The Biden administration on Thursday announced $100 million in funding to improve energy efficiency and resilience of low-income U.S. households to climate change. The Biden administration will also begin accepting applications Thursday for a new credit program designed to make it more affordable for low-income communities to install small solar and wind projects. Both programs are funded by the Inflation Reduction Act.
New technologies like heat pumps and solar panels can save energy, lower utility bills and prevent greenhouse gas emissions, but they often come with a hefty price tag initially. While costs tend to fall over time as adoption increases, this often leaves low-income households last in line. These programs aim to reverse this situation by providing incentives to homeowners and developers to make it easier for them to bring these technologies into their homes.
The $100 million will be used through loans and grants to help 1,500 households achieve "zero energy consumption." The Department of Energy defines a "zero energy" home as one that is "so energy efficient that renewable energy systems can offset most or all of the home's annual energy use." For example, winners can use the funds to install solar panels or strengthen roofs with better installation methods. They must also work toward certain sustainability certifications, such as LEED certification.
"This will truly bring housing built in the 1970s into this century and prepare it for restorative development in the years to come," Adrianne Todman, deputy secretary of Housing and Urban Development, said at a news conference.
The new Low-Income Community Incentive Credit program announced Thursday is expected to bring 1.8 gigawatts worth of clean energy investment annually to "underserved communities," according to a White House fact sheet. By comparison, U.S. rooftop solar capacity will be approximately 40 gigawatts in 2022 (excluding utility-scale solar farms). The program provides tax credits of up to 20 percentage points for small solar and wind energy equipment installed in tribal or low-income communities. This is an additional incentive on top of the existing investment tax credit for clean energy projects.
"I would say the Low-Income Community Incentives Credit Program is the most significant tax incentive in U.S. history to promote clean energy investment in low-income communities, tribal lands and affordable housing," Energy Undersecretary David Turk said in the release. "That said, this is a big deal and a game-changer."