This session focused on the key roles cities can play in support their own energy procurements, as well as key roles of local government can play to catalyze clean energy adoption community-wide.

1. FEDERAL FUNDING LEARNING SERIES PART 5
PLAY YOUR PART: UNDERSTANDING HOW CITIES CAN TAKE
ADVANTAGE OF IRA GRANTS, NEW IRS PROVISIONS AND
DIRECT PAY MODELS TO ADVANCE COMMUNITYWIDE
CLEAN ENERGY PROJECTS
December 15, 2022

2. Introductions
Alex Dane
Senior Manager
Clean Energy Innovation & Partnerships
WRI
Matthew Popkin
Manager
Urban Transformation
RMI
Many Thanks to the rest of the RMI/WRI Funding Team:
Jingyi Tang & Ryan Warsing (RMI), Andrew Light (WRI)
Ian Goldsmith
Research Analyst
U.S. Energy
WRI
Kat Carroll
Research Analyst
U.S. Energy
WRI

3. Last time on our
Federal Funding
Learning Series...
3
What is the Inflation Reduction Act?
How New Market Incentives and Direct Pay
Unlock Opportunities for Municipalities
Key Tools to Help Navigate Federal Funding
Considerations As You Prepare for New IRA
and IIJA Programs

4. Agenda
Welcome & Introductions
Funding Guidance Update: Understanding Available Funding and Incentives
How Cities Can Seize the Moment
Preparing for Justice40: Integrating Equity into City Grant Applications
Deal Stacking: Maximizingthe Value from theIRA for Your Community
How Direct Pay Impacts City Roles and Creates New Models for Clean Energy Deployment
Q&A
4

5. Key Learning Objectives
5
1. Identify key roles cities can play to support
their own energy procurements and catalyze
clean energy adoption community-wide
2. Explore how different clean energy
projects can “stack” IRS tax provisions
and utilize direct pay models to take
advantage of a new and improved
economic landscape enabled by the IRA

6. Poll
Questions!

7. Poll Questions
• Welcome! Which municipal department do
you work within?
• Elected Official
• Finance/Grants
• Management/Administration
• Planning
• Public Works
• Sustainability/Resilience
• Transportation
• Technical advisor/consultant to
municipalities
• Non-profit/community organization
• Other (not listed)
• How would you describe the community
you represent or work for?
• Large City (200,000+ pop.)
• Medium City (50,000-200,000 pop.)
• Small City or Town (Under 50,000 pop.)
• County – Urbanized Area
• County – Rural Area
• Municipal Moon Outpost
• This is our 5th webinar in this learning
series. Have you joined us for previous
sessions?
• No, this is my first time!
• Yes, I’m a returning customer.
• Yes, I’ve seen every episode so far!
7

8. Poll Question
Why are you interested in pursuing federal funding?
• Because there is money available
• The leadership of my local government has asked me to do so
• To fill a budget gap for a project
• To accelerate a project that would otherwise take years to complete
• To leverage local dollars for greater impact
• To do something innovative, interdisciplinary, and ambitious
• No specific interest - I’m just here to learn today
• My favorite hobby is scrolling endlessly through Grants.gov
• Another reason (not listed)
8

9. Funding Guidance Update:
UnderstandingAvailable Funding and Incentives

10. 204 funding opportunities are overwhelming, but FFOLD includes
5 filters to quickly down select to the most relevant to you

11. Our new Funding Guidance helps make navigating the
terms, strategies, and types of incentives digestible
11

12. 12
This guidance is broken down into 3 main categories, with
brief information and insights to walk you through different
funding considerations

13. How Cities Can Seize the Moment
12/16/2022 13

14. With IIJA and IRA both enacted, communities need
to consider multiple buckets of federal funding
14
Tax
Credits
Grants
Rebates
Loans

15. The IRA, combined with the IIJA and CHIPS and Science Act,
offer historic levels of federal investment in decarbonization and
the energy transition
Source: RMI, Congress’s Triple Whammy: Innovation, Investment and Industrial Policy

