Benefits for State and Local Governments
- Access to Clean Energy Tax Credits: For the first time, state and local governments can directly access and benefit from clean energy tax credits, which were previously inaccessible due to their tax-exempt status.
- Enhanced Financial Flexibility: Direct pay provides a direct cash payment from the federal government, making it easier for governments to finance clean energy projects without relying on third-party arrangements or private sector partnerships.
- Increased Project Affordability: By covering up to 70% of project costs, governments can undertake larger clean energy projects more affordably, enabling significant investments in solar, wind, electric vehicle charging infrastructure, and more.
- Environmental and Health Benefits: Encourages investments that reduce greenhouse gas emissions and improve public health, aligning with broader environmental and climate goals.
- Promoting Environmental Justice: Direct pay can be used for projects in energy communities and low-income areas, enhancing equity and justice in clean energy access.
- Complementary Funding Opportunities: There is no prohibition on combining direct pay with federal or state grant funds for the same project, which can further increase project viability.
- Policy and Project Opportunities: Enables state legislatures and local governments to fund priority projects, such as energy efficiency upgrades in schools or electrification of state fleets.
Overall, the direct pay option empowers state and local governments to lead in the clean energy transition, foster sustainable practices, and ensure equitable access to clean energy benefits.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/what-are-the-benefits-of-the-direct-pay-option-for-state-or-local-governments-under-the-ira/
