The Energy Community Tax Credit Bonus has left many solar companies puzzled about its impact. Recently, the US Treasury Department and the IRS provided guidance to clear the confusion. What does this mean for solar companies, installers, and people in Energy Communities? Let’s break it down.
Firstly, What Exactly Is an Energy Community?
Brownfield Site
These are properties with potential environmental hazards, defined in certain parts of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA). To qualify, these sites must have been identified as hazardous by federal, state, or tribal resources or confirmed through an Environmental Site Assessment. Small projects with a capacity of 5 megawatts or less also qualify with a completed Phase I Environmental Site Assessment.
Metropolitan or Non-Metropolitan Statistical Area
These areas must have had significant employment or revenue linked to fossil fuel industries since 2009. At least 0.17% of direct employment or 25% of local tax revenues must be from coal, oil, or natural gas-related activities. Additionally, these areas must have had an unemployment rate equal to or above the national average for the previous year.
Census Tract
This includes tracts where a coal mine closed after 1999 or a coal-fired electric generating unit retired after 2009. The tax credit bonus also applies to directly adjoining census tracts. This provision aims to support communities impacted by the shift away from coal-based energy production.
In simple terms, Energy Communities are places negatively affected by traditional energy production methods. The new guidance aims to clarify these areas, providing a better understanding of the Energy Community Tax Credit Bonus and how it applies to solar companies and installers.
This post was written by Daniel Massaad, owner and expert solar technician at Energy Solutions Direct! ESD is the top choice for solar panels in Clearwater! Our licensed and certified contractors are masters of their craft; with years of experience servicing the great Tampa Bay area and beyond, the choice is simple. ESD excels at offering you the best in solar value!
