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New data provided exclusively to Heatmap shows just how complicated it is to get money where it needs to go.
By the numbers, a new federal program designed to give low-income communities access to renewable energy looks like a smashing success. According to data provided exclusively to Heatmap, in its first year, the Low-Income Communities Bonus Credit Program steered nearly 50,000 solar projects to low-income communities and tribal lands, which are together expected to produce more than $270 million in annual energy savings.
But those topline numbers don’t say anything about who will actually see the savings, or how much the projects will benefit households that have historically been left behind. In reality, the majority of the projects — about 98% — were allocated funding simply for being located in low-income communities, with no hard requirement to deliver energy or financial savings to low-income residents.
A closer look at the data reveals a more complicated success story. While the program did make some clear strides in bridging the solar inequality gap, other factors — including the language in the law that created it — are also holding it back.
The Low-Income Communities Bonus Credit Program came out of the Inflation Reduction Act in August 2022. Though the goal is to increase solar access for low-income households, it’s not actually a tax credit for low income households. It’s for small wind and solar developers — and beginning in 2025, developers of other types of clean energy — whose projects meet certain criteria.
The law caps the total amount of energy the program can support at 1.8 gigawatts per year, and developers have to apply and get their project approved in order to claim funds. To be eligible, a project must produce less than 5 megawatts of power and fall under one of four categories: It must be located in a low-income community, be built on Indian land, be part of an affordable housing development, or distribute at least half its power (and guaranteed bill savings) to low-income households. The first two categories qualify for a 10% credit; the second two, which stipulate that at least some financial benefits go to low-income residents, qualify for 20%. In both cases, the credit can be stacked on top of the baseline 30% tax credit for clean energy projects that meet labor standards, meaning it could slash the cost of building a small solar or wind farm in half.
Each of these provisions has the potential to address at least some of the barriers disadvantaged communities face in accessing clean energy. Low-income homeowners may not have the money for a down payment for rooftop solar or the credit to find financing, for instance. But by giving developers a tax credit for projects located in low-income communities, solar leasing programs, in which homeowners lease panels from a third party in exchange for energy bill savings, now have an incentive to expand into these neighborhoods, and potentially offer lower lease rates. The program helped fund nearly 48,000 residential solar projects in the first year.
Tribal lands, meanwhile, account for more than 5% of solar generation potential in the U.S., but are still a largely untapped resource, for reasons including lack of representation in utility regulatory processes, complex land ownership structures, and limited tribal staff capacity. The program gives outside developers additional incentive to work through the challenges, and it also earmarks funds for tribe-owned development. Crucially, the IRA also opened the door for tribes, as well as other tax-exempt entities, to utilize clean energy incentives and receive a direct payment equal to the tax credits. The program supported 96 solar projects on tribal lands in the first year.
The third category attempts to overcome the famous “split incentive” problem for low-income renters whose landlords have little reason to spend money on a solar project that primarily benefits tenants. The program helped finance 805 solar projects on low-income residential buildings, where the developers are required to distribute at least 50% of the energy savings equitably among tenants.
Lastly, while renters in some states can subscribe to community solar projects, which offer utility bill credits in exchange for a small subscription fee, the subscriptions can be scooped up by wealthier customers if there’s no low-income requirement. The program sponsored 319 community solar projects where at least half the capacity had to go to low-income residents and offer at least 20% off their bills.
U.S. Deputy Secretary of the Treasury Wally Adeyemo declared the program a success. “These investments are already lowering costs, protecting families from energy price spikes, and creating new opportunities in our clean energy future,” he said.
Despite overwhelming demand during the four-month application period, however, the program ended up with capacity to spare. Although applications totaled more than 7 gigawatts, ultimately, the Department approved just over 49,000 projects equal to about 1.4 gigawatts, or roughly enough to power 200,000 average households. All of it was solar.
The gap between applications and awarded projects has to do with the program’s design. The Treasury divided the 1.8 gigawatt cap between the four categories, setting maximum amounts that could be awarded for each one. Within the four categories, the awards were further divided, with half set aside for applicants that met additional ownership or geographic criteria, such as tribal-owned companies, tax-exempt entities, or projects sited in areas with especially high energy costs relative to incomes.
For example, 200 megawatts were earmarked for Indian lands, with half reserved for applicants meeting those additional criteria, but only 40 megawatts were awarded. The fourth category, meanwhile, which was designed to encourage community solar development, was oversubscribed.
Since tax data is confidential, the Treasury Department could not share much detail about these projects, including where, exactly, they were, who developed them, or who will benefit from them. A map overview shows a concentration of awards across the sunbelt, with Illinois, New York, Maine, Massachusetts, and Puerto Rico also seeing a lot of uptake.
