HUD Updates Guidance on Solar Program Benefits for PHAs and Assisted Housing Residents

On August 4, 2023, the U.S. Department of Housing and Urban Development (HUD) issued updated guidance (HUD No. 23-162, paired with Housing Notice H 2023-09 and a companion Office of Public and Indian Housing notice) clarifying how financial benefits from community solar subscriptions and on-site solar facilities should be treated for residents of public housing and HUD-assisted multifamily properties. The update was explicitly tied to President Biden's Investing in America agenda and the Inflation Reduction Act (IRA), which dramatically expanded federal incentives for rooftop and community solar serving low-income households.

The guidance targets a longstanding operational question: when a PHA or Section 8, Section 202, Section 811, or Section 236 property owner enrolls tenants in community solar, or installs solar on the building, how should the resulting utility savings be handled so they actually reach the resident rather than being clawed back through rent or utility allowance adjustments? HUD's answer — spelled out across its Office of Multifamily Housing and Office of Public and Indian Housing — is that credits from a community solar subscription paid directly to the resident are generally excluded from income, and that utility allowances should not be reduced simply because a household is receiving solar bill credits. This removes a key disincentive that had been slowing solar subscriptions in subsidized buildings.

For owners and PHAs, the guidance also lays out documentation expectations, the handling of tenant-paid versus owner-paid utility configurations, and clarifies when savings from on-site (behind-the-meter) systems can be retained by the owner to help cover operating costs versus when they must flow through to residents. HUD framed the update as necessary infrastructure for the IRA's low-income solar provisions — most notably the Low-Income Communities Bonus Credit under Section 48(e), which reserves capacity specifically for projects serving federally-subsidized housing and for projects that deliver at least 50% of financial benefits to low-income households.

The solar-benefits guidance sits alongside HUD's Green and Resilient Retrofit Program (GRRP), the first HUD program specifically designed to fund direct investments in energy efficiency, renewable energy generation, low-emission building materials, and climate resilience at HUD-assisted multifamily properties. Funded by the IRA with $837.5 million in grants and $4 billion in loan authority, GRRP launched on May 11, 2023 with three cohorts — Elements, Leading Edge, and Comprehensive — each with different funding caps and eligibility tracks. Eligible properties must be receiving HUD assistance under Section 8, Section 202, Section 811, or Section 236. Eligible scopes have historically included solar photovoltaic (PV) installation, battery storage, heat pumps, building envelope upgrades, electric vehicle charging, wind-resistant roofing, and other resilience measures.

Together, the August 4, 2023 solar-benefits guidance and the May 11, 2023 GRRP NOFOs were intended to function as a pair: GRRP provides the capital to install solar on HUD-assisted buildings or subscribe residents to community solar, and the solar-benefits guidance ensures that the resulting bill savings actually reach the households paying the utility bill rather than being offset by rent or allowance adjustments. Owners pursuing GRRP-funded solar scopes, and PHAs signing their residents up for state or utility community solar programs, should read the August 2023 guidance together with their applicable HUD program regulations and their state's community solar tariff rules before finalizing resident enrollment or utility allowance schedules.

Note: GRRP program administration has continued to evolve since launch, including subsequent policy updates affecting the scope of eligible measures. Owners and PHAs should always verify current NOFO terms and notice guidance directly with HUD before applying or enrolling residents.