Treasury has launched a LMI adder dashboard that tracks the application and approval process of the 10% investment tax credit adder for wind and solar projects have a capacity of 5 megawatts or less that meet certain criteria for serving low to middle income communities.  In some instances the adder is 20% if the project provides certain financial benefits to low income households, rather than merely being sited in a low income area.  Here is a prior blog post describing the program: https://www.projectfinance.law/tax-equity-news/the-two-low-income-community-bonus-tax-credit-programs

The LMI adder is the only tax credit adder that requires an application and an award of allocation because Congress capped the size of the program at 1.8 gigawatts a year.  The cap was based on the community solar industry’s estimate of the size of its annual market; however, it appears the industry significantly undershot the market size.  For each year, the IRS has 1.8 gigawatts of capacity available to allocate, and for 2023 applications have been submitted for 8 gigawatts of capacity. 

The 1.8 gigawatts is allocated to specific categories. The two Indian land categories and two of the residential categories have received fewer applications than capacity allocated to the category.  For instance, for the two Indian land categories there is cumulatively 200 megawatts of capacity but only 54 megawatts of applications have been submitted as of today.  For the two undersubscribed residential categories, there is cumulatively 345 megawatts of capacity and applications for only 130 megawatts have been submitted as of today.  Applications can still be submitted on a rolling basis and “will be considered through early 2024.”  This creates an opportunity for developers with projects on Indian land or that meet the residential requirements; however, it seems likely that applications were already submitted for most of those eligible projects.  The project cannot be placed in service before the allocation is received.

The IRS can opt to reallocate unused capacity within a category to another category.  It will be interesting to see if it does so and which categories receive the additional allocation. 

As of today, the IRS has not yet approved any of the applications.  The IRS is being advised on which applications to approve by the Department of Energy.