16. IRA’s projected climate spend is $386B, but that could be far
higher since tax credits make up 70% of IRA and are uncapped
CleanElectricity Tax Credits
42%
Individual CleanEnergy
Incentives
9%
CleanManufacturing Tax
Credits
10%
CleanFuel and Vehicle
Tax Credits
9%
Other Energy and
Climate Spending
4%
Conservation, Rural
Development, Forestry
9%
Building Efficiency, Electrification, Transmission,
Industrial, DOEGrants andLoans
7%
Air Pollution, Hazardous Materials,
TransportationandInfrastructure
10%
Green = Tax Credits
Blue = Grant/Loan/Rebate

17. C40 Cities released an IRA implementation guide to help
mayors and their staffs understand the climate provisions
and grant programs included in the IRA:
17
Climateaction and the Inflation Reduction Act: A guide for local government leaders (c40knowledgehub.org)

18. 18
Expansion of Ambition for Cities
2021 Clean
Energy Baseline
Bipartisan
Infrastructure
Law
Inflation
Reduction Act
Level of Federal Funding

19. • Educating residents, nonprofits and businesses about how to access tax credits,
rebates, and grants (ex: home energy efficiency grants)
• Creating incentives, policies and conditions to encourage businesses to participate in
the renewable energy, electrification, and decarbonization transition
• Encouraging growth of partnerships between universities, nonprofits, energy
businesses, the construction industry, etc. in order to catalyze innovation
Advocate - Facilitator
19
Policy and goal-setter
Incubator - Partner
With an influx of incentives, cities can take on new roles
in assisting residents and businesses in the community

20. Consider multiple strategies and metrics to help
increase and measure project ambition and impact
Align projectswith long-term plans and strategies
Partner with other municipal departments,businesses,
non-profits,utilities, etc.
Implement scalable and replicable programs to build long-
term capacity
Leverage funds into an effort that extends beyond initial
funding
Change the way officials, businesses, and local residents
think about energy use
Try innovative technologies or approaches
Energy savings
Jobs created
and/or
retained
Renewable
energy capacity
installed
Funds
leveraged
Greenhouse
gas emissions
reduced

21. Preparing for Justice40: Integrating
Equity into City Grant Applications
12/16/2022 21

22. 22
Executive Order 14008 and Justice40 Interim
Implementation Guidance
40% of the benefits of investments in climate change, clean energy and energy efficiency, clean transit, affordable and
sustainablehousing, training and workforce development,remediationand reduction of legacy pollution,and the
developmentof critical clean water and wastewaterinfrastructure should flow to disadvantaged communities (Source).

23. 23
Source: Lawyers for Good Government
• No single consistent
definition of a
disadvantaged
community – states
define disadvantaged
communities via
different criteria
• Some agencies, like
DOE, will accept state
definitions of DACs for
consideration when
awarding funding
Lawyers for Good Government Disadvantaged
Communities Criteria Report

24. 24
Executive Order 14008 and Justice40 Interim
Implementation Guidance
40% of the benefits of investments in climate change, clean energy and energy efficiency, clean transit, affordable and
sustainablehousing, training and workforce development,remediationand reduction of legacy pollution,and the
developmentof critical clean water and wastewater infrastructureshould flow to disadvantagedcommunities (Source).
Agency Prioritization Criteria
Different agencies define a
‘disadvantaged’ community
according to their own criteria,
ex: DOT’s definition for
‘transportation burden’ or DOE’s
‘energy burden’

