Bringing Solar Within Reach: A Guide for Tax-Exempt Entities to Deliver Affordable Energy to Low-Income Households

The document outlines the RISE model, where tax-exempt organizations act as solar owners to install systems for LMI households at low or no upfront cost, utilizing the IRS 'direct pay' mechanism to claim the Clean Electricity Investment Tax Credit (ITC). It details an eight-step implementation process: determining project type and team, identifying ownership structures (such as green banks or CDFIs), planning capital stacks, selecting installers, conducting community engagement, constructing projects, claiming tax credits, and managing ongoing operations. The guide emphasizes the importance of trusted community messengers and provides strategies for adapting to potential policy changes regarding federal incentives.

• LMI communities have historically faced barriers to solar adoption, including high upfront costs, limited financing, and insufficient tax liability to use federal credits; as of 2023, only 26% of residential solar installations reached these communities despite them making up 46% of the US population.
• The RISE model enables tax-exempt entities to serve as solar owners and receive direct cash payments from the IRS equal to certain tax credits, specifically the Clean Electricity Investment Tax Credit (ITC), to offset project costs.
• There are three primary solar project types suitable for the RISE model: single-family rooftop solar (using leases or PPAs), multifamily solar (where owners pass savings to tenants), and community solar (where residents sign subscription agreements).
• To avoid the IRS clawing back a portion of the ITC, the tax-exempt owner must retain ownership of the solar system for at least five years, though a period of six years is recommended for safety.
• The Investment Tax Credit (ITC) provides a 30% base tax credit, with the possibility of an additional 40% bonus tax credit if prevailing wage and apprenticeship requirements are met.
• Effective community engagement for LMI residents requires trusted messengers, such as local community-based organizations (CBOs), partner nonprofits, solar ambassadors, and city officials, rather than traditional methods like cold calling.
• Tax-exempt owners are advised to pre-register with the IRS at least 120 days before filing tax returns that include a direct pay election and must maintain documentation for seven years for potential audits.

APA

RMI (2025). Bringing Solar Within Reach: A Guide for Tax-Exempt Entities to Deliver Affordable Energy to Low-Income Households. https://rmi.org/resources/bringing-solar-within-reach-a-guide-for-tax-exempt-entities-to-deliver-affordable-energy-to-low-income-households/

Chicago

RMI. Bringing Solar Within Reach: A Guide for Tax-Exempt Entities to Deliver Affordable Energy to Low-Income Households. 2025. https://rmi.org/resources/bringing-solar-within-reach-a-guide-for-tax-exempt-entities-to-deliver-affordable-energy-to-low-income-households/.

Wikipedia

{{cite report |author=RMI |title=Bringing Solar Within Reach: A Guide for Tax-Exempt Entities to Deliver Affordable Energy to Low-Income Households |date=25 June 2025 |url=https://rmi.org/resources/bringing-solar-within-reach-a-guide-for-tax-exempt-entities-to-deliver-affordable-energy-to-low-income-households/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{rmi2025bringing, author = {{RMI}}, title = {{Bringing Solar Within Reach: A Guide for Tax-Exempt Entities to Deliver Affordable Energy to Low-Income Households}}, institution = {RMI}, year = {2025}, month = jun, url = {https://rmi.org/resources/bringing-solar-within-reach-a-guide-for-tax-exempt-entities-to-deliver-affordable-energy-to-low-income-households/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }