WASHINGTON, D.C. — Community solar, the energy choice that provides Americans with equal access to local, affordable, and reliable electric power, is on track for explosive growth, accelerated by the historic Inflation Reduction Act of 2022 (IRA). The new law provides $7 billion in federal funds, available as competitive grants, for eligible recipients to leverage toward the deployment of community solar facilities and other zero-emissions technologies, including a 20 percent bonus credit for projects serving or located in qualified low-to-moderate income communities.
“There is money on the table and businesses and state and local governments should take advantage of it or risk losing out,” said Jeff Cramer, CEO, Coalition for Community Solar Access (CCSA). “This funding infusion will create hundreds of thousands of good paying jobs, strengthen American manufacturing, and shore up the reliability and resilience of more affordable US energy supplies. It will unleash hundreds of millions of dollars of private capital to fund public infrastructure.”
Community solar is already one of the fastest growing segments of the solar industry. The IRA sets the stage for even more growth. One-third of states have already implemented community solar programs, and the deployment of community-scale solar facilities that they’ve enabled are already yielding significant financial and public health benefits for their host communities. These projects generate more than 4.4 gigawatts (GW) of low-cost electricity—enough to affordably and reliably power nearly 800,000 homes. Wood Mackenzie, the global energy research and consultancy, predicts community solar capacity will nearly double in the next five years to more than 7 GW without counting any new state markets opening.
“Electricity prices are rising across the country—largely due to spikes in fossil fuel costs, long-overdue distribution and transmission infrastructure upgrades, and climate change. The good news is that local solar resources like community solar have zero fuel costs and, at scale, can permanently reduce stress and volatility on the grid,” said Cramer. “With the passage of the IRA, the combination of these benefits plus the federal funding to accelerate the deployment of renewables makes this the moment for state and local governments to move. The time is now.”
Among other provisioned incentives for community solar project developers, the IRA extends the existing 30 percent Investment Tax Credit (ITC) and, once it is substituted by the new technology-neutral ITC, will allow taxpayers (i.e. claimants) to include interconnection costs for projects at or below 5 megawatts placed in service beginning in 2023. Both the extended ITC and new tech-neutral ITC makes bonuses available for projects located in low-to-moderate income, Tribal, and energy (e.g. brownfield sites) communities, as well as for projects that meet domestic content standards, which will facilitate the development of domestic supply chains for solar power infrastructure.
Community solar allows households to connect via subscription to local solar power facilities and receive a credit on their electricity bills for their share of power produced. The IRA provisions that stand to benefit the development of community solar nationwide are augmented by a slate of new actions by the Biden-Harris Administration, including:
- Enabling 4.5 million families living in HUD-assisted rental housing to subscribe to community solar projects, saving them, on average, 10 percent on their electricity bills per year.
- Connecting community solar to households participating in the Low-Income Home Energy Assistance Program (LIHEAP) program via a new Community Solar Subscription Platform being piloted in several states and Washington, D.C.
- Tapping $10 million in funding via the Bipartisan Infrastructure Law to provide solar industry jobs to those in underserved and underrepresented communities.
- The Department of Energy’s National Community Solar Partnership is working toward the goal of expanding community solar to power the equivalent of five million households by 2025.
“These historic investments underscore the critical role community solar is playing in our clean energy future. All Americans should have access to local renewable energy,” said Cramer.