How the Inflation Reduction Act clean energy programs benefit U.S. communities and business

From pv magazine

The IRA is not just about tax credits and incentives. It is providing billions of dollars in grants and loans for clean energy and climate action, with an emphasis on energy justice and meeting the needs of residents in disadvantaged communities, tribes, and rural areas. The act also advances the Justice40 Initiative, which aims to deliver 40% of the overall benefits of IRA and infrastructure investments to people in disadvantaged communities.

The money is on the table. Here we examine some of the places funding is making a difference.

Disadvantaged communities

The U.S. Department of Energy’s (DOE) Office of State and Community Energy Programs has a $27 million Energy Future Grants (EFG) program to encourage local, tribal, and state governments to work with community organizations, academia, utility companies, and non-profits on projects to benefit disadvantaged communities.

The goal of the EFG funding is to address barriers preventing low-to-moderate income (LMI) and disadvantaged communities from realizing the benefits of clean energy for power, transportation, and building. The program expects to make around 50 awards, with recipients each eligible for around $500,000. Applicants submit a community benefits plan outlining how projects will support community and labor engagement, invest in the American workforce, promote diversity and inclusion, and contribute to the Justice40 goal.

Additional IRA funding is available for native communities, supplementing investment from the American Rescue Plan and Bipartisan Infrastructure Law. Specifically, the IRA provides $75 million to help guarantee up to $20 billion in loans to support tribal investment in energy-related projects, and $150 million to bring clean electricity to tribal homes. It appropriates $225 million for tribal climate resilience, which can also support tribes that need to relocate due to impacts of climate change. Tribes also benefit from the Justice40 Initiative.

Job creation

The IRA is expected to create millions of quality jobs as many of the clean energy tax provisions offer bonus credits to projects paying prevailing wages or using registered apprentices. U.S. manufacturing is also ramping up as a result of the IRA’s domestic content requirements, which offer bonus credits for projects featuring US steel, iron, and other manufactured products. Thus, more manufacturing workers are needed.

The DOE is investing $13.5 million in a training partnership program to expand the solar workforce in under-served and under-represented communities. The DOE estimates as many as 1.5 million workers will be needed by 2035 to achieve the Joe Biden-Kamala Harris administration’s decarbonization goals. Trade body the Solar Energy Industries Association estimates the solar and storage industries will need 800,000 new workers for a million-plus workforce by 2030.

Local solar

Starting in 2024, community solar is expected to begin an upward path, growing at an annual clip of 8% with nearly 14 GW of cumulative capacity set to be installed by 2028, according to a recent study by analyst Wood Mackenzie and business, non-profit membership body the Coalition for Community Solar Access.

Community solar cuts upfront investment and makes clean energy possible for non-homeowners and those whose roofs are not solar-friendly. The Community Power Accelerator program intends to unite investors, philanthropic organizations, developers, community-based organizations, and technical experts to deploy more equitable community solar projects.

The DOE has launched the 2023 Sunny Awards for Equitable Community Solar, offering $200,000 in prizes for community solar projects and programs that increase equitable access and ensure benefits go to subscribers and their communities. The energy department also announced a $3 billion conditional loan commitment to residential solar company Sunnova Energy’s Project Hestia, which aims to expand access to solar in disadvantaged communities.

“[The] DOE is providing an exciting new set of tools and important assistance to support solar deployment across the nation so that all communities can enjoy the economic and critical public health benefits that come with deploying renewable energy,” said U.S. Secretary of Energy Jennifer M. Granholm

Energy loans

The IRA provides substantial resources to guarantee clean energy project loans. With $40 billion in loan authority supported by $3.6 billion in credit subsidy for loan guarantees, the DOE intends to encourage development of technology that advances renewable energy systems, carbon capture, nuclear energy, and critical minerals processing, manufacturing, and recycling.

The DOE’s Solar Energy Technologies Office understands it will need a decommissioning plan after incentivizing vast amounts of solar. The $20 million Materials, Operation, and Recycling of Photovoltaics funding opportunity is intended to support research, development, demonstration, and commercialization projects that minimize material use in solar energy systems, improve the installation quality and resilience of PV systems, and improve the reuse and recyclability of solar panels. The funding opportunity asks teams to identify ways to optimize solar systems throughout their lifecycle, to lower costs, thus facilitating rapid deployment of solar energy.

