You’re out of free articles.
Log in
To continue reading, log in to your account.
Create a Free Account
To unlock more free articles, please create a free account.
Sign In or Create an Account.
By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy
Welcome to Heatmap
Thank you for registering with Heatmap. Climate change is one of the greatest challenges of our lives, a force reshaping our economy, our politics, and our culture. We hope to be your trusted, friendly, and insightful guide to that transformation. Please enjoy your free articles. You can check your profile here .
subscribe to get Unlimited access
Offer for a Heatmap News Unlimited Access subscription; please note that your subscription will renew automatically unless you cancel prior to renewal. Cancellation takes effect at the end of your current billing period. We will let you know in advance of any price changes. Taxes may apply. Offer terms are subject to change.
Subscribe to get unlimited Access
Hey, you are out of free articles but you are only a few clicks away from full access. Subscribe below and take advantage of our introductory offer.
subscribe to get Unlimited access
Offer for a Heatmap News Unlimited Access subscription; please note that your subscription will renew automatically unless you cancel prior to renewal. Cancellation takes effect at the end of your current billing period. We will let you know in advance of any price changes. Taxes may apply. Offer terms are subject to change.
Create Your Account
Please Enter Your Password
Forgot your password?
Please enter the email address you use for your account so we can send you a link to reset your password:
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.”
Log in
To continue reading, log in to your account.
Create a Free Account
To unlock more free articles, please create a free account.
Current conditions: In the Atlantic, the tropical storm that could, as it develops, take the name Jerry is making its way westward toward the U.S. • In the Pacific, Hurricane Priscilla strengthened into a Category 2 storm en route to Arizona and the Southwest • China broke an October temperature record with thermometers surging near 104 degrees Fahrenheit in the southeastern province of Fujian.
The Department of Energy appears poised to revoke awards to two major Direct Air Capture Hubs funded by the Infrastructure Investment and Jobs Act in Louisiana and Texas, Heatmap’s Emily Pontecorvo reported Tuesday. She got her hands on an internal agency project list that designated nearly $24 billion worth of grants as “terminated,” including Occidental Petroleum’s South Texas DAC Hub and Louisiana's Project Cypress, a joint venture between the DAC startups Heirloom and Climeworks. An Energy Department spokesperson told Emily that he was “unable to verify” the list of canceled grants and said that “no further determinations have been made at this time other than those previously announced,”referring to the canceled grants the department announced last week. Christoph Gebald, the CEO of Climeworks, acknowledged “market rumors” in an email, but said that the company is “prepared for all scenarios.” Heirloom’s head of policy, Vikrum Aiyer, said the company wasn’t aware of any decision the Energy Department had yet made.
While the list floated last week showed the Trump administration’s plans to cancel the two regional hydrogen hubs on the West Coast, the new list indicated that the Energy Department planned to rescind grants for all seven hubs, Emily reported. “If the program is dismantled, it could undermine the development of the domestic hydrogen industry,” Rachel Starr, the senior U.S. policy manager for hydrogen and transportation at Clean Air Task Force told her. “The U.S. will risk its leadership position on the global stage, both in terms of exporting a variety of transportation fuels that rely on hydrogen as a feedstock and in terms of technological development as other countries continue to fund and make progress on a variety of hydrogen production pathways and end uses.”
Remember the Tesla announcement I teased in yesterday’s newsletter? The predictions proved half right: The electric automaker did, indeed, release a cheaper version of its midsize SUV, the Model Y, with a starting price just $10 shy of $40,000. Rather than a new Roadster or potential vacuum cleaner, as the cryptic videos the company posted on CEO Elon Musk’s social media site hinted, the second announcement was a cheaper version of the Model 3, already the lower-end sedan offering. Starting at $36,990, InsideEVs called it “one of the most affordable cars Tesla has ever sold, and the cheapest in 2025.” But it’s still a far cry from Musk’s erstwhile promise to roll out a Tesla for less than $30,000.
