Financing Solar Panels Just Became Much Easier. Thank the Climate Bill.

The Inflation Reduction Act (IRA) has introduced 'Direct Pay' (or elective pay), allowing tax-exempt entities and certain third-party financial organizations to receive cash back—between 30% and 70%—on clean energy project costs. This enables a model where a third party, such as the nonprofit RE-volv, pays upfront costs and leases the system to a recipient at a monthly rate lower than previous electricity costs. A 12kW project at the Watts-Willowbrook Church of Christ in Compton, California, serves as an example, expecting to save over $180,000 in electricity costs over 20 years with no upfront payment. RMI's RISE Cohort is working to scale this model by providing technical assistance to local governments and financial institutions.

• The Inflation Reduction Act's 'Direct Pay' (elective pay) provision allows tax-exempt entities, including nonprofits and cities, to receive cash back of 30% to 70% on clean energy project down payments, removing a previous barrier where these entities could not utilize tax credits.
• A third-party financing model leverages Direct Pay by allowing non-taxable financial entities (such as green banks, CDFIs, or nonprofits) to own the system and cover upfront costs. The recipient pays a monthly lease lower than their previous electricity costs, and the owner reinvests any payback exceeding the project cost into further solar projects.
• The Watts-Willowbrook Church of Christ (The Brook) in Compton, California, implemented a 12kW solar array with no upfront costs via this model. The project is expected to save the church more than $180,000 on electricity over the next 20 years and will be paired with battery storage to serve as a resiliency hub for emergency services during heatwaves.
• This financing model can offer higher savings for households than traditional solar loans; in Nevada, RMI's Green Upgrade Calculator estimates potential savings between $12,600 and $20,400 over twenty years, compared to $10,000 via a traditional loan.
• Additional IRA mechanisms, specifically the $27 billion Greenhouse Gas Reduction Fund (GGRF), provide upfront capital, low-interest loans, and risk mitigation tools to further scale this third-party solar model.

APA

RMI (2024). Financing Solar Panels Just Became Much Easier. Thank the Climate Bill. https://rmi.org/resources/financing-solar-panels-just-became-way-easier-thank-the-climate-bill/

Chicago

RMI. Financing Solar Panels Just Became Much Easier. Thank the Climate Bill. 2024. https://rmi.org/resources/financing-solar-panels-just-became-way-easier-thank-the-climate-bill/.

Wikipedia

{{cite report |author=RMI |title=Financing Solar Panels Just Became Much Easier. Thank the Climate Bill. |date=11 September 2024 |url=https://rmi.org/resources/financing-solar-panels-just-became-way-easier-thank-the-climate-bill/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{rmi2024financing, author = {{RMI}}, title = {{Financing Solar Panels Just Became Much Easier. Thank the Climate Bill.}}, institution = {RMI}, year = {2024}, month = sep, url = {https://rmi.org/resources/financing-solar-panels-just-became-way-easier-thank-the-climate-bill/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }