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Who can use tax equity financing for solar projects?

SIREN is familiar with two churches who have used tax equity financing to fund their solar systems.  In this form of financing, a nonprofit (and therefore tax-exempt) organization partners with a qualified investor who has passive income to invest.  Together they form a limited liability company or other contractual agreement; the company purchases the system and claims the federal renewable energy  income tax credit plus any other associated benefits ( e.g., business depreciation).  Ownership of the system reverts to the nonprofit under terms decided by the partners.

The renewable energy tax credit is one of a handful of  tax equity financing mechanisms. For more information on the rules governing each type and for discussion of how related policy might develop, see Tax Equity Financing: An Introduction and Policy Considerations,  a comprehensive report on the subject prepared by the Congressional Research Service


Category: Financial Issues

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