Illustration: Sarah Grillo/Axios
Solar industry titans are lobbying to weaken an energy equity tool created under the Inflation Reduction Act.
Why it matters: The industry push against the tool — guidance for a bonus tax credit for solar projects in low-income areas — is unsettling environmental justice advocates.
Driving the news: The Treasury Department released guidance last week for the credit crafted not only to help bring solar to these areas but also to support new firms entering the market.
- Projects in low-income communities can soon try to claim up to 20% in bonus tax breaks on top of an existing 30% solar investment credit.
- Industry is focused on an aspect of the credit that will be competitive and given to only 700 MW-worth of solar projects. There's a similar break for wind power, and additional wattage will be given to projects on tribal lands and qualifying low-income residential homes.
The intrigue: Behind closed doors, solar firms and trade groups — including the Solar Energy Industries Association — have pushed officials to ditch parts of the guidance after it was released, Axios learned.
- Among their objections: a requirement that qualifying projects not be placed in service yet.
- They also contested the timetable for the application process, which starts in the third quarter of 2023.
- Instead, industry wanted applications to come in on a rolling basis and for projects already placed in service to qualify.
Between the lines: The larger players argue that the guidance will hinder solar’s arrival to low-income communities. But industry is objecting to parts of the guidance that benefit new companies that may not be able to quickly apply.
- Michelle Moore, a community solar advocate who served as President Obama’s chief sustainability officer, told Jael that the changes industry wants could let the biggest firms secure the credits before small businesses can even learn about them.
- “I was talking to an affordable housing developer … they weren’t even aware of the bonus credits. They didn’t even know it existed,” she said.
- Daphany Rose Sanchez, an energy equity advocate based in New York City, wants “to just make sure the [administration] continues in this pathway because it is standing up to these actors in the shadows and telling them ‘We care about these communities.’”
What’s next: Treasury doesn’t sound eager to do what industry wants.
- Treasury spokeswoman Ashley Schapitl said in an email that the department remains focused on making sure the credit is “creating economic opportunity in communities that have often been left behind.”
What they’re saying: One organization released a statement in favor of industry: Grid Alternatives, a pro-environmental justice group whose biggest donors include large solar firms, banks, tech companies and cities in California.
- Andie Wyatt of Grid told Jael "part of why" her group released the statement was because “if it's big developers and industry associations coming out and complaining about this very well-intentioned guidance on an environmental justice program … it’s not going to be received that well.”
In a statement, SEIA president Abigail Ross Hopper told Jael that the association "agree[s] that this program should be centered in equity and promote environmental justice."
- She added: "We are concerned ... that without changes, this program won't function for anyone, and that will be deeply disappointing for everyone."
The big picture: Nearly all solar executives are white — and so is the population that benefits most from tax breaks generally.
- This is why a competitive bonus credit helping new solar businesses in minority communities would be particularly unusual.
