The Bipartisan Infrastructure Law and Inflation Reduction Act: What ICAST is Watching
Within the space of a year, President Biden signed two bills into law that contain billions of dollars for clean energy and underserved communities. Funds from the Bipartisan Infrastructure Law (BIL) and the Inflation Reduction Act (IRA) will go toward building out the nation’s EV charging infrastructure, incentivizing building electrification and solar projects, weatherizing low-income homes, growing the nation’s clean energy workforce, and much more. Since the BIL’s signing in November of last year, the Biden Administration has announced over $185B in funding and over 6,900 specific projects, reaching over 4,000 communities across the U.S. The IRA is the largest single investment in clean energy in the nation’s history; it was signed in August of 2022, and legal experts are still neck deep in analyzing the language. Federal agencies are soliciting input to inform their approach to implementing the Act and will issue official guidance after the comment periods close. ICAST has been weighing in to help create the best possible opportunity for the IRA to benefit multifamily (MF) housing and disadvantaged communities.
Both bills increase opportunities for clean energy projects in MF through new or increased funding sources. Here are some of the key provisions ICAST is tracking:
Inflation Reduction Act
(Note: Understanding of the IRA is evolving as legal experts work through it.)
The solar Investment Tax Credit (ITC) was increased to 30%, and a new 10% bonus credit (48E) was added for small solar facilities in low-income housing. The Energy Efficiency Home Credit (45L) received a funding boost and can now provide credits of up to $5,000 for new construction and major renovation projects that meet certain requirements. Most importantly, the IRA eliminated the basis reduction for stacking ITC and 45L with LIHTC. The Act also created a larger tax deduction of up to $5/sq. ft., depending on the energy savings achieved, through the Commercial Buildings Energy-Efficient Tax Deduction (179D). Some IRA credits and deductions are subject to prevailing wage and apprenticeship requirements; if those requirements are not met, the credit rate or deduction drops.
One billion dollars in IRA funding was provided for the U.S. Dept. of Housing and Urban Development (HUD) to implement the ‘Green and Resilient Retrofit Program,’ which will provide grants and direct loans for conserving energy and water and increasing climate resilience in HUD-assisted MF housing. As reported in ICAST’s Policy Blog, HUD recently closed its request for public input.
The IRA also contains almost $9B for the High-Efficiency Electric Home Rebate (HEEHR) and Home Energy Performance-Based, Whole House Rebates (HOMES) programs. Rebates are tiered based on income, e.g., rebates for low- and moderate-income (LMI) households can be double what non-LMI households receive. HEEHR will make $4.5B available via point-of-sale rebates for electrification upgrades, including heat pumps for space and water heating. HOMES will provide $4.3B for energy efficiency retrofits.
Lastly, the IRA provided $27B to the EPA to award grants (likely recipients include nonprofit credit unions, Community Development Financial Institutions, and green banks) to mobilize financing and leverage private capital for carbon mitigation projects. The Fund is focused on benefitting low-income and disadvantaged communities.
Bipartisan Infrastructure Law
As ICAST previously reported, the BIL provided $3.5B in Weatherization Assistance Program (WAP) to be spent over five years. This preceded by less than a year of ICAST’s receipt of an award through the U.S. Dept. of Energy to launch a redesign of the WAP. Through this redesign, ICAST and its partners will demonstrate how States can expand weatherization services for MF, and ICAST will document the process so that the work can be replicated. The BIL also provided $500M for the Low-Income Home Energy Assistance Program, which provides utility bill payment assistance and weatherization upgrades. Finally, the Law provided funds for the EE and Conservation Block Grant Program and the EE Revolving Loan Fund Capitalization Grant Program, which will help support EE retrofits.
ICAST will continue to publish updates as information becomes available, as well as more detailed breakdowns of relevant provisions in the laws.