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Dane County Office of Energy & Climate Change

Federal Funding for Businesses, Developers, and Other Entities

Learn more about opportunities for-profit businesses, non-profit entities, and public entities, such as schools and local government, to take advantage of IRA tax credits and funding.

   

    

Project Financing

Learn more about Direct Pay and options to finance your energy efficiency or renewable energy project.

Financing

   

Tax Credits and Incentives

Solar On Your Facility

Less than 1 MW(ac)
The IRA will provide 30% funding for solar installations of less than 1 MW(ac) on commercial facilities, with no maximum allowance. The 30% credit also applies to battery storage and interconnection charges. 

  • The incentive is a 30% tax credit for a for-profit business that files tax returns.
  • The incentive is a 30% Direct Pay from the US Treasury for nonprofits and public entities.
  • Projects can earn additional credit if:
    • Meets certain domestic content minimums (10%)
    • Sited in a brownfield or an energy community (10%)
    • Sited in qualifying low income community (10%) (this is a separate provision and will require a separate application, subject to annual maximum of 1.8GWac/year) 
    • Serves a qualified low income residential building project or low income economic benefit project (20%) (this is a separate provision and will require a separate application, subject to annual maximum of 1.8GWac/year)
  • The credit is reduced 15% for projects funded via tax-exempt bonds (which applies mostly to local governments and school districts). 
  • Credits are in effect 2023 - 2032

Refer to Department of Energy summary for more information on the Investment Tax Credit for solar energy projects.  

More about transitioning your organization to renewable energy is here

Farmers and other rural landowners may want to explore AgriSolar, where a PV array co-exists with farming operations. 

1 MW or Larger Solar

In order to receive the full 30% credit, systems that are 1MW or larger have additional requirements around Prevailing Wage and Apprenticeship. Refer to the US Department of Labor FAQs for more  information on prevailing wage and apprenticeship.

Entities can claim tax credits for larger solar arrays by a) the Investment Tax Credit (which is the provision described above that also applies to smaller systems) or b) accessing the Production Tax Credit, where payment is based on energy generated. The IRA updates both of these provisions, increasing the credits, accommodating more renewable energy technologies and adding prevailing wage and apprenticeship requirements.

Refer to IRS guidance for more information on both the Production Tax Credit and the Investment Tax Credit for large renewable energy projects. 

More about transitioning your organization to renewable energy is here

Farmers and other rural landowners may want to explore AgriSolar, where a PV array co-exists with farming operations. 

Geothermal At Your Facility

With the Investment Tax Credit entities can receive a 30% credit for geothermal installations if a) the system size is under 1 MW(ac) or, b) if it is over 1 MW(ac) and the prevailing wage and apprenticeship requirements are met. See additional FAQs from the US Department of Labor on prevailing wage and on apprenticeship requirements.

  • The incentive is a 30% tax credit for a for-profit business that files tax returns
  • The incentive is a 30% Direct Pay from the US Treasury for nonprofits and public entities

Refer to IRS guidance for more information on both the Production Tax Credit and the Investment Tax Credit for more details. 

In situations where a facility is adding both solar and geothermal, the combined system must be under 1 MW(ac) or meet the prevailing wage requirements.

Example

Forest Edge Elementary in the Oregon Area School District has a 646 kW (dc)/500 kW(ac) solar array, a geothermal system with a capacity of about 800 kW and a 125 kW battery. So total capacity is 500+800+125=1,425 kW or 1.4 MW(ac). Under the IRA, that facility would exceed the 1 MW(ac) cap so, to get the full 30% credit, a team building that facility today would need to meet the prevailing wage and apprenticeship requirements.

 

Wind and Other Renewable Energy Systems

The IRA expanded the types of renewable energy systems included in the Production Tax Credit and the Investment Tax Credit. 

Refer to IRS guidance for more information on both the Production Tax Credit and the Investment Tax Credit for large renewable energy projects.

 

Energy Efficient Commercial Buildings

The IRA expanded and enhanced an existing energy efficiency tax deduction, Energy Efficient Commercial Buildings Deduction (179D).

Under the IRA the incentives of $0.63 to $1.88 per square foot is modified to be $0.50 - $1.00 on a sliding scale based on savings achieved, with incentives increasing to $2.50 to $5.00 per square foot when the project meets prevailing wage and apprenticeship requirements

The tax deduction applies to both new construction and retrofits.

