US Treasury releases guidance on IRA adders for coal community renewables

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The Elizabeth Mine Solar project in Vermont, which is installed on landfill at an abandoned mine. Image: Greenwood Energy

The US Treasury Department yesterday released guidance on the bonuses included in the Inflation Reduction Act (IRA) for historically fossil fuel-producing ‘energy communities’.

Renewable energy developers who choose to develop projects in areas or communities that are historically focused on energy production or have hosted significant fossil fuel plants – predominanty coal-fired ones – can receive up to a 10% bonus on both the Investment Tax Credit (ITC) and Production Tax Credit (PTC) facilities of the IRA.

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The base level of the ITC and PTC for renewables projects under the IRA is 30%, subject to conforming to wage and labour laws.

To qualify for the bonus a census tract or directly adjoining census tract must be produced, showing a coal mine that was closed after 1999 or a coal-fired electricity generating unit that was retired after 2009. Areas with significant employment or local tax revenues from fossil fuels – as well as above average unemployment – also qualify, as well as hazardously contaminated ‘brownfields’.

Secretary of the treasury, Janet L. Yellen said: “The Inflation Reduction Act ensures all Americans benefit from the growth of the clean energy economy by driving investment and creating jobs in coal communities. Coal communities have the knowledge and resources to play a leading role in the growth of the clean energy economy, and additional public investment will jumpstart the process.”

Applications for the first funding round are expected to open on May 31st.

A report from the Solar Energy Industries Association last month predicted that the IRA is set to create 115,000 new jobs in the solar and storage manufacturing sector, and over 500,000 across the entire industry.

PV Tech Premium recently examined the ‘great rethink’ of the US energy market that the IRA tax credits are causing, as adders like these energy community bonuses opening up more options for investors, corporates and developers to optimise projects and “capture as much additional value as possible.”

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