That may be part of why the company is losing market share. As Heatmap’s Matthew Zeitlin reported, Tesla’s slice of the U.S. electric vehicle sales sank to its lowest-ever level in August despite Americans’ record scramble to use the federal tax credits before the September 30 deadline President Donald Trump’s new tax law set. General Motors, which sold more electric vehicles in the third quarter of this year than in all of 2024, offers the cheapest battery-powered passenger vehicle on the market today, the Chevrolet Equinox, which starts at $35,100.
Get Heatmap AM directly in your inbox every morning:
Trump’s pledge to revive the United States’ declining coal industry was always a gamble — even though, as Matthew reported in July, global coal demand is rising. Three separate stories published Tuesday show just how stacked the odds are against a major resurgence:
As you may recall from two consecutive newsletters last month, Secretary of Energy Chris Wright said “permitting reform” was “the biggest remaining thing” in the administration’s agenda. Yet Republican leaders in Congress expressed skepticism about tacking energy policy into the next reconciliation bill. This week, however, Utah Senator Mike Lee, the chairman of the Senate Committee on Energy and Natural Resources, called for a legislative overhaul of the National Environmental Policy Act. On Monday, the pro-development social media account Yimbyland — short for Yes In My Back Yard — posted on X: “Reminder that we built the Golden Gate Bridge in 4.5 years. Today, we wouldn’t even be able to finish the environmental review in 4.5 years.” In response, Lee said: “It’s time for NEPA reform. And permitting reform more broadly.”
Last month, a bipartisan permitting reform bill got a hearing in the House of Representatives. But that was before the government shutdown. And sources familiar with Democrats’ thinking have in recent months suggested to me that the administration’s gutting of so many clean energy policies has left Republicans with little to bargain with ahead of next year’s midterm elections.
Soon-to-be Japanese prime minister Sanae Takaichi.Yuichi Yamazaki - Pool/Getty Images
On Saturday, Japan’s long-ruling Liberal Democratic Party elected its former economic minister, Sanae Takaichi, as its new leader, putting her one step away from becoming the country’s first woman prime minister. Under previous administrations, Japan was already on track to restart the reactors idled after the 2011 Fukushima disaster. But Takaichi, a hardline conservative and nationalist who also vowed to re-militarize the nation, has pushed to speed up deployment of new reactors and technologies such as fusion in hopes of making the country 100% self-sufficient on energy.
“She wants energy security over climate ambition, nuclear over renewables, and national industry over global corporations,” Mika Ohbayashi, director at the pro-clean-energy Renewable Energy Institute, told Bloomberg. Shares of nuclear reactor operators surged by nearly 7% on Monday on the Tokyo Stock Exchange, while renewable energy developers’ stock prices dropped by as much as 15%
Researchers at the United Arab Emirates’ University of Sharjah just outlined a new method to transform spent coffee grounds and a commonly used type of plastic used in packaging into a form of activated carbon that can be used for chemical engineering, food processing, and water and air treatments. By repurposing the waste, it avoids carbon emitting from landfills into the atmosphere and reduces the need for new sources of carbon for industrial processes. “What begins with a Starbucks coffee cup and a discarded plastic water bottle can become a powerful tool in the fight against climate change through the production of activated carbon,” Dr. Haif Aljomard, lead inventor of the newly patented technology, said in a press release.
Last week’s Energy Department grant cancellations included funding for a backup energy system at Valley Children’s Hospital in Madera, California
When the Department of Energy canceled more than 321 grants in an act of apparent retribution against Democrats over the government shutdown, Russ Vought, President Trump’s budget czar, declared that the money represented “Green New Scam funding to fuel the Left's climate agenda.”
At least one of the grants zeroed out last week, however, was supposed to help keep the lights on at a children’s hospital.
The $29 million grant was intended to build a 3.3-megawatt long-duration energy storage system at Valley Children’s Hospital, a large pediatric hospital in Madera, California. The system would “power critical hospital operations during outage events,” such as when the California grid shuts down to avoid starting wildfires, according to project documents.
