Inflation Reduction Act helps grow solar power in So Cal public sector

As we end the third month of 2024, there are signs that a brand-new program from the U.S. Inflation Reduction Act (IRA) is bearing fruit. One of the provisions of the IRA, passed in 2022, is the creation of a program that allows non-taxable entities to receive direct funding for new solar power installation and production. Already, the IRA is expanding clean power in South Pasadena, the City of Orange, and other communities in Southern California.  

 

Until now, federal support for clean power, such as solar and wind energy systems, has been limited to tax credits that can be claimed by individuals and businesses. The IRA expanded eligibility to non-taxable entities such as municipalities, schools, churches, and other non-profit organizations, allowing these entities to receive direct federal support for up to 70% of the cost of a new project. 

 

The new program is called Direct Pay, and it was formally launched by the Department of Treasury at the start of 2024. Already, Direct Pay is having an impact on the expansion of clean, cheap, local power generation. 

 

Municipalities and schools represent a large sector newly eligible for funding through Direct Pay. The South Pasadena Unified School District is taking advantage of the program to install solar power systems at all five of their schools starting this spring. The district is expecting that the Direct Pay program will cover at least 30% of the cost of installing approximately 1100 kilowatts of generating capacity. Once operational, the clean energy systems will provide as much as 90% of the school buildings’ power. 

 

The IRA Direct Pay program additionally offers churches and other not-for-profit organizations funding for new clean energy generation. The Congregation B’nai Israel in Tustin has just finished installing a 126-kilowatt solar array at their synagogue. They will use the Direct Pay program to provide 40% of the funding for that new system. 

 

Clean power can also be a boon for residents of affordable housing. In the City of Orange, the Foundation for Affordable Housing has just installed 1,596 panels on carports in The Knolls, an affordable housing community. The installation was funded, in part, by programs in the Inflation Reduction Act. The Foundation expects that households in the community will see electricity savings of about $700 each year. 

 

Across a range of non-taxable entities, the Direct Pay program established by the IRA is creating new capacity for greenhouse gas reductions and energy savings. Implementation of Direct Pay is just getting started, though; more organizations are sure to use it in the months and years ahead.