Calculating potential impact of EPA’s $7 billion Solar for All program

Clean Energy States Alliance (CESA) published a report summarizing trends and calculating the potential impact of the U.S. Environmental Protection Agency’s $7 billion Solar for All competition.

Solar for All is a funding opportunity announced by the Environmental Protection Agency (EPA) in June 2023. The goal of the program is to enable millions of low-income households access to affordable, resilient, and clean solar energy. The program was intended to up to 60 grants to states, territories, tribal governments, municipalities and nonprofits, and the CESA report looks at the range of proposals submitted for awards.

The CESA report, Empowering Tomorrow: A Preview of States’ Greenhouse Gas Reduction Fund Solar for All Programs, looks at 35 Solar for All applications submitted in 33 states, the District of Columbia and Puerto Rico. The overall finding is that if all 35 of the applications were funded, the projects would deploy 2.9 GW of solar capacity, providing $2 billion in savings for 711,068 low-income households over the next five years.

“The Solar for All competition represents an investment in solar for disadvantaged communities, the scope and scale of which has not been seen before,” explains CESA Senior Project Director Vero Bourg-Meyer. “For some states, this is an acceleration of work they have supported, with much more modest resources and variable levels of success, for years. For others, it is an entirely new endeavor, now enabled by the IRA.”

The deadline for receipt of applications was October 12, 2023. The EPA plans to notify applicants of its decisions in March 2024. Once award decisions are announced, award recipients and the EPA will negotiate cooperative agreements, with the EPA making final awards in July 2024. The Inflation Reduction Act (IRA) requires that all funds are awarded by September 30, 2024.

EPA restricted the maximum amount of funding that applicants could request, based on the total population of disadvantaged census tracts identified by the Climate and Economic Justice Screening Tool (CEJST).

Of the 35 states included in the report, two were eligible for a large program (>$250M to $400M), 16 were eligible for a medium program (>$100M to $250M), and 17 were eligible for a small program ($25M and up to $100M). All but nine states requested the maximum amount of funding available in the size category.

The types of solar in the applications includes community, single-family residential, multi-family residential and other. Not all applications indicated the planned capacity, but of those that did, the report estimates that 63% of applications are for community solar, which would total about 1.75 GW of new capacity. An estimated 20% applied for single-family residential, for approximately 575 MW of new capacity. About 17% applied for multi-family residential, for an estimated 479 MW.

With an estimated 6.2 GW of community solar installed across the United States the nation as of Q4 2023 according to the Solar Energy Industries Association, the country has a long way to go toward achieving the Department of Energy’s target of 20 GW installed. The 1.75 GW of new community solar capacity proposed in applications for Solar for All state programs would help to move the needle toward the goal, while also supporting low- to middle-income (LMI) and disadvantaged communities (DAC).

Among the states that applied, all but five intend to add battery storage amounting to 1.2 GWh across all programs. While not a primary goal of the Solar for All program, the CESA report notes that this amount of storage that would serve DACs and low-income households over the next five years is significant.

Five key takeaways from the CESA report include:

1. The program can bring funding to a large number of disadvantaged communities and low-income households, while also lowering greenhouse gas in the targeted areas.
2. Solar for All can jumpstart the solar market and expand the benefits of solar far beyond the initial five years of the program. CESA notes that after the award decisions are announced, additional states will be evaluating strategies and more households will benefit from this funding over time.
3. Solar for All will feed the entire ecosystem of support services that can transform the LMI market.
4. Individual state programs will be driven by goals set by states’ leadership, enabled by the priorities established in local legislation, and fed by needs and wants of local communities.
5. States and the private sector can leverage the funding with other funding opportunities including other Greenhouse Gas Reduction funding as well as the revamped tax credits, including the bonus credit programs and new credit monetization features.

The CESA report points out that the Solar for All program aims to address known market barriers to transforming state markets for LMI customers. CESA sees the program as “an incredible opportunity for states to collaborate, exchange and grow markets together, faster than they would on their own, building economic opportunity, alleviating poverty, and working to meet their clean energy goals”.