Got Clean Energy Projects? Free Program Helps Local Agencies Recoup Some Program Costs

Washington State has been a leader in addressing climate impacts and has invested in programs intended to move us toward a clean energy future. This blog highlights a state program that provides both legal and technical assistance to entities that may be eligible for federal clean energy tax credits. It also includes case studies from local governments that have utilized the state program and obtained federal tax credits.

Background on Elective Pay Provisions of the Inflation Reduction Act (IRA)

Historically, tax-exempt entities, including state and local governments, were unable to benefit from federal clean energy tax credits. Since these entities don't pay federal income tax, they had no tax burden to offset with a tax credit.

However, in 2022, Congress passed the Inflation Reduction Act (IRA) which created an opportunity for local governments that invest in clean energy infrastructure and technology to receive various federal tax credits as direct, elective payments. 

How it works:

• A local government undertakes a qualifying clean energy project or investment.
• The local government then preregisters and files an annual tax return with the Internal Revenue Service (IRS) to claim a “refund” for the investment tax credit.
• If the forms are properly filed and the project or investment meets the eligibility criteria, the IRS pays the “refund” directly to the local government (even though it does not offset any taxes owed).

Recent Legislative Changes Impacting Eligible Projects

When the IRA was passed in 2022, there was a broad range of clean energy projects and investments eligible for elective pay provisions. In 2025, Congress passed the One Big Beautiful Bill (OBBB), HR 1, that limits or phases out some of the credits and imposes additional requirements impacting eligibility.

Changes include, but are not limited to:

• Repealing the clean commercial vehicle credit (Section 45W) for vehicles acquired after September 30, 2025.
• Repealing the electric vehicle infrastructure credit (Section 30C) for property placed in service after June 30, 2026.
• Accelerating the phase-out of certain credits for solar and wind projects.

Nevertheless, there are still significant opportunities for local governments to take advantage of the elective pay provisions—including tax credits. Depending on when projects can begin construction, entities can still receive tax credits for solar and wind projects developed within reasonable timelines. The credit timelines for battery storage, geothermal, and ground-source heat pumps were also not impacted by HR 1. For more information, see Updates to Certain Elective Pay Eligible Credits Under HR 1 from the Lawyers for Good Government (L4GG).

To help determine project eligibility and to assist local governments through the IRS filing process, the Washington State Department of Commerce has created the free resource, the Washington Clean Energy Tax Credit Assistance Program (CETCAP)

Washington Clean Energy Tax Credit Assistance Program (CETCAP)

CETCAP has helped more than 200 organizations install clean energy and EV charging projects, unlocking hundreds of thousands of dollars in federal incentives. The program provides free legal, technical, and filing support for qualified projects statewide, helping reduce the cost of essential clean-energy upgrades.

CETCAP is open to Washington schools, hospitals, tribes, municipalities, and other tax-exempt institutions. Through federal elective pay, eligible entities can receive cash payments after completing approved projects, typically covering about 30% of project costs, with bonus credits that can increase savings to as much as 70%.

CETCAP can help entities determine eligibility of completed projects, plan projects, meet compliance deadlines, navigate complex qualification rules, and prepare accurate filings—all at no cost. Interested entities are encouraged to fill out an intake form to schedule a 30-minute introductory call.

Case Studies

Both King County and the Snohomish County Public Utility District have worked with the CETCAP program to apply for credits for existing clean energy projects.

King County

King County outlines ambitious goals to reduce greenhouse gas emissions, prepare for climate impacts, and support sustainable, resilient frontline communities in its Strategic Climate Action Plan (2025). Working with the CETCAP program, the county filed for $6.5 million in federal energy tax credit for several projects.

The county received $4.6 million in tax credits for a battery storage system installed at the West Point Treatment Plant. The 16.8-megawatt battery system was designed to prevent spills of untreated wastewater during power disruptions. Though the plant opened in just 2024, the battery system has already proven its worth, keeping critical pumps working during 78 power interruptions last year.

The county also received $285,000 in tax credits for solar projects at wastewater treatment and solid waste facilities. One project recipient was the Bow Lake transfer station in Tukwila, the busiest station in the county. The photovoltaic system on the roof of the administrative building generates 2.5% of the building’s annual energy use. Other energy efficient measures built into the site include

• Onsite rainwater collection and storage (used to clean the facility);
• Drought resistant native plants landscaping; and
• Low-flow water fixtures.

Another $1.5 million in credits helped the county build its fleet of light-duty electric vehicles, and $88,000 in credits helped to recover costs associated with adding nine EV charging ports at Metro bus bases, which will help power new battery-electric buses.

Snohomish County Public Utility District

The Snohomish County Public Utility District (PUD) provides electricity to over 367,000 customers in Snohomish County and on Camano Island and water services to 23,000 customers in the northeast section of the Snohomish County.

In 2024, the PUD and the City of Everett kicked off construction on a 400-kilowatt solar array in South Everett. This was the second such project for the PUD, with the first being the Arlington Microgrid that was installed in 2019. This array is included in the PUD’s Community Solar program, which allows customers to buy into the program at a per unit price and receive a monthly credit on their bill based on their units’ production.

The South Everett Solar Project solar array will generate enough electricity to power approximately 40 homes. Instead of selling energy units to customers, the funds generated by this solar array will be donated to the Community Energy Fund, which provides emergency bill assistance for income-qualified customers.

The PUD is currently working through the CETCAP program to apply for tax credits that could offset cost of developing the South Everett solar array, freeing up agency funds for other clean energy programs.

Conclusion and Additional Resources

Local governments with clean energy projects should fill out the CETCAP intake form to determine whether such projects might be eligible for federal tax credits. The assistance provided is free and the program is only available for a limited time, so agencies should act as soon as possible.

Our free webinar, Making the Most of Clean Energy Incentives in Washington State, on Thursday, March 26, from 12 – 1:30 p.m. will offer more details on available clean energy credits and the CETCAP program, as well as information from local governments that have worked with the program. We’ll be joined by speakers from Lawyers for Good Government (L4GG), Giraffe Financial, and King County.

For additional background on the IRA and how elective pay works, see Tax-Exempt Entities: New Source of Funding Available for Clean Energy Projects (although note that some of the eligible projects will have changed based on legislation passed in 2025 limiting or phasing out some of the credits).