Non-IRA incentives and sources of financing for solar

Written by Brian Lavinio, PEA intern and Williams College (2024)

Solarize Philly is your one-stop shop to go solar for your property.

This is the second addition in a two-part blog series focused on solar, storage, and other technologies highlighted in the Inflation Reduction Act (IRA). Part 1 is here. The IRA is a powerful tool with many incentives and sources of financing for solar projects; however, there are non-IRA solar financing measures that can provide additional benefits. Many of these can be combined with IRA benefits to reduce already lowered costs of solar projects.


There are dramatic cost savings available for installing solar!

IRA Investment Tax Credit reduces system costs by at least 30%: “Adders” for domestically-produced content, low income and energy communities can reduce costs even further

PECO incentive of $0.10 per kWh of energy generated in first year of operation, which PEA estimates will reduce total system cost by approximately 5%.

Expect a reduction in the cost of solar by at least 35% and potentially much more!

What incentives are available?

In June of 2023, PECO launched a new solar energy incentive for commercial property owners. The incentive is for production of “behind-the-meter” solar energy and provides $0.10 per kWh of energy generated based on the property’s first year of annual solar production, minus any excess kWh that is not directly consumed by the account and sent to the grid. Simply put, PECO will provide an incentive on the kWh that commercial properties produce and consume.

We estimate that this incentive will reimburse property owners between approximately 5% of a typical total solar system’s cost. This incentive, when combined with the IRA’s expanded Investment Tax Credit (or Elective Pay for non-tax paying entities) of at least 30%, brings the total cost of commercial solar projects down by 35% or more. See this blog post for more information.

What financing measures are available?

If commercial property owners are unable to generate the required capital for solar projects, there are financing measures available to reduce the gap in access to renewable energy projects.

Commercial Property Assessed Clean Energy (C-PACE)

C-PACE financing is available for commercial property owners to pay for energy efficiency, water conservation, clean energy, indoor air quality (IAQ), and resiliency projects. PEA administers the Philadelphia program. C-PACE terms can be as high as 30 years and interest rates in the second half of 2023 were between 7% and 8%.

C-PACE financing can be a great solution to pay for the full upfront cost of installing solar. When incentive payments are received (12-18 months after installation) they can go towards C-PACE payments or can be used for other capital investments.

What properties are eligible?

  1. Commercial properties including office, multifamily, retail, warehouse, medical, hospitality, agricultural, industrial, and vacant land, among others.
  2. Non-governmental, tax-exempt organizations that operate facilities such as community centers, medical facilities, theaters, schools, religious facilities, among others.

For more information about Philadelphia C-PACE and to determine if your property and project qualifies, check out the Philly C-PACE website or contact Lisa Shulock at

Catalyst Term Loan, Philadelphia Green Capital Corp.

Financed through Philadelphia Green Capital Corp. (PGCC), an affiliate of PEA and the Philadelphia region’s green bank, this loan offers lightly secure financing for low-to-moderate income multifamily properties and non-profits. The Catalyst Term Loan primarily targets energy and resilience improvements through decarbonizing buildings, improving occupant health and safety, and complying with local building energy-efficiency requirements. Renovations and new construction are both eligible.

What properties are eligible?

  1. Affordable and market-rate residential properties with five or more units.
  2. Co-ops, condominiums, rental properties, and affordable housing (including mixed-use).
  3. Buildings owned by non-profits or municipalities, including community centers and houses of worship. 

What are some eligible improvements?

Most energy performance improvements are eligible, as well as improvements to a building’s health, safety, or resiliency. Some examples include:

  • Solar PV and other renewable energy systems
  • Repairs needed for building electrification or solar, including roof replacement or electrical rewiring
  • Energy storage solutions
  • Work deemed necessary for achieving high-performance building standard certifications such as LEED

What are the loan terms and rates?

Loans can range from $50,000 to $2,000,000, with rates starting at 8.75% and terms ranging from 7-20 years. Higher loan amounts may be considered on a case-by-case basis by PGCC. Rates vary based on housing affordability status and/or owner’s nonprofit status.

For more information, check out the PGCC webpage. Questions can be directed to Rishika Ghosh,

Sustainable Development Fund

The Sustainable Development Fund is part of the Reinvestment Fund of Philadelphia in conjunction with the Pennsylvania Public Utility Commission. This fund financially supports projects that promote energy conservation and efficiency, and clean energy technologies.

Who is eligible?

  1. For-profit companies
  2. Non-profit organizations
  3. Local government entities

Renovations and new construction are both eligible. All projects must be located in the Commonwealth of Pennsylvania.

What are some eligible improvements?

The Sustainable Development Fund provides financial support for projects promoting energy conservation and efficiency, renewable energy implementation, storage solutions, and construction of electricity-generating projects from clean energy sources. Examples include:

  • Construction of solar, wind, hydro, or other renewable energy sources.
  • Energy conservation and energy efficiency improvements in buildings, including gut rehab and energy retrofits. 
  • Energy-efficient production equipment.
  • Electric storage solutions.