“The U.S. Department of Energy’s cancellation of funding for [the] long-duration energy storage demonstration grant is disappointing,” Zara Arboleda, a spokesperson for the hospital, told me.
Valley Children’s Hospital is a 358-bed hospital that says it serves more than 1.3 million children across California’s Central Valley. It has 116 neonatal intensive care unit beds and nationally ranked specialties in pediatric neurology, orthopedics, and lung surgery, among others.
Energy Secretary Chris Wright has characterized the more than $7.5 billion in grants canceled last week as part of an ongoing review of financial awards made by the Biden administration. But the timing of the cancellations — and Vought’s gleeful tweets about them — suggests a more vindictive purpose. Republican lawmakers and President Trump himself threatened to unleash Vought as a kind of rogue budget cutter before the federal government shut down last week.
“We don’t control what he’s going to do,” Senator John Thune told Politico last week. “I have a meeting today with Russ Vought, he of PROJECT 2025 Fame, to determine which of the many Democrat Agencies, most of which are a political SCAM, he recommends to be cut,” Trump posted on the same day.
Up until this year, canceling funding that is already under contract with a private party would have been thought to be straightforwardly illegal under federal law. But the Supreme Court’s conservative majority has allowed the Trump administration to act with previously unimaginable freedom while it considers ruling on similar cases.
Faraday Microgrids, the contractor that was due to receive the funding, is already building a microgrid for the hospital. The proposed backup power system — which the grant stipulated should be “non-lithium-ion” — was supposed to be funded by the Energy Department’s Office of Clean Energy Demonstrations, with the goal of finding new ways of storing electricity without using lithium-ion batteries, and was meant to work in concert with that new microgrid and snap on in times of high stress.
That microgrid project is still moving forward, Arboleda, the hospital’s spokesperson, told me. “Valley Children’s Hospital continues to build and soon will operate its microgrid announced in 2023 to ensure our facilities have access to reliable and sustainable energy every minute of every day for our patients and our care providers,” she added. That grid will contain some storage, but not the long-term storage system discussed in the official plan.
Faraday Microgrids, formerly known as Charge Bliss, didn’t respond to a request for comment, but its website touts its ability to secure grants and other government funding for energy projects.
In a statement, a spokesman for the Energy Department said that the grant was canceled because the project wasn’t feasible. “Following an in-depth review of the financial award, it was determined, among other reasons, that the viability of the project was not adequate to warrant further disbursements,” Ben Dietderich, a spokesman for the Energy Department, told me.
The children’s hospital, at least, is in good company. On Tuesday, a Trump administration document obtained by Heatmap News suggested the Energy Department is moving to kill bipartisan-backed funding for two direct air capture hubs in Texas and Louisiana. And although California has lost the most grants of any state, the Energy Department has also sought to terminate funding for new factories and industrial facilities across Republican-governed states.
Editor’s note: This story initially misstated the number of neonatal intensive care unit beds at Valley Children’s Hospital. It has been corrected.
Rob and Jesse break down China’s electricity generation with UC San Diego’s Michael Davidson.
China announced a new climate commitment under the Paris Agreement at last month’s United Nations General Assembly meeting, pledging to cut its emissions by 7% to 10% by 2035. Many observers were disappointed by the promise, which may not go far enough to forestall 2 degrees Celsius of warming. But the pledge’s conservatism reveals the delicate and shifting politics of China’s grid — and how the country’s central government and its provinces fight over keeping the lights on.
On this week’s episode of Shift Key, Rob and Jesse talk to Michael Davidson, an expert on Chinese electricity and climate policy. He is a professor at the University of California, San Diego, where he holds a joint faculty appointment at the School of Global Policy and Strategy and the Jacobs School of Engineering. He is also a senior associate at the Center for Strategic and International Studies, and he was previously the U.S.-China policy coordinator for the Natural Resources Defense Council.
