Maximizing Community Benefit

by | May 9, 2024

Future State

Equitable access to clean energy and energy efficiency technology benefits and opportunities

Efficiency upgrades and behind-the-meter energy are set to become more and more attractive for homeowners, nonprofits, governments, and businesses. This is not only because of a general desire for more resilient electricity systems, but also the anticipated increased demand for electricity, which will come from manufacturing growth, electric vehicles, data centers, and extreme weather (to name a few reasons). The National Renewable Energy Laboratory estimates that by 2050, electricity generation capacity in the U.S. must double to support the electrification of the transportation sector and others. As the gridGrid: The interconnected network for delivering electricity from producers to consumers. It consists of power stations, electrical substations, and electric power transmission and distribution lines covering a wide area. attempts to keep up with demand, distributed and local energy generationDistributed and Local Energy Generation: Technologies that generate electricity at or near where it will be used, such as solar pane ls and combined heat and power. This approach reduces energy loss during transmission and distribution by utilizing local energy sources. may soon be not just a “nice-to-have,” but a necessity to shield people and businesses from volatile fossil fuel prices and alleviate an overtaxed grid.
To date, these technologies have largely been available only to high-income households, but Northeast Ohio nonprofits have been working to extend their benefits to low-income neighborhoods via multiple pilot projects. Economic development tends to focus on increasing incomes; with significant tax incentives becoming available, an added focus should be decreasing expenses so existing incomes can go further. They now have an even greater opportunity, thanks to the IRA, to make rooftop solar, community solar and home efficiency upgrades a reality for all.

Programs funded by the IRA have incentivized the deployment of distributed solar as well as upgrading home infrastructure to heat pumps, electric appliances, energy-efficient windows, and so forth. Importantly, for the first time, the IRA allows governments and nonprofits to benefit from 12 different clean energy tax incentives; entities with no tax liability receive a “direct pay” cash rebate.

These policies, which focus on low-income households and communities, aim to lower energy costs for consumers while spurring demand for new technologies that are a necessary part of the green energy transition. For example, about half of the $27 billion Greenhouse Gas Reduction Fund (GGRF) is dedicated to low-income communities. There is no cap on the amount of tax credits the federal government can deploy — the only limitation is the ability of communities to unlock demand.

As one example of the catalytic potential of the IRA, Growth Opportunity Partners is the lead applicant on a multi-state application for $250 million from the EPA’s Solar for All program, part of GGRF. The coalition on the application includes 20 counties in Ohio and other midwestern and northeastern states. For governments and nonprofits, funding from GGRF can be used for upfront financing of clean energy projects; costs can later be offset via “direct pay.”

This federal investment sets the stage for the successful deployment of clean energy and energy efficiency technologies in low-income communities, but it does not guarantee success for three reasons.

First, it is possible that residents and nonprofits in Northeast Ohio do not claim their fair share of these dollars, especially when it comes to the rebates offered by the Department of Energy (DOE). This could be due to a lack of awareness. It could also be due to a lack of upfront capital to finance projects; many investments are completely offset by tax credits or rebates for very low-income households, but other households that, by most definitions, are low-income will only receive partial rebates. Progress could be stymied by a lack of broader coordination among actors in the economic development system to help residents stack the varying programs to their maximum benefit. The Connecticut Green Bank’s lauded low-income solar programs were successful precisely because they addressed barriers related to awareness and coordination, starting with high-touch efforts to build trust between residents of low-income communities, government agencies and solar contractors. This kind of hyperlocal “ground game” will likely be required to ensure that households take advantage of these federal investments.

Second, community solar — arrays that are larger than what can fit on a house but smaller than utility-scale projects that connect to high-voltage transmission lines — offer many advantages over rooftop solar. They cost less per watt than residential solar and they create more equitable access to solar energy because they don’t depend on high-quality single-family housing. But their growth is being hampered by interconnection queues, extremely high interconnection fees, or other impediments created by state policy (Ohio gets a “C” grade for its state policies related to interconnection from the Interstate Renewable Energy Council).

Third, it is possible that Northeast Ohio could achieve substantial progress in terms of clean energy and energy efficiency technology adoption but miss opportunities to ensure that workers and business owners of color benefit equitably from this building boom. Relative to the amount of funding available for technology deployment, there is very little available for workforce and business development. This will fall largely on local funders and nonprofits.

To overcome these possible barriers and maximize investment, this residential clean energy deployment must be understood by mainstream economic development actors as an economic development opportunity, in that it has the potential to bring in substantial outside resources to the region (in the form of federal tax credits and rebates), save households significant money (to be recirculated in the community), and set the stage for workforce and business development (ideally addressing electrification skills that are needed in manufacturing, not just clean energy deployment).

Key Actors

  • Green banks and community development financial institutions
  • Local funders
  • Workforce development organizations and community colleges
  • Local nonprofits
  • Small business support organizations

Strategy Guidance

Tier 1: Fundamentals

Invest in marketing and technical assistance to increase adoption of heavily subsidized clean energy and energy efficiency technologies

Tier 2: Cutting Edge

Pair technology deployment efforts with inclusive workforce and business development

Tier 3: Globally Distinctive

Scale experiments in community-owned solar

Get the Practical Guide to the Green Economy

Maximizing community benefit is one strategic imperative for growing the everyone economy in a green future. Download The Practical Guide to the Green Economy below and read on for more insights, ideas and imperatives from the Fund for Our Economic Future.

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