For more information, check out the Sustainable Development Fund webpage, or contact Bridget Wiedeman at the Reinvestment Fund,


  • Obtain quotes from Solarize Philly solar installers
  • Secure Financing or capital for 100% of system cost
  • Approximately 12-18 months after interconnection with PECO, receive payments from IRS and PECO for 30-35% or more of system cost

Financing options can include:

Reach out to Solarize Philly, your one-stop shop to go solar for your property.

Incentives for Solar/ Storage/ CHP and Other Renewables for Commercial Properties

Written by Brian Lavinio, PEA intern and Williams College (2024)

This is the first in a two-part blog series focused on financing solutions for solar, storage, and other renewables technologies for commercial properties. The primary driver is the Inflation Reduction Act (IRA). Signed into law by President Biden in August, 2022, the historic piece of legislation contains $369 billion of federal climate-related funding. Since the IRA was signed into law, federal agencies have released updates on implementation details, regulations, and guidance. This series will educate commercial property owners on these updates and how they can monetize them.  This blog series is an update to an earlier version published in February 2023. 

The greatest benefits from the IRA for commercial property owners is expansion of Alternative Energy Credits, Section 48 of the Investment Tax Credit (ITC). Alternative energy technologies that are eligible for incentives include solar, energy storage, ground source heat pumps, geothermal, combined heat and power (CHP), electrochromic (dynamic) glass, and more. 

Section 48 provides a minimum tax credit of 30% of the total cost of eligible systems (aka “Facilities”) including materials, labor, interconnection costs, etc. The total credits can soar as high as 70% in specific instances.

Important note: The Philadelphia Energy Authority is not providing tax advice in this blog or any other communication. And while solar installers and other alternative energy contractors are also not qualified to provide tax advice, they are most familiar with what tax incentives a particular project is likely to be eligible for. 

What properties are eligible?

Nearly all commercial properties are able to take advantage of this incentive:

  1. Owners with tax capacity (meaning they owe at least as much in federal taxes as the value of the credit) will receive a credit on taxes owed for the tax year the system is placed in service.
  2. Nonprofits and most government-owned properties are eligible for Elective (aka Direct) Pay. After an application process, they will receive a check from the IRS for the credit amount.
  3. Owners that do not pay taxes (and are not nonprofits or government entities) such as Real Estate Investment Trusts (REITs) are able to sell or transfer the credits to entities that can monetize the tax credits.

Are all projects able to receive a minimum of 30% credit?

Projects smaller than 1MW receive a 30% credit as a base amount. For projects larger than 1MW, there are prevailing wage and apprenticeship requirements that aren’t addressed here. In addition, there are significant “adders” that can increase the tax credit up to 70% (though not common) of total system cost depending on which qualifications a project meets. 

What are these “adders”?

These are bonuses that increase the value of the 30% base tax credit from the ITC. They are the Domestic Content Bonus, Energy Community Siting Bonus, and Low-Income Community Bonus. Each adder is applied differently, but they can be stacked to increase the value of a project’s tax credit. The Domestic Content Bonus and Energy Community Siting Bonus are 10% credits, while the Low-Income Community Bonus is 10% or 20%. 

What is the Domestic Content Bonus?

The purpose of this adder is to encourage the manufacturing and sourcing of American-made materials in their renewable energy projects. The IRS and Department of the Treasury issued guidance in Notice 2023-38 on eligibility and requirements to access the domestic content bonus. The U.S. solar industry has stated that the guidance makes it very difficult to meet the requirements in the next several years. They are encouraging the Treasury Department to modify the requirements in the final regulations, not expected to be released until sometime in 2024. 

Solar installers are best able to inform customers as to whether their systems meet the content requirement.

What is the Energy Community Siting Bonus?

This bonus is designed to boost development in communities with economies historically dependent on the fossil fuel industry for employment and tax revenues. The IRS and Department of the Treasury released updated guidance in Notice 2023-47

In order to access this benefit, projects must be located in energy communities. The Department of Energy has released a comprehensive map to help developers determine their eligibility. 

Philadelphia does not qualify though there are locations close to Philadelphia that do.  In addition, projects located on Brownfield sites are also eligible for this bonus. 

What is the Low-Income Community Bonus?

This bonus targets low income communities and projects on Indian Lands. Unlike the other bonus credits or “adders”, there is a cap on the tax credits that will be distributed in the low income community bonus. It is expected that the Low-Income Community Bonus applications will exceed the available funding. Some describe it as a “lottery” for low-income credit adders. 

This bonus is divided into categories with differing credits. Most relevant to the Philadelphia area are:

  1. Facilities located in low-income communities (10% credit): Check out this map that visualizes eligible communities under this category. For the Philadelphia region, the building must be in a Census tract that is identified in the map as located in a New Market Tax Credit Low Income Community. 
  2. Facilities are part of a qualified low-income residential building project (20% credit): Eligible housing programs can be found here
  3. Facilities are part of a qualified low-income economic benefit project (20% credit): These facilities must provide at least 50% of the financial benefits of the electricity produced from the project to one of the following: 
    1. households with income less than 200% of the poverty line
    2. households with income less than 80% of the area’s median gross income

Facilities may only qualify for one of the categories in the Low-Income Community Bonus. 