25. Department of
Transportation
Department of Energy Environmental ProtectionAgency Housing and Urban
Development
Priorities for Justice40
Inclusion into Overall
Planning
• Increaseaffordable
transportation options
that fight climate
change and connect
communities
• Identify and prioritize
projects that benefit
DACs
• Evaluate the negative
impacts of
transportation
projects on DACs
• Decreaseenergy burden in
DACs
• Decreaseenvironmental
exposureand burdens of
energy infrastructure
• Increaseparity in clean energy
technology
• Increaseaccess to low-cost
capital in DACs
• Increaseclean energy
enterpriseand jobs in DACs
• Increaseenergy resiliency and
democracy in DACs
• Develop comprehensive
framework for EJ impacts in
relevant EPA decisions
• Build capacity for community
participation
• Strengthen EPA’s external civil
rights compliance program
• Integratecommunity science
• Make procurementand
contracting moreequitable
• Help tribal communities
achieve safe, resilient
housing
• Pilot new models for Section
3 compliance
• Improveequity in
community planning and
engagement
• Reduce lead and radon
exposure
• Update HUD’s
environmentalreview
policies to include climate
hazards and environmental
justice
IndividualDepartment
Mapping Tool
Transportation
Disadvantaged Census
Tracts
DOEDisadvantaged Communities
Reporter
Climate and Economic Justice
Screening Tool; EJScreen
Climate and Economic Justice
Screening Tool
Clarity of Implementation
Pathway for Cities
Agency Implementation of Justice40

26. 26
Executive Order 14008 and Justice40 Interim
Implementation Guidance
40% of the benefits of investments in climate change, clean energy and energy efficiency, clean transit, affordable and
sustainablehousing, training and workforce development,remediationand reduction of legacy pollution,and the
developmentof critical clean water and wastewater infrastructureshould flow to disadvantagedcommunities (Source).
Agency Prioritization Criteria
Different agencies define a
‘disadvantaged’ community
according to their own criteria,
ex: DOT’s definition for
‘transportation burden’ or DOE’s
‘energy burden’
Grant Program
Criteria
Within the prioritization criteria from an
agency, there are a) specific mapping
tools highlighting specific areas for
investment and/or b) individual criteria
within a program or funding opportunity

27. 27
• Prioritized applications that advanced racial equity or provided 'significant
community benefit'
• Suggested that applicants use the DOT Transportation Disadvantaged
Census Tracts mapping tool, EJScreen or geographic or demographic
indicators including low income, high or persistent poverty, linguistic
isolation, etc., to identify disadvantaged communities when making their
application
• Takeaway: Because of a diversity of indicators available at the state
and federal level, and a need for flexibility, applicants to grant
programs will likely be required to make their own argument as to
whether the area where their project is located, or the people that it
will impact, could be considered disadvantaged.
Low- or No-Emissions Vehicle Program

28. Deal Stacking: Maximizing Value from
the IRA for Your Community
12/16/2022 28

29. The IRA's updated energy tax credits provide an
opportunity for communities to "stack" incentives
• On top of the base PTC and ITC, IRA adds
incentives for:
• Paying good wages for workers
• Using American-made components
• Siting in "energy communities," including
brownfield sites and historically fossil fuel
dependent areas
• Siting in a low-income or tribal community (ITC)
• Built as a part of a low-income residential building
(ITC)
• Having 50% of the financial benefits flow to low-
income households (ITC)
• Maximum possible benefits:
• $31/MWh for the PTC
• 70% of eligible project costs for the ITC!
29

30. Your community can be the support and resource hub for tax
credit deal stacking
New IRA-powered roles, along with existing expertise and
connections, make city governments well-suited to be deal stack hubs for
their communities.
Incubator - Partner
• Finding and recommending
solar installers who use
American-made materials
• Partnering on research with
local higher education
institutions
• Connecting with non-profit
housing developers
Policy and Goal Setter
• Prioritizing
initiatives and projects that
fulfill adders
• Easing solar permitting and
zoning regulations
• Engaging in utility resource
planning and regulatory
process to support DERs
Advocate - Facilitator
• Identifying "energy
community" sites
• Educating local businesses
and non-profits
• Holding community
engagement sessions on
renewable energy
development

31. Deal Stacking Example
• A for-profit housing developer in Western Pennsylvania
plans to develop a new multifamily property with HUD
project-basedrental assistance.
• Knowing the potential for IRAdeal stacks, the city
Department of Housing connects the developer to the
city Department of Sustainability.
• The Department of Sustainability provides
resources, guidance, and connections to help
meeting adders.
• The new building installs a rooftop solar array with 70%
of its costs reimbursed, quickly turning it into a source
of revenue!
31
File:Vienna and Earl Apartment Buildings.JPG - Wikimedia Commons

