Unlocking Elective Pay Grant Program

The Unlocking Elective Pay Grant Program (Challenge #2 of the MI Healthy Climate Challenge) is administered by the Michigan Department of Environment, Great Lakes, and Energy (EGLE) Office of Climate and Energy in partnership with the Michigan Infrastructure Office Technical Assistance Center. The program aims to support the creation and implementation of planning and financial support strategies that help tax-exempt community institutions in Michigan maximize federal clean energy tax credits through the Elective Pay (Direct Pay) mechanism under Internal Revenue Code Sections 6417 and 6418. Objectives include accelerating clean energy deployment, facilitating cross-sector partnerships, scaling replicable aggregation and financing models, expanding tax credit access for low- and moderate-income households lacking tax liability, and ensuring projects can access available bonus incentives such as Low-Income Communities, Energy Communities, and Domestic Content bonus credits.

Eligible applicants include nonprofits, affordable housing developers, community-based organizations, regional intermediaries, technical assistance providers, community lenders (CDFIs, green banks, credit unions), and municipal or public entities partnering with nonprofits or lenders. For-profit organizations and entities located outside Michigan are only eligible to apply in formal partnership with, or on behalf of, a Michigan-based nonprofit or public sector entity that will meaningfully participate and benefit. Funding is not intended to support standalone individual clean energy projects pursuing Elective Pay on their own, but rather technical assistance, project aggregation models, bridge financing mechanisms, and collaborative frameworks that enable broader clean energy deployment across multiple properties or entities.

Eligible project activities include feasibility planning, vendor evaluation, capital stack design, legal and accounting services (excluding litigation), staffing for aggregation coordination, loan capitalization for bridge financing products, and compliance guidance regarding federal requirements such as prevailing wage, apprenticeship, and Foreign Entity of Concern rules. Supported clean energy technologies include solar energy, battery storage, energy efficiency, electric vehicle infrastructure, wind energy, and geothermal systems.

The application process is a competitive, two-step procedure. Applicants were first required to submit an online Concept Paper detailing the proposed project, key partners, and expected impact. Only applicants receiving an 'encouraged to apply' designation were invited to submit a full formal application using the online application portal, accompanied by an itemized Approved Budget Form, budget narrative, Project Timeline Template, relevant price estimates, and recent financial audit reports or financial statements.