Unlike the other bonuses, this requires an application through the Department of Energy. The application for the 2023 program year was opened October 19 and closed on November 18, 2023. Applications submitted after the initial 30 days will be considered on a rolling basis. To be eligible, projects must be under contract, but not placed in service. More guidance is expected to be released in 2024.

Stacking the investment tax credits for projects under 1MW

Philadelphia Energy Authority is not providing tax advice but rather educating readers about the potential tax benefits of the Inflation Reduction Act. The second of this two-part blog series is about financial incentives and financing options to go solar for commercial property owners in addition to the IRA incentives.

Credit category% credit of total system cost
*assume project cost of $200,000
Value of BonusNet cost of system after bonus (with base credit)Net cost of system after bonuses (stacked)
Base credit30%$60,000$140,000$140,000 (base credit)
Domestic Content10%$20,000$120,000$120,000 (base + domestic)
Energy Community10%$20,000$120,000$100,000 (base + domestic + energy community)
TOTAL50%$100,000$100,000 (base + domestic + energy community)
Low income community 10%10% $20,000$120,000$80,000 (base + domestic + low-income community)
Low income 20%20%$40,000$100,000$60,000 (base + domestic + low-income community)

Philadelphia Energy Authority is not providing tax advice but rather educating readers about the potential tax benefits of the Inflation Reduction Act. The second of this two-part blog series will be published later in January and will cover financial incentives and financing options to go solar for commercial property owners in addition to the IRA incentives.

Very High Efficiency HVAC – Building Electrification Done Right

Editor’s Note: The following post is written by guest blogger David Cohan Senior Advisor with the Institute for Market Transformation (IMT). C-PACE is an excellent financing tool to pair with a VHE HVAC upgrade.

This post reviews the problems with the standard electrification approach (swap heat pumps for gas-fired heating equipment) and a better solution – Very High Efficiency HVAC – suitable for many commercial building types.

Building electrification is a key strategy for achieving the goal of an emissions-free global energy economy. As more building owners become aware of this, they are looking for ways to electrify that make sense both technically and economically. The default solution is to simply remove gas-fired heating equipment and replace it with heat pumps, eliminating the use of on-site fossil fuels. Problem solved (but not)!

Heat pumps are important, but installing them without making other changes to the HVAC system can have a variety of negative impacts:

  • Increased electrical demand necessitating expensive upgrades to the electrical service.
  • Increased utility bills. In most parts of the country, the price of electricity is significantly higher than the price of natural gas. Even if the heat pumps are more efficient, the cost will usually be higher.
  • Continuation of poor ventilation and indoor air quality. Replacing heating and cooling equipment will not, by itself, do anything to improve these.
  • Increased emissions. If the electrical grid serving a building is powered by coal and natural gas plants, electrification may simply shift emissions from Scope 1 (the building) to Scope 2 (the power plants) without any reduction occurring. If the new heat pumps increase electricity use and the power plants providing that electricity are less efficient than the old gas-fired heating equipment, overall emissions can actually increase. The arguments for building electrification assume that the grid is increasingly powered by renewable energy but the pace at which this is happening varies dramatically from region to region.

To avoid these negative possibilities, what is needed is electrification that does not increase demand and also does not increase electricity use. And if that approach simultaneously improves ventilation and indoor air quality, that would be amazing. Such an approach exists. Very High Efficiency (VHE) HVAC has been successfully installed and validated in twenty buildings (and counting).  In Tarrytown, NY a 71,000 square foot office building replaced 24 gas-fired rooftop units with a VHE HVAC system. Natural gas use fell by 97%, electricity use was reduced by 34% and peak electrical demand was reduced by 25% with the results validated by Pacific Northwest National Laboratory. Multiple other examples exist of buildings that achieved similar results.

VHE HVAC is not a specific product or technology. It is a performance-based, technical specification that optimizes the entire HVAC system. The key elements are:

  • Ventilation system completely separated from the heating/cooling system, allowing each to be optimized to meet the building’s needs.
  • High efficiency heat/energy recovery ventilation that recovers a minimum of 85% of the energy used to heat or cool the inside air.
  • High performance electric heat pump system.
  • Right-sized heating and cooling system. Most systems are highly over-sized, reducing the overall system efficiency.

The full VHE HVAC specification can be seen at The approach uses high efficiency versions of equipment that are widely available through multiple manufacturers, including all of the major heat pump manufacturers. The equipment is familiar to industry designers and installers so the approach can be replicated and scaled without requiring extensive or specialized training. VHE HVAC is widely applicable in typical commercial buildings (office, retail, education, public assembly, restaurants, etc.). Because it is a systems approach, it requires replacement of all the equipment in a zone or a building. This needs to be considered when deciding whether VHE HVAC makes sense for a specific building. High-rise buildings and multifamily buildings are feasible but have more limited applications.

For more information, contact David Cohan at or visit The Institute for Market Transformation is a national nonprofit organization that partners with government, business, and philanthropy to improve the efficiency and performance of the places we live, work, and learn.