32. Deal Stack Diagram
32
30% InvestmentTax Credit
+10% Domestic Content
Bonus
+10% Energy Community
Adder
+20% QualifiedLow-
Income Residential
Building Project (through
1.8 GW environmental
justice capacity)
70% of rooftop
solar costs
reimbursedunder
ITC!
With assistanceand guidance from the city,
the housingdeveloper is able to achieve:

33. Start preparing for deal stacks by learning more and
incorporating them into your development strategy
33
Identify and map areas
in your municipality
that will qualify for IRA
“adders”
Help your community
partners and institutions
understand these new
opportunities
Proactively engage
with your finance
departments to prepare
them for new financial
opportunities
Build relationships with
community-based
partners to share these
opportunities for
equitable development
Embrace complexity as
an opportunity for
incentive stacking
Consider all the newIRA
incentives in context
with your community’s
strategy

34. How Direct Pay Impacts Cities and
Creates New Models for Clean Energy
Deployment
12/16/2022 34

35. The IRA created a new mechanism called “Direct Pay” (aka
“Elective Pay”) that unlocks the benefits of tax credits for tax-
exempt entities
35
What does this do?
• Enables tax exempt
entities to directly
capture tax credit
incentives for clean
energy
How will this work?
• Direct Pay will likely
work like a regular
income tax refund
where eligible parties
are treated as if they
"overpaid" on a tax
return
• This is non-
competitive funding
Why does this matter?
• Project directly
owned by tax exempt
entities are now
significantly more
affordable than ever
before

36. Direct pay strengthens the role cities play in community
clean energy deployment because:
• In the private sector, tax credits must be monetized as reductions of tax
liability, leading to complicated tax equity structures.
• Direct pay guarantees a cash payment from IRS.
Tax credits are received
as cash paymentsdirectly from
the federal government.
• The "adders" to tax credits align funding with many public policy goals,
like supporting American businesses and having clean
energy benefit low-income communities.
Tax credits and adders align
with public policy goals.
• Direct pay is open to all state, local, and tribagovernment subdivisions,
as well as any 501(c)(3) organization.
• This opens new partnershipsand alignments of clean energy funding.
Cities can directly partner with
other tax-exempt entities to
advance clean energy.
36

37. Direct pay unlocks new models for bringing the benefits
of clean energy to your community
DirectOwnership for Municipal Benefit
• Cities fund and own clean energy projects
for their own direct benefit
• Roles:Policy and goal setting
DirectOwnership for Community Benefit
• Cities fund and own a clean energy project
for community members to utilize
• Roles:Policy and goal setting, Incubator
37
Direct Pay Facilitation
• Cities help other eligible entities take
advantage of direct pay by providing technical
and strategic assistance
• Roles: Advocate, Incubator
Direct Pay "Plug-in"
• Cities "plug-in" direct pay as a funding source
into a new or previously ideated program or
project
• Roles: Policy and goal setting

38. Direct Ownership for
Municipal Benefit: A
School Goes Solar
• A school district in New Mexico
decides to install a solar carport.
• Because of direct pay, it receives
30% of its costs back
through electing to take the ITC.
• Over the next 10 years, the district
saves about 30% on its municipal
energy bills and offsets a
significant portion of its
emissions.
38

39. 39
Direct Ownership for Municipal Benefit Diagram
Federal
Government
Local Utility
Ownership
Green – Dollars
Blue – Ownership
Gold – Electricity
Orange - Assistance

40. Direct Ownership
for Community
Benefit: Making a
Brightfield
• A Midwestern town builds a
community solar array on a
brownfield site in a low-income
neighborhood.
• The town receives 60% of
eligible
project costs back through
claiming the ITC plus eligible
adders.
• The lower project costs mean
lower community solar
subscription fees for low-income
neighborhood households.
40

