Solar PV Rooftop
December 3, 2021

As discussed recently on the YSG Solar blog, the Build Back Better Act includes a number of provisions for the renewable energy sector—and solar in particular. In its current form, the bill’s framework includes a record $555 million worth of clean energy and climate-related investment. One notable inclusion is refundability for the 25D tax credit. However, while this may be an improvement on the previous iteration of the 25D tax credit, it doesn’t bring the same benefits as a direct pay option for Section 25D.

Solar Panels Dusk

Direct Pay for 25D

In recent months, over 300 environmental justice advocates, environmental groups, and renewable energy companies have been demanding that Congress offer a direct pay option for the residential energy efficiency property tax credit (Section 25D). This would ensure more equitable access to residential clean energy resources like solar for a wide range of families at varying income levels.

Direct Pay for 25D: Why It Matters

As things stand, the investment tax credit (ITC) is the main federal incentive for the installation of solar energy projects for both residential and commercial customers. However, the current structure of the ITC does not benefit all Americans equally, and may even exacerbate economic, social, and health inequity between low- to moderate- income (LMI) homeowners and higher earners. LMI households are less likely to owe enough in federal taxes to receive the full value of the ITC for residential solar systems, making the ITC considerably less effective for these households. If a direct pay option was in place, this would allow lower-income homeowners to access the economic and environmental benefits of clean energy that are currently available to higher earners. Without direct pay for 25D, disadvantaged communities and LMI households must spend a disproportionate amount of their income on utility bills, while also being most at risk from the impact of climate change. 

Direct Pay For Section 25D: How It Benefits Homeowners

A direct pay option for 25D will provide a number of economic and environmental benefits for homeowners.

  • LMI families will be able to receive the entire subsidy in a single year, freeing up capital to allow for the purchase of a renewable energy system.

  • Direct pay will increase energy independence and expand rooftop solar in markets which are underserved and underrepresented.

  • LMI families will have lower, more reliable electric bills.

  • Local jobs will be created in a high-demand industry.

  • Ownership of residential renewable energy systems will be broadened.

  • The impact of climate change will be mitigated.

If you’re interested in going solar, reach out to YSG Solar today. YSG has been working in the solar industry for over 10 years, handling everything from residential rooftop projects to large-scale solar land leases. We will identify the ideal solar project for your energy needs and make that project a reality. Call the office at 212.389.9215 or send us an email to learn how much you could save.

YSG Solar is a project development company responsible for commoditizing energy infrastructure projects. We work with long-term owners and operators to provide clean energy assets with stable, predictable cash flows. YSG's market focus is distributed generation and utility-scale projects located within North America.