The newly enacted Inflation Reduction Act (IRA) is set to extend and expand clean electricity tax credits and provide new opportunities for clean energy project development over the next decade. In addition to the extension of the investment and production tax credits at historical levels (provided certain prevailing wage requirements are met), the law also offers a new suite of “bonus credits” intended to encourage renewable and storage development in select geographic regions.
One such region, called an “energy community,” is newly defined and qualifies for a 10% “bonus” tax credit for clean electricity developed in certain areas affected by the retirement of manufacturing and energy infrastructure. In this Insights piece, CRA explores the geographic extent of energy communities, with a particular focus on locations affected by coal infrastructure retirement. We estimate that coal-retirement energy communities comprise approximately 18% of total US land area and identify the strategic implications of this incentive for market participants over the next decade.
Figure 1: Existing and potential coal-retirement energy communities