Contract with new clean energy infrastructure, access newly available federal funding, AND KEEP the benefits within your community
Municipalities and other not-for-profit organizations interested in contracting with regional projects and/or utilizing their land and buildings for new renewable energy and storage projects, have mainly been able to do so to-date, by leasing out their property to project developers or by investing in their own solar panels. While this helps communities bring in a small amount of income or reduce costs over time, it often does not give communities control over how the projects are developed, who benefits from the projects and how. The Inflation Reduction Act (IRA) that was passed into law August 2022 by the Biden administration changes this dynamic, enabling communities to access direct payments either for themselves and/or their low- to moderate-income residents, through contracting with local solar or storage.
The IRA directs nearly $400 billion in federal funding to clean energy projects in an effort to lower carbon emissions. The Act opens the opportunity for local actors to benefit directly by contracting with projects, and makes federal funds available to tax-exempt organizations like municipalities to help offset their project costs – should they decide to develop themselves.
The important change the IRA brings to municipalities is that the Act changes who can access investment tax credits (ITC). These credits have previously been available only to organizations with significant tax liability. Now, tax-exempt organizations including local governments and NGOs can also benefit from federal funds for supporting and contracting clean energy infrastructure, opening new opportunities for project development and income streams.
The funds can be accessed through a new direct pay option that enables tax-exempt organizations to receive a refund from the IRS for tax credits on projects placed in service after 2022. This refund is approximately 30% of the total project value with additional bonuses that can stack the ITC value to reach 40-70%. In particular, support is enabled for projects benefiting low to moderate income residents.
Joule Community Power provides you with the tools needed to navigate and act on the opportunity to contract with or develop local projects, take advantage of nearby projects, and maximize community benefit, including for your low- to moderate-income residents. Learn more or contact us.
Additional Resources
Information on the Investment Tax Credits for renewable energy credits from the EPA and the guide to solar ITC: