August 05, 2025
Aug. 5, 2025
Jeff Johnston, EGLE Public Information Officer, JohnstonJ14@Michigan.gov, 517-231-9304
Rachel Felice, MIO, rachel@momentstrategies.com, 734-552-5979
Two new opportunities will support nonprofits, public institutions, and other tax-exempt entities in accessing federal clean energy tax credits through Elective Pay, also known as Direct Pay.
Elective Pay is a U.S. Internal Revenue Service mechanism that allows tax-exempt entities such as nonprofits, local and tribal governments, school districts, rural electric cooperatives, and houses of worship to receive clean energy tax credits as direct cash reimbursements.
To help communities navigate this opportunity, the State of Michigan is launching two support programs:
“This new MHC Challenge is a next step for EGLE and the State of Michigan to support communities leading the way toward a healthier, cleaner future for all Michiganders,” said EGLE Director Phil Roos. “This Challenge and the Ambassador Program will break down barriers standing in the way of vital clean energy projects and move us closer to our MI Healthy Climate Plan goals.”
“Elective Pay has the power to supercharge clean energy projects that lower costs and strengthen the work of nonprofits, schools and local and tribal governments across Michigan, but only if communities know how to access it,” said MIO Director Kevin Mehren. “The Elective Pay Ambassador Program will embed local champions in every region of the state to help organizations bring their clean energy goals to life, from installing solar panels to transitioning fleets to electric. With the help of the MIO Technical Assistance Center, we are making clean energy more accessible and impactful for the communities that need it most.”
About Elective Pay
Certain federal tax credits offer the opportunity to receive a reimbursement of a significant portion of clean energy project costs.
Historically, clean energy tax incentives were largely unavailable to tax-exempt entities and low-income households. Elective Pay lets tax-exempt entities claim tax credits as cash payments, unlocking significant savings for clean energy projects that save money and make a lasting impact in communities.
These credits can be claimed for a range of eligible projects, including solar, energy storage, geothermal installations, and electric vehicles and associated charging infrastructure.
But the incentives remain underused due to complex eligibility requirements, potentially long waits for reimbursement, and limited awareness or capacity among those who could benefit.
The new MHC Challenge grant program will invest in strategies that lead to clean energy project implementation using Elective Pay, and the EPAP will place 10 experts across the state to help entities tackle these barriers.
About the Unlocking Elective Pay Challenge
This MHC Challenge offers grant funding to develop and deploy clean energy strategies that help nonprofits, local and Tribal governments, public school districts, electric cooperatives, houses of worship, and other tax-exempt entities access and utilize federal clean energy tax credits, specifically by using Elective Pay.
Grant awards will range from $250,000 to $1 million, with two to six projects expected to receive funding.
Funded projects will help with the creation and implementation of planning and/or financial support strategies that help tax-exempt community institutions in Michigan maximize federal clean energy tax credits. These may include:
Projects should demonstrate clear public benefit and help set the foundation for broader adoption across Michigan.
The first MHC Challenge, Solar for Savings, announced its first-round awards last month.
Unlocking Elective Pay Application timeline
Note: The State of Michigan recognizes that certain federal clean energy tax credits will be phased out according to the recently passed Congressional reconciliation bill. This Challenge is intended to support the near-term uptake of credits, and EGLE will adapt program requirements if needed based on federal guidance.
About the Elective Pay Ambassador Program
EPAP ambassadors will increase awareness of Elective Pay across Michigan and ensure eligible entities, such as nonprofits, municipalities, Tribes, houses of worship, school districts, and others have the help they need to bring home as much federal clean energy investment funding as they qualify for.
The program will pay stipends to host organizations (municipalities, nonprofits, etc.) that will house a regional Elective Pay Ambassador who will host educational events on Elective Pay, raise awareness about MIO TAC’s Elective Pay resources and technical assistance services, and ensure Elective Pay is embedded in clean energy project planning. The EPAP will run for one year, and there will be one ambassador in each of Michigan’s 10 Prosperity Regions.
Interested potential applicants can review the Program Overview and complete an online application by 11:59 p.m. Sunday, Aug. 31, 2025.
Educational webinars
EGLE and MIO TAC will host two webinars providing an overview of these opportunities and the application process. Register here:
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