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

This guide outlines the Renewables Investment for Social Equity (RISE) model, which enables tax-exempt entities to use the IRS 'direct pay' (elective pay) mechanism to deliver affordable solar energy to low- and moderate-income (LMI) households. The model allows tax-exempt organizations to own solar systems, install them at low or no upfront cost for residents, and recover costs via the Clean Electricity Investment Tax Credit (ITC).

• The RISE model addresses a significant disparity in solar access, noting that while LMI residents comprise 46% of the US population, only 26% of residential solar installations reached these communities as of 2023.
• Tax-exempt entities can act as solar owners and utilize 'direct pay' to receive cash payments from the IRS equal to certain tax credits, specifically the Clean Electricity Investment Tax Credit (ITC).
• The guide identifies three primary solar project types for RISE programs: single-family rooftop solar (using leases or power purchase agreements), multifamily solar (where a third-party tax-exempt organization owns panels on a complex and savings are passed to tenants), and community solar (where residents sign subscription agreements for a share of electricity output).
• To avoid the IRS 'clawing back' portions of the ITC, the entity claiming direct pay must maintain ownership of the solar system for at least 5 years, though the guide recommends a minimum of 6 years for safety.
• The Investment Tax Credit (ITC) under Section 48 (and its successor Section 48E) 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 moving beyond traditional methods like cold calls; successful strategies include using 'community energy liaisons' embedded in community-based organizations (CBOs) and 'co-design' processes using physical, visual tools.
• The guide provides a risk-mitigation framework for potential policy shifts, suggesting that if direct pay is revoked, programs should shift to private entity ownership (similar to the Solarize model) while maintaining a focus on LMI needs.

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} }