IRS, RAAS, Statistics of Income, August 2024
I reached out to more than a dozen nonprofits, tribal organizations, and other groups who advocate for or develop clean energy projects benefiting low-income communities to find examples of what the program was actually funding. The first person I was connected with was Richard Best, the director of capital projects and planning for Seattle Public Schools, who got a 10% tax credit for solar arrays on two new schools under construction in low-income neighborhoods. While the school system already planned to put solar on these schools, Best said the tax credits helped offset increased construction costs due to supply chain interruptions, preventing them from having to make compromises on design elements like classroom size.
“It's not insignificant,” he told me. “The solar array at Rainier Beach High School is in excess of a million dollars — just the rooftop solar array. That's $400,000 [in tax credits]. So these are significant dollars that we're receiving, and we're very appreciative.”
Jody Lincoln, an affordable housing development officer for the nonprofit ACTION-Housing in Pittsburgh, Pennsylvania, got a 10% tax credit to add solar to a former YMCA that the group recently converted to a 74-unit apartment building. The single room occupancy rental units serve men who are coming out of homelessness or incarceration. Lincoln told me the building operates “in the gray,” and that any cost saving measures they can make, including the energy savings from the solar array, enable it to continue to operate as affordable housing. When I asked if they could have built the solar project without access to the IRA’s tax credits, she didn’t hesitate: “No.”
These two examples show the program has potential to deliver benefits to low-income communities, even in cases where the energy savings aren’t going directly to low-income residents.
I also spoke with Alexandra Wyatt, the managing policy director and counsel at the nonprofit solar company Grid Alternatives. She told me Grid partnered with for-profit solar developers, such as the national solar company SunRun, who were approved for the tax credit bonus for rooftop solar lease projects on low-income single-family homes. In these cases, Grid helped pull together other sources of funding like state incentives for projects in disadvantaged communities to pre-pay the leases so that the homeowners could more fully benefit from the energy bill savings.
It’s unlikely that all of the nearly 48,000 residential rooftop solar projects in low-income communities that were approved for the credit in the first year had such virtuous outcomes. It’s also possible that projects installed on wealthier homeowners’ roofs in gentrifying neighborhoods were subsidized. In an email to me, a Treasury spokesperson said the Department recognizes that “simply being in a low-income community does not mean low-income households are being served,” and that it was required by statute to include this category. It was still the agency’s decision, however, to allocate such a large portion of the awards, 700 megawatts, to this category — a decision that some public comments on the program disagreed with.
Wyatt applauded the Treasury and the Department of Energy, which oversees the application process, for doing “an admirable job on a tight timeframe with a challenging program design handed to them by Congress.” She’s especially frustrated by the 1.8 gigawatt cap, which none of the other renewable energy tax credits have, and which changes it into a competitive grant that’s more burdensome both for developers and for the agencies. It adds an element of uncertainty to project finance, she said, since developers have to wait to see if their application for the credit was approved.
Wendolyn Holland, the senior advisor for policy, tax and government relations at the Alliance for Tribal Clean Energy told me there was tons of interest among indigenous communities and tribal clean energy developers in taking advantage of the IRA programs, but it wasn’t really happening. Holland cited challenges for tribes reaching the stage of “commercial readiness” required to apply for federal funding. Tribal developers have also said they are limited by the lack of transmission on tribal lands. When I asked the Treasury about the paltry number of projects on Indian Lands, a spokesperson said it was not for lack of trying. The Department and other federal agencies have conducted webinars and other forms of outreach, they said, through which they’ve heard that many tribes are struggling to access capital for energy projects, and that development on Indian lands has “unique challenges due to the history of allotment of Indian lands and status of some land as federal trust land.”
Holland is optimistic that things will change — in December, Biden issued an executive order committing to making it easier for tribes to access federal funding. The Alliance also recently petitioned the Federal Energy Regulatory Commission to address barriers for tribal energy development in its new rules that are supposed to get more transmission built.
The unallocated capacity from 2023 was carried over to the next year’s round of funding, so it wasn’t lost. But a dashboard tracking the second year of the program looks like it's following a similar pattern. While the community solar-oriented category, which was increased to allow for 900 megawatts, is nearly filled up, the tribal Lands category, which kept its 200 megawatt cap, has received applications to develop less than a sixth of that.