41. Direct Ownership for Community Benefit Diagram
41
Federal
Government
Owner-
ship
Green – Dollars
Blue – Ownership
Gold – Electricity
Orange - Assistance
Local Government
Community
Residents

42. Direct Pay Facilitation: Connecting the Dots
• A southeastern city wants build resilience
hubs with solar and storage solutions.
• The city reaches out to a large local church
and a library, who are both direct pay
eligible.
• The city connects the organizations to
their trusted local developer. Providing
technical assistance, the city helps them
claim direct pay tax credits for the
solar and storage system.
42

43. Direct Pay Facilitation Diagram
43
Ownership
Ownership
Green – Dollars
Blue – Ownership
Gold – Electricity
Orange - Assistance
Local Church
Town Library
Federal
Government
Local Government

44. Direct Pay "Plug-In"
• A medium-size Great Plains town with a municipal
utility plans to develop a community wind project.
• While the project was proposed before IRA, newly
available tax credits immediately reduce the overall
cost and shorten the payback period.
• With the budget savings generated from the tax credits,
the utility reduces subscriber fees even further than
planned, producing greater savings for consumers.
44

45. Direct Pay "Plug-in" Diagram
45
Municipal Utility
Ownership
Green – Dollars
Blue – Ownership
Gold – Electricity
Orange - Assistance
Federal
Government
Local Government
Community
Residents

46. Direct Pay presents certain challenges, meaning it
won't be right for every program
Direct Pay electing entities cannot take advantage of asset depreciation
benefits, which is a key part of recovering costs for private business.
Projects funded by tax-exempt bonds can see their credit reduced by up to 15%.
After 2025, all projects electing for Direct Pay must meet domestic content
requirements on steel, iron, and manufactured products.
Projects must ensure funding to cover upfront planning, permitting, and
installation costs.
46

47. Next steps to get ready for Direct Pay
47
1. Review your community's clean energy strategy
• Look for ways direct pay can "plug-in" to an existing or planned initiative.
• Consider previous ideas limited by financing constraints.
• Identify areas that may qualify for extra incentives.
2. Identify and build relationships with key partners
• Engage private developers, workforce training agencies, and educational institutions to discuss workforce and domestic
content requirements.
• Talk to your utility about Direct Pay and other IRA incentives about their implications for clean energy in your
community.
• Reach out to newly eligible entities in your community to gauge interest and needs.
3. Prepare for working with the IRS
• Stay tuned for updated guidance.
• Brief your finance department on the changes and opportunities (aka “why this matters”)to
prepare them for dealing with new processes,

48. The IRA enables cities to make real progress on their
community-wide clean energy goals
48
Grants allow cities to
advance clean energy
and environmental
justice in particular
projects
Deal stacking leverages
city knowledge,
capacity, and expertise
Direct pay opens new
possibilities for clean
energy ownership
models, including direct
city ownership
Cities can work with local
utilities, businesses, and
community institutions and to
ensure awareness of
expanded options for funding
the energy transition

49. Near-term resources to keep you going!
• USDN’s Inflation Reduction Act Miniguide
• NACO’s Inflation Reduction Act Legislative Analysis for Counties
• RMI - 4 Ways the IRA Speeds the Shift to a Cleaner, More Affordable Energy Future
• WRI - Beyond Climate: 6 Big Benefits of the IRA
• C40 Climate Action and the Inflation Reduction Act: A Guide for Local Government Leaders
Understanding the IRA
• FFOLD Tool (Updated 9/23/2022)
• Electrification Coalition EV Funding and Financing Guide
Understanding Federal Funding Opportunities
• Equity Design Considerations for Federal Funding
• White House CEQ Justice40 Guidance
Understanding Equity& Federal Funding

50. Questions & Discussion
Type directly in the Zoom Q&A.

51. THANK YOU FOR JOINING US FOR THIS
LEARNING SERIES!
For more info, please contact:
Matthew Popkin at mpopkin@rmi.org
Alex Dane at alex.dane@wri.org