Policy Ideas

Public Private Patnerships

Opening the market to public-private partnerships could unlock tremendous potential for economic growth with tribes, co-ops, or local governments. Currently, Investment Tax Credit (ITC) buyers are eager to invest in tribal opportunities and are even willing to pay a premium for tribal projects. Partnerships could make it easier for tax-exempt entities to get access to the knowledge resources they need without having to give up all of the economic upside in a PPA deal. 

Backstop

Direct pay has some large penalties if requirements aren’t meant. For instance, in 2026 a rule kicks in that all components be sourced domestically to qualify for direct pay (for projects over 1 MWac). Given that direct pay projects are smaller than private projects on average, they often have less access to bid at higher prices or larger volumes, which can crowd them out of US supply chians. Tax-exempt entities will face substantial challenges, especially if certain components are unavailable from domestic sources. A backstop program offering 90% of 80% of the tax credit value would provide tribes with some assurance — if they can't meet domestic sourcing fully, they wouldn't drop to zero. Instead, they could secure 90 cents on the dollar, maintaining project feasibility.

Financing Key Milestones

Direct pay could be structured to provide financing at key project milestones rather than only upon completion (COD). Currently, the direct pay structure grants tax-exempt entities the full tax credit amount only when projects are fully operational, which creates cash flow challenges that inhibit project development. Instead, a milestone-based direct pay structure would distribute portions of the tax credit as projects hit specific development stages — such as procurement of domestic content, bill of materials purchased, and grid interconnection approved. This approach would ease cash flow, reduce reliance on expensive bridge financing, and make renewable projects more accessible to smaller, resource-limited entities.

Something else

Something else