Wyatt said that so far, she does think the bonus credit has been successful in spurring good projects that might not otherwise have happened. Still, it will probably take a few years before it will be possible to assess how well it’s working. The good news is, as long as it doesn’t get repealed, the program could run for up to eight more years, leaving plenty of time to improve things. It’s already set to change in one key way. Beginning in 2025, it becomes tech-neutral, meaning that developers of small hydroelectric, geothermal heating or power, or nuclear projects, will be able to apply. (When asked why no wind projects were approved to date, a spokesperson for the Treasury said taxpayer privacy rules meant it couldn’t comment on applications, but they added that wind projects tend to be larger than 5 megawatts and take longer to develop.)
One thing is for sure, despite the heavy administrative burden of screening tens of thousands of applications, the agencies involved are clearly committed to implementing the program.
“I’m definitely pleased that they managed to get the program up and running as quickly as they did,” Wyatt told me. “I mean, it's kind of lightning speed for the IRS.”
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A conversation with Heather O’Neill of Advanced Energy United.
This week’s conversation is with Heather O’Neill, CEO of renewables advocacy group Advanced Energy United. I wanted to chat with O’Neill in light of the recent effective repeal of the Inflation Reduction Act’s clean electricity tax credits and the action at the Interior Department clamping down on development. I’m quite glad she was game to talk hot topics, including the future of wind energy and whether we’ll see blue states step into the vacuum left by the federal government.
The following conversation has been lightly edited for clarity.
During Trump 1.0 we saw blue states really step into the climate role in light of the federal government. Do you see anything similar taking place now?
I think this moment we’re in – it is a different moment.
How are we handling load growth? How are we making sure consumers are not paying for expensive stranded assets? Thinking about energy affordability? All of those challenges absolutely present a different moment and will result in a different response from state leaders.
But that’s where some of the changes our industry has gone through mean we’re able to meet that moment and provide solutions to those challenges. I think we need aggressive action from state leaders and I think we’ll see that from them, because of the challenges in front of them.
What does that look like?
Every state is different. Take Virginia for example. Five years after we passed the Virginia Clean Economy Act – a big, bold promise of action – we’re not on track. So what are the things we need to do to keep the foot on the accelerator there? This last legislative session we passed the virtual power plant legislation that’ll help tremendously in terms of grid flexibility. We made a big push around siting and permitting reform, and we didn’t quite get it over the finish line but that’s the kind of thing where we made a good foundation.
Or Texas. There’s so much advanced energy powering Texas right now. You had catastrophic grid failure in Hurricane Uri and look at what they’ve been able to build out in response to that: wind, solar, and in the last few years, battery storage, and they just passed the energy waste reduction [bill].
We need to build things and make it easier to build – siting and permitting reform – but it’s also states depending on their environment looking at and engaging with their regional transmission organization.
You saw that last week, a robust set of governors across the PJM region called on them to improve their interconnection queue. It’s about pushing and finding reforms at the market level, to get these assets online and get on the grid deployed.
I think the point about forward momentum, I definitely see what you’re saying there about the need for action. Do you see state primacy laws or pre-emption laws? Like what Michigan, New York, and California have done…
I’m not a siting expert, but the reform packages that work the best include engagement from communities in meaningful ways. But they also make sure you’re not having a vocal minority drowning out the benefits and dragging out the process forever. There are timelines and certainty attached to it while still having meaningful local engagement.
Our industry absolutely has to continue to lean into more local engagement and community engagement around the benefits of a project and what they can deliver for a community. I also think there’s a fair amount of making sure the state is creating that pathway, providing that certainty, so we can actually move forward to build out these projects.
From the federal government’s perspective, they’re cracking down on wind and solar projects while changing the tax credits. Do you see states presenting their own incentives for renewables in lieu of federal incentives? I’ve wondered if that’ll happen given inflation and affordability concerns.
No, I think we have to be really creative as an industry, and state leaders have to be creative too. If I’m a governor, affordability concerns were already front and center for me, and now given what just happened, they’re grappling with incredibly tight state budgets that are about to get tighter, including health care. They’re going to see state budgets hit really hard. And there’s energy impacts – we’re cutting off supply, so we’re going to see prices go up.
This is where governors and state leaders can act but I think in this context of tight state budgets I don’t think we can expect to see states replacing incentive packages.
It’ll be: how do we take advantage of all the flexible tools that we have to help shape and reduce demand in meaningful ways that’ll save consumers money, as well as push on building out projects and getting existing juice out of the transmission system we have today.
Is there a future for wind in the United States?
It is an incredibly challenging environment – no question – for all of our technologies, wind included. I don’t want to sugar-coat that at all.
But I look at the whole picture, and I include wind in this: the technologies have improved dramatically in the past couple of decades and the costs have come down. When you look around at what resources are around to deploy, it’s advanced energy. We’re seeing it continue to grow. There’ll be headwinds, and it’ll be more expensive for all of us. But I look at what our industry and our technologies are able to offer and deliver, and I am confident we’ll continue to see growth.
