The following is an article by Mike Gordon, Founder and Chief Strategy Officer at Joule Assets.
The federal government has proven adept at creating ambitious, well-intentioned energy goals to move towards a greener future, but the initial vision does not provide the plan to make those goals a reality. This is particularly true when the federal ambition is based on state action.
A recent example is the U.S. Department of Energy (DOE) Announcement a new national community solar partnership goal that would allow community solar programs to power five million homes by 2025 and generate $ 1 billion in energy bill savings.
It’s a great idea, but community solar programs, which provide guaranteed savings to all residents, would need to grow by over 700% over the next four years to meet those goals. Community solar energy currently does not have the support structure necessary to complete these scale-up efforts, but state-level governments can help more than the federal government.
What the federal government does is help catalyze programs like Community Distributed Generation (CDG), which allows subscribers to share the benefits of municipal projects, and aggregation of community choices ( ACC), which enables the collective purchasing capacity of a municipality to procure power – executed at the local level. According to the National Renewable Energy Laboratory, CCAs are the most participatory mechanism for purchasing green electricity in the United States.
Individual states will ultimately lead to success in the increased adoption of community solar power. Here are three ways state and local governments can help the DOE and other committed federal agencies achieve these goals.
Implement withdrawal programs
There are two approaches to community solar power: opt-in, which means residents must take action to join a program and often go through credit checks to do so, and opt-out, where residents are automatically registered through their municipality. , regardless of creditworthiness.
Adoption of opt-out programs is around 90% in New York City, the only state that has made it possible to facilitate opt-out for community solar power through CCA programs. In contrast, traditional opt-in programs only achieve 2-3% adoption. New York pioneered this construction with a decision in 2020 and launched the first community choice solar opt-out program in the United States in September. This approach reduces promoters ‘selling costs and eliminates the need to check residents’ creditworthiness.
Opt-out programs allow solar developers to fully subscribe to their community solar projects overnight with customers of all income levels. This paves the way for large-scale climate action by making climate inaction more difficult for consumers than choosing clean energy. Since city leaders can prioritize low to moderate income (LMI) households to receive solar credits, developers can easily qualify for low income incentives.
Extending CCA beyond the 10 states in which it is currently licensed and applying its capabilities to community solar power is the best way to achieve DOE goals and there is an enriched way to attack it: authority. municipal.
The current federal leadership has formulated ambitious goals to effectively support LMI communities and clearly sees municipal authority as a key approach to ensuring success. This fits into a larger picture of the meeting Justice40 goals, another government effort that directs at least 40% of the profits from federal investments in climate and clean energy to underprivileged communities.
Getting municipalities to lead the charge for their own communities is the only way these efforts can expand to the point where seven times the growth is achievable over four years.
By authorizing CCA and applying its authority to community solar power in the remaining 40 states, municipalities can take more ownership of how their energy is purchased and how they can save on those costs. Using CCA and CDG in tandem, as New York has done, is the smarter way to scale. New York Governor Kathy Hochul recently expanded the goals of the state’s NY-Sun program, which have already supported 114,000 projects, with nearly 6,000 more in the pipeline. This is a model for the national approach to this challenge.
Beyond unlocking community solar power, CCA can be used to deliver other aspects of the energy transition in a socially equitable way, from energy storage to the electrification of our transport infrastructure and of our facilities through efficiency.
It appears that the federal government will have funding for community solar power and other distributed clean energy resources under the infrastructure program and the Build Back Better reconciliation bill, if passed. It is essential to structure the rules wisely to access the subsidies and the resulting tax credit to achieve community solar goals. Smart structures would reward states for making the regulatory changes needed to empower LMI consumers while supporting the construction of a smarter, greener and more robust grid.
Federally funded low-income adders for community solar energy and storage that devote at least 51% of their credit supply to low-income consumers and more reward projects that spend much more than that would help scale up programs and divert the majority of solar benefits to them. who needs it most. These programs will be more powerful if they go beyond consumers who currently receive federal subsidies.
Additionally, federal funding that provides transmission and distribution owners with the necessary capital for the improved solar and storage facilities needed to improve the grid will ensure targets are met in a timely manner. Eligibility for one set of incentives, such as grants, should streamline the process of qualifying for another set of incentives, such as tax benefits, if the requirements for both are similar.
Without highlighting resources and rewarding effective plans to achieve a monumental community solar energy scale-up effort, DOE’s new goals will not be met. The current market structure does not allow for the growth needed to power five million homes over the next four years, but with the right plan these ambitious goals can be achieved.