Due to the IRA’s establishment of a direct-pay Investment Tax Credit (ITC) option for eligible tax-exempt entities, SFF funding support is no longer needed to offset the lost value of this tax credit for entities that previously could not access it either directly or through a third party. Hence:
-The SFF will no longer consider the previous 2022 ITC rate of 26% as our general ceiling for project funding.
-The SFF will continue to provide selective sub-grant awards on a case-by-case basis to support new solar projects on eligible nonprofit and public institutions. SFF grant sub-awards will generally not exceed 10-20% of total project cost, but larger awards may be considered for high-need, high-impact projects.
-We also will continue to support technical assistance contracts for eligible commercial entities as well as nonprofit and public institutions.
Our funding award decisions, as always, will be based on need as well as impact, and will take into account the full expanded range of financial incentives made available by the IRA.
The SFF team anticipates that the direct-pay ITC option will provoke a growing need for bridge loans to cover the time gap between a solar project’s construction and eventual remittance of ITC payment by the federal government.
-The SFF is prepared to support these emerging solar financing needs by providing unsecured bridge loans for qualifying projects via our partner organization, regional blended capital platform Invest Appalachia (IA).
-The SFF and IA have developed a flexible suite of solar credit enhancements to help leverage large-scale repayable investment into promising solar projects that face financing obstacles related to risk migration, cost of capital, or timing of investment. Product options will generally be structured as unsecured zero-interest loans, recoverable grants, or loan guarantees. They are expected to be repaid but are designed to absorb risk and/or cost to help secure the overall capital stack for an impactful project.
-Moreover, the SFF will consider sub-grant awards to offset interest and fees accrued on ITC bridge loans issued by traditional lenders for impactful solar projects on deserving local anchor institutions.
We will continue to monitor the IRA’s solar market impacts and adapt our program to fit the region’s evolving needs. SFF applicants can submit funding and financing requests through the SFF application portal or reach out directly to SFF Director Autumn Long at autumn.long@appvoices.org.