The Grain Belt Express was just the beginning.
The anti-renewables movement is now coming for transmission lines as the Trump administration signals a willingness to cut off support for wires that connect to renewable energy sources.
Last week, Trump’s Energy Department with a brief letter rescinded a nearly $5 billion loan guarantee to Invenergy for the Grain Belt Express line that would, if completed, connect wind projects in Kansas to areas of Illinois and Indiana. This decision followed a groundswell of public opposition over concerns about land use and agricultural impacts – factors that ring familiar to readers of The Fight – which culminated in Republican Senator Josh Hawley reportedly asking Donald Trump in a meeting to order the loan’s cancellation. It’s unclear whether questions around the legality of this loan cancellation will be resolved in the courts, meaning Invenergy may just try to trudge ahead and not pick a fight with the Trump administration.
But the Grain Belt Express is not an anomaly. Across the country, transmission lines tied to both renewable sources and more conventional fuels – both fossil and nuclear – are facing a growing chorus of angst and anguish from the same crowds that are fighting renewable energy. In some ways, it’s a tale as old as widespread transmission itself. But I am also talking about farmers, ranchers, and rural towns who all now mention transmission lines in the same exasperated breaths they use to bemoan solar, wind, and battery storage. Many of the same communities fighting zero-carbon energy sources see those conflicts as part of a broader stand against a new age of tech industrial build-out – meaning that after a solar or wind farm is defeated, that activism energy is likely to go elsewhere, including expanding the grid.
I’ve been trying to figure out if there are other situations like Grain Belt, where a project facing local headwinds could potentially be considered no longer investable from a renewables-skeptic federal perspective. And that’s why since Invenergy lost its cash for that project, I have been digging into the Cimarron Link transmission line, another Invenergy facility proposed to carry wind energy from eastern Oklahoma to the western part of the state, according to a map on the developer’s website.
Do you remember the campaign to ban wind energy in Oklahoma that I profiled at the start of this year? Well, one of the most prominent scalps that this activism movement has claimed was bagged in late 2024, when they successfully pressured Governor Kevin Stitt into opposing a priority transmission corridor proposed by the Biden administration. Then another one of the activists’ biggest accomplishments came through an anti-wind law enacted this year that would, among other things, require transmission projects to go through a new certification program before the state’s Corporation Commission. Many of the figures fighting Cimarron and another transmission line project – NextEra’s Heartland Spirit Connector – are also involved in fighting wind and solar across the state, and see the struggles as part and parcel with each other.
Invenergy appears to want to soldier on through this increasingly difficult process, or at least that’s according to a letter some landowners received that was posted to Facebook. But these hurdles will seriously impact the plausibility that Cimarron Link can be completed any time soon.
Now, on top of these hurdles, critics want Cimarron Link to get the Grain Belt treatment. Cimarron Link was told last fall it was awarded north of $300 million from the Energy Department as a part of DOE’s Transmission Facilitation Program.
Enter Darren Blanchard, a farmer who says his property is in the path of Cimarron Link and has been one of the main public faces of opposition against the project. Blanchard has recently been pleading with the DOE to nix the disposition of that money if it hasn’t been given already. Blanchard wrote the agency a lengthy request that Cimarron get similar treatment to Grain Belt which was made public in the appendix of the agency’s decision documents related to the loan cancellation (see page 23 of this document).
To Blanchard’s surprise, he got a reply from the Transmission Facilitation Program office “responding on behalf of” Energy Secretary Chris Wright. The note, to him, read like they wanted him to know they saw his comment: “We appreciate you taking the time to share your views on the project,” it read.
Now, this might’ve been innocuous. I haven’t heard back from the Energy Department about Cimarron Link and I am personally skeptical of the chances a grant is canceled easily. There is no high-level politician calling for the cancellation of this money right now, like there was in Sen. Josh Hawley and the Grain Belt Express.
But I do believe that if there is a will, there is a way with the Trump administration. And as anti-renewables sentiments abound further, there’ll be more ways to create woe for transmission projects like Cimarron that connect to renewable resources. Should voices like Blanchard aim their sights at replicating what happened with Grain Belt, well… bets may be off.
Over the next few weeks, I will be chronicling more fights over individual transmission projects connected to zero-carbon sources. Unique but with implications for a host of proposed wires across the country, they’re trend-setters, so to speak. Next week I’ll be tackling some power lines out West, so stay tuned.
