The US Treasury Department has released proposed guidance on the energy community bonus provision of the Inflation Reduction Act (IRA).
The energy community bonus for the Investment Tax Credit (ITC) and Production Tax Credit (PTC) is available to developers for locating projects in historical energy communities, including areas with closed coal mines or coal-fired power plants.
The bonus is also available to areas that have significant employment or local tax revenues from fossil fuels and higher than average unemployment.
Gregory Wetstone, President and CEO of the American Council on Renewable Energy (ACORE), said: “We are grateful for the helpful clarity the Treasury Department provided today on an important provision of the Inflation Reduction Act (IRA).
“The IRA includes key incentives designed to help fossil fuel and frontline communities benefit from the transition to clean energy.
“Today’s guidance will help renewable energy developers and investors better understand how this program will work and where the boundaries lie for the ‘energy community’ designation.
“We are encouraged by the duration of the energy community qualification, the inclusion of a new mapping tool, and clarity that offshore wind projects can qualify for the bonus when interconnection facilities are located in energy communities.
“This new guidance is a constructive response to the reality that there is a great deal of capital ready to flow into the renewable sector under the IRA, even as players on all sides of the transaction want to be sure they have a solid understanding of how the law works and what must be done to qualify for incentives.
“We are encouraged and impressed with the Administration’s commitment to fully maximising the economic and environmental benefits of this transformative legislation.”