Shift Key is hosted by Robinson Meyer, the founding executive editor of Heatmap, and Jesse Jenkins, a professor of energy systems engineering at Princeton University.
Subscribe to “Shift Key” and find this episode on Apple Podcasts, Spotify, Amazon, YouTube, or wherever you get your podcasts.
You can also add the show’s RSS feed to your podcast app to follow us directly.
Here is an excerpt from our conversation:
Robinson Meyer: Your research and other people’s research has revealed that basically, when China started making capacity payments to coal plants, in some cases, it didn’t have the effect on the bottom line of these plants that was hoped for, and also we didn’t really see coal generation go down or change in the year that it happened. It wasn’t like they were paying these plants to stick around and not run. They were basically paying these plants, it seems like, to do the exact same thing they did the year before, but now they also got paid. And maybe that was needed for their economics, we can talk about it.
Why did coal get those payments and not, say, batteries or other sources of spare capacity, like pumped hydro storage, like nuclear? Why did coal, specifically, get payments for capacity? And does it have to do with spinning reserve? Or does it have to do with the political economy of coal in China?
Michael Davidson: When it came out, we said exactly the same thing. We said, okay, this should be a technology neutral payment scheme, and it should be a market, not a payment, right? But China’s building these things up little by little. Over time we’ve seen, historically, actually, a number of systems internationally started with payments before they move to markets because they realize that you could get a lot more competitive pressure with markets.
The capacity payment scheme for coal is extremely simple, right? It says, okay, for each province, we’re going to say what percentage of our benchmark coal investment costs are we going to subsidize. It’s extremely simple. It does not account for how much you’re using it at a plant by plant level. It does not account for other factors, renewables, etc. It’s a very coarse metric. But I wouldn’t say that it had had some, you know, perverse negative effect on the outcome of what coal generation is. Probably more likely is that these payments were seen, for some, as extra support. But then for some that are really hurting, they’re saying, okay, well then we will maybe put up less obstacles to market reforms.
But then on top of that, you have to put in the hourly energy demand growth story and say, okay, well you have all these renewables, but you don’t have enough storage to shift to evening peaks. You are going to rely on coal to meet that given the current rigid dispatch system. And so you’re dispatching them kind of regardless of whether or not you have the payment schemes.
I will say that I was a skeptic, right? Because when people told me that China should put in place a capacity market, I said, China has overcapacity. So if you have an overcapacity situation, you put in place a market, the prices should be zero. So what’s the point? But actually, when you’re looking out ahead with all of this surplus coal capacity that you’re trying to push down, you’re trying to push those capacity factors of those coal plans from 50%, 60%, down to 20% or even lower, they need to have other revenue schemes if you’re not going to dramatically open up your spot markets, which China is very hesitant to do — very risk averse when it comes to the openness of spot markets, in terms of price gaps. So that’s a necessary part of this transition. But it can be done more efficiently, and it should done technology neutral.
And by the way that is happening in certain places. That’s a national scheme, but we actually see that the implementation — for example, Shaanxi province, we have a technology neutral scheme that would include other resources, not just coal.
Mentioned:
China’s new pledge to cut its emissions by 2035
What an ‘ambitious’ 2035 electricity target looks like for China
China’s Clean Energy Pledge is Clouded by Coal, The Wire China
Jesse’s upshift; Rob’s upshift.
This episode of Shift Key is sponsored by …
Hydrostor is building the future of energy with Advanced Compressed Air Energy Storage. Delivering clean, reliable power with 500-megawatt facilities sited on 100 acres, Hydrostor’s energy storage projects are transforming the grid and creating thousands of American jobs. Learn more at hydrostor.ca.
A warmer world is here. Now what? Listen to Shocked, from the University of Chicago’s Institute for Climate and Sustainable Growth, and hear journalist Amy Harder and economist Michael Greenstone share new ways of thinking about climate change and cutting-edge solutions. Find it here.
Music for Shift Key is by Adam Kromelow.