On America’s new crude record, coal costs, and Hungary’s SMR deal
Current conditions: Coastal storms are pushing water levels on New England’s shores two feet above normal levels • Japan just set a new temperature record of more than 106 degrees Fahrenheit • A cold front is settling over South Africa, bringing gale-forces to KwaZulu-Natal on the east coast.
The Department of Energy issued a report on Tuesday calling into question the global consensus on climate change and concluding that global warming poses less economic risk than previously believed. “The rise of human flourishing over the past two centuries is a story worth celebrating. Yet we are told — relentlessly — that the very energy systems that enabled this progress now pose an existential threat,” Secretary of Energy Chris Wright said in a statement. “Climate change is real, and it deserves attention. But it is not the greatest threat facing humanity.” But scientists whose work appeared in the 151-page report decried an analysis they said “fundamentally misrepresents” their research. I rounded up some comments they’ve made over the past couple of days:
A pumpjack in the Permian Basin.Joe Raedle / Getty Images
U.S. crude oil production surged to a record 13.49 million barrels per day in May, despite concerns about oversupply driving prices down to four-year lows, according to a Reuters analysis of data from the U.S. Energy Information Administration. The milestone represents a win for President Donald Trump, who has repeatedly urged the industry to “drill, baby, drill,” even as rival producers in the Organization of the Petroleum Exporting Countries increased output to maintain market share, making profits difficult to turn in the U.S.
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The Bureau of Ocean Energy Management has rescinded its designated areas for offshore wind development in federal waters. The move de-designated more than 3.5 million acres off the continental shelf in the Gulf of Maine, the New York Bight, California, Oregon, the Central Atlantic, and the Gulf of Mexico for potential wind development.
The agency said it was acting in accordance with Secretary of the Interior Doug Burgum’s order this week to weed out any policies that give preferential treatment to wind and solar. While the de-designation will not affect existing leases, the decision makes permanent the temporary pause on offshore wind leases Trump issued via an executive order on his first day in office in January.
In May, Energy Secretary Chris Wright issued an emergency order directing the utility Consumers Energy to keep Michigan’s J.H. Campbell coal plant operating for another 90 days, through August 20, to meet surging electricity demand on the Midwest’s grid. In a public filing as part of its quarterly earnings announced Thursday, Consumers Energy named the price of complying with the administration's order so far: $29 million. And that’s just the cost of operating the plant through June 30. The company said it plans to recoup the cost from ratepayers. The filing did not indicate what the total cost would be for the full three-month period.
Even before Trump returned to office, coal plant retirements were slowing. As Heatmap’s Matthew Zeitlin wrote last year, “Coal and gas were being retired so steadily over the past 20 years not just because plants were aging, but also because power use was essentially flat from the early 2000s through, essentially, yesterday. This meant that older plants — especially dirty coal plants — became uneconomic to run, especially as natural gas prices began to fall.” Coal plant retirements dropped last year to their lowest level since 2011, according to the Energy Information Administration, though at least as of February they were projected to increase this year again by 65%.
Of all the small modular reactors competing for a shot in the West’s ballyhooed nuclear renaissance, GE-Hitachi Nuclear Energy’s 300-megawatt model is among the most promising. Ontario’s public utility just broke ground on what could be the world’s first BWRX-300s. The Tennessee Valley Authority has plans to build the second set. And Finland, Sweden, Estonia, and Poland are all considering buying their own. Add Hungary to that list. Piggybacking off the Polish project, Hungary on Wednesday signed a letter of intent with Poland’s Synthos Green Energy to back construction of up to 10 BWRX-300 reactors, the U.S. Embassy in Hungary announced. “This is American engineering at its best — the kind of trusted technology that reflects the strength, reliability, and excellence of the American industrial base,” Chargé d’Affaires Robert Palladino said in a speech at the signing event.
The move comes as the U.S. looks to broaden its grip on Europe’s nuclear sector. Westinghouse, the legendary American nuclear developer behind the only two new reactors built from scratch in a generation in the U.S., is building Poland’s first atomic power station. Earlier this week, Slovakia skipped its competitive bidding process and picked Westinghouse to construct its next nuclear plant. But after struggling to build its own reactors at home, the U.S. has to prove it can deliver on the deals.
“Wind farms: Loud, ugly, harmful to nature. Who says that? These giants are standing tall against fossil fuels, rising up out of the ocean like a middle finger to CO2,” Samuel L. Jackson says in a new minute-long TV commercial from Swedish wind giant Vattenfall advertising seaweed snacks from aquatic crops grown on the artificial reefs around the behemoth turbine foundations. It may be one of the most defiant, if expletive-laden, defenses made yet of the industry the Trump administration is bent on drowning.