Increasing energy efficiency 25% over the baseline will garner a $2.50/square foot tax deduction provided that prevailing wage and apprenticeship requirements are met. A 50% reduction would garner the $5.00/square foot tax deduction. 

This credit does not qualify for Direct Pay. Instead local governments and nonprofits can assign the credit to the project designer.  

More Information

  • The IRS summarizes the changes to this tax deduction in their October 2022 request for comments.
  • Rewiring America has a factsheet about electrification for contractors 
  • Other helpful discussions of the changes to the 179D tax deduction include:
  • Note that this is a tax deduction, not a tax credit. We encourage entities to discuss the potential deduction as part of project planning with both project contractors and tax advisors. 

 

Residential New Construction

The IRA updates and expands a tax credit for builders of new energy efficient residential housing called the New Energy Efficient Homes Credit (45L).

For single-family homes, builders are eligible for:

For multi-family homes, builder/developers are eligible for:

Also see additional guidance from both the EPA for Energy Star Homes tax credits and the DOE for the Net Zero Energy Ready Homes credits

 

Fleet Vehicles

The IRA includes separate provisions for clean fuel tax credits for consumers and businesses. 

The clean vehicle credit is a tax credit for businesses and available as Direct Pay for nonprofits and other tax exempt entities. 

For qualified commercial clean vehicles, the credit equals the lesser of:

  • 15% of the entity’s tax basis in the vehicle (30% if the vehicle is not powered by gas or diesel)
  • The incremental cost of the vehicle

The maximum credit is $7,500 for qualified vehicles with gross vehicle weight ratings (GVWRs) of under 14,000 pounds and $40,000 for all other vehicles. The credit applies to road vehicles as well as mobile machinery, as defined in § 4053(8) of the Code.

Learn more about the EV credit under lease arrangements.

See also FAQs for the Commercial Clean Vehicle Credit

 

Project Financing

Direct Pay

Nonprofits that do not pay taxes can receive payments directly from the US Treasury for some of their clean energy projects. This is called Direct Pay and it is new so the forms are still being finalized but, essentially, an entity will be able to fill out a Treasury form (e.g, size and cost of solar installation, or about the purchase of an electric vehicle) and have the incentive paid directly back to them.

For example:

  • If a school installs a solar array that costs $100,000, they can get $30,000 back via Direct Pay.
  • If a neighborhood center purchases an electric minibus to transport children they can get up to $40,000 back via Direct Pay. 

Direct Pay does not apply to all of the tax credits under the IRA but it does apply to important credits including the renewable energy credits and the clean fuel vehicles. 

Notably, Direct Pay is not authorized for the Energy Efficient Commercial Buildings Deduction. In that instance tax-exempt entities are permitted to allocate the tax deduction to the designer. 

As the Direct Pay forms are finalized we will update with additional links.

Direct Pay is not a grant with ongoing reporting requirements. It is a one-time transaction where entities will be able to claim federal support for their projects. As such, it is going to be especially helpful for smaller communities or nonprofits to use. 

 

Coupling IRA with PACE

PACE, Property Assessed Clean Energy, is an innovative way for property owners to finance energy efficiency, water conservation, renewable energy and other related projects.

Essentially PACE is a lien against your property assessment. Dane County is one of about 50 counties in Wisconsin where businesses and nonprofits have access to this financing mechanism. (Homeowners are not eligible for PACE financing in Wisconsin, although there are green mortgage products that offer similar benefits.)

A key benefit of PACE is that the financing can be set up so that your repayments are smaller than your energy savings—so that you realize bottom line savings even while you pay for the project installation. 

The IRA is going to make projects more affordable for businesses and nonprofits in our area. If the upfront capital is still a barrier for you, PACE is a great solution. 

 

Coupling IRA With Focus On Energy

Focus on Energy is Wisconsin’s statewide energy efficiency and renewable energy program. Focus has been helping residents and businesses pursue clean energy solutions since 2001 and has assisted hundreds of entities across Dane County on thousands of energy efficiency and renewable energy projects. If you are interested in how your business can leverage the IRA to save money you should connect with Focus on Energy to be certain you are maximizing your ability to qualify for all available incentives from Focus on Energy in addition to IRA incentives.