“Thanks to President Biden’s Investing in America agenda, we are creating a robust PV recycling industry that will help us achieve a clean energy future through rapid deployment of solar energy,” says Granholm. “This announcement will enhance PV systems throughout their lifecycle to lower costs and reduce impacts on the environment while ensuring that we have a plan for taking solar panels offline in an efficient and economical manner that boosts the domestic supply chain.”

Through proper recycling and reuse initiatives, solar deployment will become less dependent on the supply chain and better able to sustain the expected growth in clean energy.

Clean outcome

With the passage of the IRA, in combination with the Bipartisan Infrastructure Law and other legislation, the DOE says that the United States will achieve a 40% reduction in economy-wide greenhouse gas emissions, from 2005 levels, by 2030, positioning the United States to realize the president’s goal with additional executive-branch, state, local, and private sector action. The government department estimates that the clean energy provisions of the IRA and the Bipartisan Infrastructure Law, together, could reduce emissions by more than a billion metric tons of CO₂ equivalent in 2030, equivalent to the combined annual emissions released from every home in the United States.

Energy communities

The 10% investment tax credit adder allocated for energy communities under IRA extends eligibility in a few different ways. In addition to focusing on low-income communities, the designation considers the energy legacy of a region. Communities that sit above the national average for unemployment and have disproportionately relied on the fossil fuel industry for economic wellbeing are designated as energy communities.

This designation is important for these communities as the nation seeks to bring jobs to areas that would be hurt by the transition away from fossil fuels. One prime example of this work is an 800 MW solar project in Kentucky which will be built on the former Starfire coal mine.

The BrightNight-developed project, built directly on former mine lands, represents more than $1 billion in infrastructure investment and will produce enough power for the equivalent of more than 170,000 Kentucky households each year. Projects of this size can bring up to 1,000 construction jobs, or more, which is much needed in Appalachia, an area which will suffer the wounds of a dying coal industry.

Electric vehicle truck provider Rivian signed on for the first 100 MW of the project in a long-term power purchase agreement. The site will be built in phases, starting in 2025. Environmental group The Nature Conservancy will also sign for a 2.5 MW power purchase agreement.

“Significant investments in infrastructure will be critical to solving the climate crisis but how we invest is just as important as how much we invest: We need to ensure both people and the planet are central to these decisions, especially in communities like the Appalachians that have powered America for centuries and have tremendous natural resources,” stated Jennifer Morris, CEO of The Nature Conservancy.

PV leaders

The Department of Energy awards five organizations a grand prize of $10,000 each for exemplifying the full potential of community solar and its benefits for residents. This year’s winners of the Sunny Awards for Equitable Community Solar, between them, accounted for $4.3 million in annual savings for their subscribers.

The Shungnak-Kobuk Community Solar Independent Power Producer Project is a solar-plus-battery microgrid owned and operated by two Alaskan tribes which insulates the communities from volatile diesel gas prices. The 223 kW array stabilizes the local grid and excess funds from the project will be used to finance home energy-efficiency upgrades.

Washington D.C. Solar for All is a no-cost LMI program saving customers an average $520 per year. It currently operates more than 160 community solar projects that serve more than 6,000 households in the US capital, Washington DC. The program has a goal of reducing electricity bills by 50% for 100,000 households by 2032.

Brooklyn N.Y. Community Power is a 1.2 MW project delivering guaranteed 20% bill savings to 500 LMI households. The project provided workforce training, led by Solar One and Green City Force, that led to full-time jobs with solar installers for several public housing residents. All the subscribers to this project also become members of the NYC Community Energy Co-op, giving them a controlling stake in future energy projects and the opportunity to become member-owners of the solar array that serves their community.

Faribault Community Solar, in Minnesota, was developed by member-owned energy democracy body Cooperative Energy Futures, under the Rewards Community program run by utility Xcel Energy. The Faribault project provides bill savings to 77 subscribers, half of which are LMI households. The program foregoes credit or income verification and backs its program with a unique subscriber model in which a large local organization acts as “anchor tenant” to mitigate risk.

JOE-4-SUN Ashland is a 6 MW project in Ashland, Massachusetts, which leverages the commonwealth government’s Solar Massachusetts Renewable Target program. It serves more than 500 LMI households, guaranteeing 50% bill savings, which amounts to more than $400 of annual savings per household. The project used entirely union labor, supporting well-paid jobs with livable wages and benefits. The facility is on the former Nyanza Chemical Waste Dump, designated a “superfund” site in need of remediation, under the Comprehensive Environmental Response, Compensation, and Liability Act.

Learn more from leaders and experts about the U.S. manufacturing renaissance during the pv magazine USA Roundtables 2023 event on October 12.