Treasury Releases 2024 Guidance for the Low-Income Communities Bonus Credit Program


Treasury Releases 2024 Guidance for the Low-Income Communities Bonus Credit Program

April 11, 2024

On March 29, the Department of Treasury and IRS released 2024 guidance for the Low-Income Communities Bonus Credit Program (LICBC). The key takeaways are that this second round will look similar to the first and DOE will begin accepting applications at some point this spring.  

Treasury confirmed that the second program year will follow the same rules as the first, but there’s a small adjustment to the capacity allocation: 100 MW of the total 1.8 GW has moved from Category 1 (Eligible Low-Income Residential and Community Projects) to Category 4 (Qualified Low-Income Economic Benefit Projects).

The new procedural guidance closely mirrors the 2023 version. DOE will again open an initial 30-day window during which all applications are considered submitted at the same time; a lottery will determine how to prioritize projects in oversubscribed categories. After that, applications will be accepted on a rolling basis pending available capacity per category.  Both of the Additional Selection Criteria (ASC) options remain and projects meeting one or both of the criteria will continue to be prioritized.

For a refresher on this topic, feel free to take a look at our original post “Unlocking IRA’s Low-Income Communities Bonus Credit: A Comprehensive Guide and Timeline,” otherwise, read on for updates.

Table of Contents

What are the final category allocations for round two?

*50% of the capacity for each category will be reserved for projects committed to meeting the ASC.
CategoryCapacity*Adder Percentage
1: Located in a Low-Income Community600 MW: 400 for residential BTM and 200 for FTM/non-residential BTM facilities10%
2: Located on Indigenous Land200 MW10%
3: Qualified Low-Income Residential Building Project200 MW20%
4: Qualified Low-Income Economic Benefit Project800 MW: all FTM + any project sending ≥ 50% of generation to the broader grid20%

How has the first round gone?

The application window for year one of the LICBC program officially closed on February 29, 2024. Until then, DOE was still accepting applications in categories with remaining capacity. Categories 1 and 4 closed after the initial 30-day window due to overwhelming interest from community solar developers. Category 4 received nearly 4 GW of applications and Category 1 saw even more. The pace of review started slowly, but DOE was flooded with nearly 50,000 applications across the whole program.  

As of mid-April, 456 MW of projects meeting one or both ASC had been approved in Category 4, with another 294 MW left to review under the ASC bucket. DOE also began approving applications in the non-ASC subcategory: 94 MW of awards had gone out with close to 3GW still pending. Only 150 MW of Category 4’s total 700 MW remained. 559 MW had been awarded in Category 1, with over 3 GW still pending. You can track the status of application review across each category at the program dashboard.

Will anything change after the 2024 round?

After the 2024 allocation, stakeholders anticipate that Treasury will open a new rulemaking process. It remains to be seen how much of the existing rules will be subject to change, but we do know that for the 2025 allocation, the tax credit will no longer be only for qualified solar and wind facilities. The total available annual capacity will still be 1.8 GW but for years 2025 through 2032, the credit will become tech-neutral credit, meaning any technology that is considered zero emissions can qualify.

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