This expansion also coincides with Treasury’s efforts to make the benefits of the Clean Electricity Production Credit and Clean Electricity Investment Credit available to clean energy facilities with a greenhouse gas emissions rate of zero or less.
“Incentives to develop clean power in communities that have been overlooked and left out for too long will drive investment and create opportunity, helping ensure that the growth of the clean energy economy benefits all Americans,” said U.S. Deputy Secretary of the Treasury Wally Adeyemo. “The Biden-Harris Administration is continuing to prioritize lowering energy costs and strengthening our energy security, and today’s announcement represents a major step forward.”
The NPRM was designed to allow a wide range of taxpayers and geographies to access the 48E(h) program, prioritize financial benefits to low-income households, and ensure consistency with the statute and other guidance. Beginning in 2025, 1.8 GW of Capacity Limitation will be available annually for allocation under the program, which will continue through the later of either the calendar year when certain greenhouse gas emissions reductions are met or 2032. The allocated credit provides a 10 or 20 percentage point boost for qualified non-combustion and gasification facilities under 5 MW on top of the 30% 48E Clean Electricity Investment Tax Credit if prevailing wage and apprenticeship requirements are also met.
The NPRM issued in August incorporates best practices learned from the successful implementation of the 48(e) program in 2023 and 2024, including maintaining much of the current program’s innovative Applicant Portal infrastructure. The portal created a paperless, user-friendly platform, making it easier for taxpayers to apply for the bonus credit.
The NPRM proposes updated definitions to expand financial benefits delivery mechanisms to account for future technologies and ensure additional benefits flow to low-income subscribers. The NPRM also proposes to maintain a sub-reservation for certain residential facilities (such as behind-the-meter rooftop solar) and set-asides for Additional Selection Criteria for applications. The proposed Additional Selection Criteria provides that at least 50% of allocations in each category support projects owned by tax-exempt entities (such as state, local and Tribal governments and non-profits), worker cooperatives, Tribal enterprises and projects that are located in communities that have high persistent poverty and high energy burdens.
The Department of Energy’s Office of Energy Justice and Equity will continue to partner with the IRS to manage the Applicant Portal and evaluate submitted applications.
The release of the NPRM marks a critical step of implementing the 48E(h) Clean Electricity Low-Income Communities Bonus Credit Program for its 2025 program opening. Treasury invites comments during the 30-day comment period and will host a public hearing on October 17, 2024, and a Tribal consultation on September 27, 2024.
News item from the Dept. of the Treasury
