Federal Funds Available for Energy Investments Powering Up in 2024

On August 16, 2022, the Inflation Reduction Act (the “Act”) was passed into law. The Act creates conservation-related tax incentives and funds over 100 programs, both new and existing, with approximately $370 billion in investments to promote clean energy technology, manufacturing, and innovation. It also provides additional incentives for clean energy projects that are located in low-income communities with the goals of creating high-quality jobs, promoting economic growth, and providing health benefits. It is expected that much of the funding will become available in 2024.

A business planning a project that includes alternative energy or helps reduce pollution should consider using one or more of the financing alternatives available under the Act. Below is a brief overview of a few of the programs that the Act is funding.

Greenhouse Gas Reduction Fund

Approximately $27 billion will be awarded by the Environmental Protection Agency to businesses, communities, and community lenders that will provide the capital for clean energy and climate projects meant to reduce greenhouse gas emissions and other air pollutants. The program places an emphasis on benefiting low-income and disadvantaged communities with at least $15 billion of the set aside for projects located in such communities.

The fund is divided into three separate programs:

• The National Clean Investment Fund will provide grants to 2-3 national nonprofit clean financing institutions, who will partner with the private sector to finance clean technology projects.
• The Clean Communities Investment Accelerator will provide grants to nonprofit organizations, enabling them to provide funding for clean technology projects in low-income communities.
• Solar for All will award up to 60 grants to create and expand low-income solar programs that assist disadvantaged communities with residential solar projects.

Applications to administer Greenhouse Gas Reduction Funds were submitted in the Fall of 2023 with grantees to be selected sometime in Spring of 2024. After grantees are selected, those grantees will ultimately provide the financial and technical assistance to successfully deploy projects, which the EPA expects to commence in the summer of 2024.

Energy Infrastructure Reinvestment Financing

The new Energy Infrastructure Reinvestment Financing Program provides the Department of Energy with $5 billion in credit subsidy to support a maximum of $250 billion of loan guarantees by the Department for projects that retool, repower, repurpose, or replace existing energy infrastructure that ceased operations or projects that enable operating energy infrastructure to reduce the emission of greenhouse gases and air pollutions. The funded projects can include infrastructure such as power plants, fossil fuel extraction sites, transmission systems, refineries, and other energy facilities that have either ceased operation or that could be improved from greenhouse gas reduction.

The application process begins with a consultation with the Loan Program Office, the office of the Department of Energy that finances large scale energy infrastructure projects, to determine whether the program is applicable to the proposed project. After the application is submitted, the Office will review the eligibility and viability of the project and follow with significant due diligence. The Department of Energy will then offer a conditional commitment and term sheet, followed by negotiations with the applicant. Finally, definitive financing documents will be executed and the Loan Program Office will maintain project monitoring and communication with mandatory requirements for the borrower.

While current rulemaking is underway to further define program eligibility, such financing has been accessed by project developers, clean tech manufacturers and service providers, regulated utilities, public power entities and independent power producers, among others. The program will remain available through September 30, 2026.