NC Nonprofit Solar Funding After Duke Energy Rebate Cuts

For five years, Duke Energy's North Carolina solar rebate program gave nonprofits a rare cash-back pathway onto the rooftop solar market. The $62 million program, required by a 2017 state law, offered tax-exempt organizations rebates of up to 75 cents per watt, capped at $75,000 per project, far more generous than the 40 cents per watt (capped at $4,000) available to residential customers. The program closed to new applicants after a final lottery in January 2023, leaving nonprofits on a waiting list and advocates scrambling to fill the gap.

The loss is significant. Duke Energy received roughly 140 applications from nonprofits in just the last two months of 2022, nearly matching the total from the program's first four years combined, evidence that demand was finally catching up with the opportunity just as funding ran out. Without the Duke rebate, which the utility has no plans to renew, North Carolina nonprofits, particularly those serving Black, Brown, and low-wealth communities, have had to rethink how to pay for solar.

Inflation Reduction Act Direct Pay: The Biggest Shift

The most consequential new tool is the Direct Pay (also called elective pay) provision of the Inflation Reduction Act of 2022. For the first time, tax-exempt entities, including 501(c)(3) nonprofits, houses of worship, schools, and local governments, can claim the 30 percent federal Investment Tax Credit as a direct cash reimbursement from the IRS after a solar system is placed in service. Historically, nonprofits had been locked out of the ITC because they owe no federal income tax. Direct Pay has been widely described as a game-changer for mission-driven organizations weighing solar.

To capture the full 30 percent credit, projects generally need to be placed in service under current IRA timelines, and additional bonus credits may be stacked for projects located in low-income communities or meeting domestic-content rules. North Carolina's Department of Environmental Quality and clean-energy nonprofits have been working to educate congregations and community organizations on how to file IRS Form 990-T and the pre-filing registration required to access the payment.

Power Purchase Agreements and Third-Party Financing

A second strategy gaining traction is the Power Purchase Agreement, or PPA. Under a PPA, a third-party developer owns and installs the solar system on a nonprofit's roof and sells the electricity back to the host at a negotiated rate, often lower than the utility tariff. The nonprofit pays nothing upfront, and the developer captures the federal tax credits and depreciation. While North Carolina's PPA rules are more restrictive than in some states, H.B. 589 (2017) opened a limited window for rooftop leasing, and solar finance firms have increasingly structured deals that work within those limits.

Mission-driven financiers are a growing part of this ecosystem. Sunwealth, a Massachusetts-based for-profit, has partnered with North Carolina installers to fund community-serving solar projects. One such project, at Rebuilding Broken Places Community Development Corporation in Goldsboro, brought 114 kilowatts of rooftop solar to a Wayne County nonprofit providing economic, educational, and social services. Working with Eagle Solar and Light and Sunwealth, Rebuilding Broken Places installed two arrays with no money down and projected roughly $51,000 in lifetime energy savings.

Philanthropic Capital and Bridging the Gap

Solar advocates in North Carolina are also assembling philanthropic bridge funding, grants from foundations and faith-based networks, to cover the portion of project cost that Direct Pay cannot reach or to advance funds while nonprofits wait for IRS reimbursement. Groups like NC Interfaith Power & Light, North Carolina Clean Energy Technology Center at NC State, and regional community-development financial institutions have been named as resources for congregations and community groups navigating the post-rebate landscape.

What Nonprofits Should Do Next

Organizations considering solar should start by sizing a system against actual usage, then run the numbers on Direct Pay plus any available bonus credits. A reputable installer with nonprofit experience can model both direct-ownership and PPA scenarios. Because Direct Pay requires IRS pre-filing registration and a tax return, nonprofits should budget for professional help and for a cash-flow gap between installation and IRS reimbursement. Finally, watch for state-level action: with the Duke rebate gone, advocates continue to push the North Carolina General Assembly and Utilities Commission for new programs to serve tax-exempt customers.