Any organization that has filed an application with the federal government for tax-exempt status will qualify for direct pay, according to Amit Kalra, partner at Sheppard Mullin. This could include state colleges and universities, nonprofit organizations and more. It likely does not include homeowners’ associations (HOAs), which typically file a corporate income tax return, Kalra said.
“The same parties that are currently willing to underwrite PPAs and take the credit exposure to a tax-exempt [entity], I don’t see why they wouldn’t be willing to underwrite a construction loan to a tax-exempt [entity], or a term loan for that matter, and say, ‘Here’s your $100. You go install this facility and then you pay us back,’ “he said.
Fellow Sheppard Mullin partner Benjamin Huffman said financiers previously set up a similar payment structure for cash grants for solar installations.
“It was essentially borrowing against that future government payment, which could be structured for this program just as easily,” Huffman said.
The ability for nonprofits to own solar projects could make energy savings and sustainability an option for more organizations than ever before.
“Having these entities be able to access the systems directly and own the systems if that’s what they choose is a huge step forward for energy sovereignty,” said Andie Wyatt, policy director and legal counsel at GRID Alternatives.