Inflation Act Boosts Solar Power in SoCal Public Sector

TL/DR –

The U.S. Inflation Reduction Act (IRA) of 2022 included a program called Direct Pay, which expands federal support for clean power by allowing non-taxable entities to receive direct funding for new solar power installations. The program covers up to 70% of the cost and has already benefited communities in Southern California, including schools in South Pasadena and a synagogue in Tustin. The Foundation for Affordable Housing in the City of Orange has also used the program to fund the installation of solar panels in an affordable housing community, which is expected to save each household about $700 in electricity costs per year.

Direct Pay Program Expands Solar Power in Southern California

As the first quarter of 2024 wraps up, evidence suggests that a new initiative from the U.S. Inflation Reduction Act (IRA) is successfully promoting solar power. The IRA’s Direct Pay program, which extends federal support to non-taxable entities for solar power installation, is already energizing communities in Southern California, including South Pasadena and the City of Orange.

Broadening Federal Support for Clean Power

Prior to the IRA, federal incentives for clean power, such as tax credits for solar and wind energy systems, were only available to individuals and businesses. The Direct Pay program, initiated by the Department of Treasury in early 2024, offers the same support to non-taxable entities, covering up to 70% of new project costs.

Impacting Schools and Municipalities

The Direct Pay program is significantly impacting the expansion of clean, cost-effective, local power generation. Schools and municipalities represent a significant sector now eligible for Direct Pay funding. For instance, South Pasadena Unified School District is leveraging the program to install solar power systems across all its schools, expecting Direct Pay to cover around 30% of the costs.

Benefitting Non-Profit Organizations

The program is also beneficial for churches and non-profit organizations. The Congregation B’nai Israel in Tustin recently installed a 126-kilowatt solar array at their synagogue, with 40% of the funding provided by the Direct Pay program.

Aiding Affordable Housing

Residents of affordable housing are also reaping the benefits of clean power. The Foundation for Affordable Housing installed 1,596 solar panels on carports in The Knolls, an affordable housing community in the City of Orange, partly funded by the IRA. This is expected to result in an annual electricity savings of about $700 per household.

Reducing Greenhouse Gas Emissions

Overall, the Direct Pay program is making strides in reducing greenhouse gas emissions and energy costs across a variety of non-taxable entities. As the program is still in its early stages, more organizations are anticipated to benefit in the coming months and years.

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