How Cities Can Scale On-Site Solar with New Federal Incentives

This guide by RMI describes how the City of San Antonio is utilizing the Inflation Reduction Act's (IRA) direct pay mechanism to scale on-site solar energy. By aggregating multiple small projects across city-owned facilities, San Antonio aims to offset a portion of its electricity consumption and achieve long-term financial savings while pursuing net-zero energy goals.

• The City of San Antonio approved a deal with Big Sun Solar to install approximately 13 megawatts (MW) of solar across 42 city-owned parking lots and facilities. This initiative is expected to offset roughly 11 percent of the electricity used for City operations and generate net savings between $7 million and $11 million over the 25-year lifespan of the panels.
• San Antonio is among the first cities to use the 'direct pay' (or Elective Pay) mechanism established by the Inflation Reduction Act (IRA) of August 2022. This mechanism allows tax-exempt entities to receive tax credits to reduce upfront costs, enabling the city to own the solar projects directly rather than relying on complex third-party structures.
• The city's strategy involves aggregating multiple small projects, each under 1 MW, which allows them to avoid new domestic content requirements for the full Investment Tax Credit. Additionally, some sites may qualify for bonuses for being in low-income or qualifying energy communities, with IRA tax credits expected to cover 30–40 percent of upfront costs.
• Because direct pay functions as a reimbursable grant where the refund may take over a year to arrive, cities must be able to finance all initial capital costs. San Antonio is managing this gap using taxable bonds and a low-interest loan from the Texas State Energy Conservation Office.

APA

RMI (2024). How Cities Can Scale On-Site Solar with New Federal Incentives. https://rmi.org/resources/how-cities-can-scale-on-site-solar-with-new-federal-incentives/

Chicago

RMI. How Cities Can Scale On-Site Solar with New Federal Incentives. 2024. https://rmi.org/resources/how-cities-can-scale-on-site-solar-with-new-federal-incentives/.

Wikipedia

{{cite report |author=RMI |title=How Cities Can Scale On-Site Solar with New Federal Incentives |date=11 January 2024 |url=https://rmi.org/resources/how-cities-can-scale-on-site-solar-with-new-federal-incentives/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{rmi2024how, author = {{RMI}}, title = {{How Cities Can Scale On-Site Solar with New Federal Incentives}}, institution = {RMI}, year = {2024}, month = jan, url = {https://rmi.org/resources/how-cities-can-scale-on-site-solar-with-new-federal-incentives/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }