Readers Write: The 2022 Inflation Reduction Act and key 2023 updates

Readers Write: The 2022 Inflation Reduction Act and key 2023 updates

Before we delve into the technical material, please let me say that despite complications that may seem infinite, I still see the world with a sense of wonder and hope to occasionally relate information—technical, economic, scientific, theoretical, humanistic, in ways that keep us positive and moving toward energy and climate sustainability.

Ever aware of the promising possibilities, this habitual and different ways of seeing things, and a fidelity to write and share.

Since OPEC’s drastic oil embargo, it’s patently obvious oil and gas are ever more subject to extreme volatility as well as artificial cost/supply manipulations of the world market.  We really need to increase local sources of energy that are not subject to world markets. Consider one half of the world’s oil is owned by governments and companies under governmental control that are not friendly to the U.S.  You need only look at OPEC, Russia, Iran, Argentina—cases, in point.

One half of U.S.-produced oil is shipped overseas at world market prices, because that’s how companies get the best price for their product.  That is to say, U.S.-produced oil is chained to the world market, it’s how our system works:

The IRA allowed individuals and small businesses that paid taxes to benefit from “green” installations and retrofits, by which they could save money and cut energy costs:

  • Receive a tax credit covering 30% of the cost to switch to lower-cost solar power, protecting against volatile energy prices.
  • Tax credit up to $5/square foot for energy efficiency improvements to lower utility bills.
  • Small businesses using large vehicles (trucks and vans) benefit from tax credits covering 30% of purchase costs for clean commercial vehicles, like EVs and fuel cell models.

The full list of IRA credits:

The problem for municipalities and non-taxable entities has been they could not benefit from IRA incentives, which were in the form of tax reductions, because they pay no taxes.

In 2023 the IRS made revisions called elective or direct pay—allowing tax-exempt local governments, tribal nations, 501(c)(3) organizations, religious 501(d) organizations, and rural energy cooperatives — to benefit from many of IRA’s incentives by receiving a direct cash payment directly from the IRS.

Eligible entities must first apply to the IRS to notify of the intent to claim rebates.  When a project is complete, the applicant must file 990T and Form 3800, with Reg. Number, to seek credit.  Credit is made as a direct cash payment to the applicant.

The IRS’ “elective pay” portal:

Note: IRA Elective pay is sometimes known as “direct pay,” which shouldn’t be confused with the IRS’ direct pay for tax payments.

There’s also a transferability option. Entities that qualify for the credit but are not eligible to use elective pay can transfer all or a portion of the credit to a third-party buyer in exchange for cash. Buyer and seller negotiate terms and pricing.

When IRA funds are exhausted the credit ends, unless the wheels of government authorize new funds.

Direct pay especially benefits electric vehicles and renewable energy installations like solar that have the largest incentives, 30% of the project cost.

It still means a capital outlay of 70%, but the refundable 30% significantly reduces payback time.  As I understand the credit, it was “uncapped” in late 2023, allowing multiple projects, not just a single project.

Some states promote renewable technologies.  The New York State Energy Research and Development Authority has good incentives and help is readily available.  Interested parties can view NYSERDA’s website and project application portal:

It takes 2.5 to four acres to generate one megawatt (MW) of solar electricity (1 million watts). One MW supplies about 1,000 homes.  It’s a matter of scale and why I think municipalities and large businesses/organizations with a lot of property can have a big impact.

As of 2022, Suffolk County had solar arrays on five closed landfills, 188 acres of panels generating 11.4 MW, with three more landfills proposed to double acreage and energy generation.  Sadly, Nassau County has no solar arrays on its closed landfills. The technology is established.

It’s inspiring that prior to IRA, The Sisters of St. Joseph in Brentwood installed a solar farm generating one MW that covers their needs.  Since 2010 The Unitarian Universalist Congregation of Shelter Rock has operated one of the largest rooftop solar arrays that continues to generate electricity as designed.

Another possibility interested parties avail themselves of is contracting with a company to install a solar system at no cost subject to a “lease,” with payment made based on an agreed percentage of the electric generated, or per acre. Leases vary. My recent query came up with $5,000+/- year/acre for large municipal installations (infrastructure, interconnections, battery storage).

For 10 acres a municipality could receive $50K/yr, for 100 acres $500k/yr, etc.

I encourage municipal governments, businesses, and environmentally focused non-tax entities to utilize IRA incentives. Make a priority list of potential projects for best fit, contact NYSERDA, and view IRS’ website.

Stephen Cipot

Garden City Park


The author worked in private industry, including a multinational oil, gas, mining, chemical company. And had a challenging career in USEPA’s emergency and remedial response division.  He volunteers time to civic and local organizations, is training to be a Fire Department EMT, and is appointed to the Town of North Hempstead’s Climate Smart Communities Task Force, a NYS program TONH participates in.  In 2022 the TONH completed a Municipal Climate Action Plan and is working on a Community Climate Action Plan. Town of North Hempstead – Climate Smart Communities and Clean Energy Communities (

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