September 7, 2023

Leveraging Federal Funding for Clean Energy Upgrades

By: Jenna Barron

Clean Energy Works is working with utilities and other stakeholders to leverage Infrastructure Investment & Jobs Act and the Inflation Reduction Act (IRA) programs funded to further accelerate adoption of inclusive utility investment policies and programs, giving focused attention to rural electric cooperatives and electric school buses as catalysts for change.  

The passage of the Infrastructure Investment & Jobs Act of 2021 and The Inflation Reduction Act of 2022 were significant milestones in the federal commitment to clean energy. The funding influx provided unprecedented support for energy efficiency and clean energy initiatives. However, we know that equity-centered financial infrastructure and enhanced community capacity are key components that will determine the success of the IRA in scaling community-led climate solutions and garnering long-term public support for climate action.

The Greenhouse Gas Reduction Fund (GHG RF) is one part of the IRA through which we see a path to help clear barriers to adoption of inclusive utility investments for utilities and customers. Based on our field experience, we find that inclusive utility investments are attractive to those who want to incorporate more inclusive financial solutions than loans and leases, which both limit participation to credit-worthy counterparties. Working with utilities to provide inclusive utility investments can enable clean energy upgrades to underserved communities and working through initiatives such as GHG RF can help us provide resources to institutions with a history of serving low-income communities, aligning with the Justice40 objectives. 

Another provision within the Inflation Reduction Act is the “Direct Pay” of clean energy tax credits. This revolutionary program extends access to clean energy funds and tax credits to a broader spectrum of entities, including governments, nonprofits, schools, universities, hospitals, and tax-exempt institutions like houses of worship or rural electric cooperatives. Prior to this provision, only entities with tax liabilities could claim tax credits for clean energy installations. With “Direct Pay,” non-taxable organizations can now tap into these incentives, thereby opening up a previously untapped market. We wrote about how this could open up the field for solar deployment in our 2020 report on Applying the PAYS® System to On-Site Solar to Expand Access for All. This provision is a step towards leveling the playing field and ensuring that clean energy benefits extend beyond traditional tax-paying entities and can reach more people. 

Federal funding to decarbonize transportation has been especially historic with the introduction of the $5B Clean School Bus Program (CSBP) through the EPA and the $5 billion National Electric Vehicle Infrastructure (NEVI) Formula Program through the Department of Transportation. Both of these programs seek to forever change the transportation landscape in the United States. CSBP seeks to decarbonize the US’ largest public fleet while also sparing our nation’s children from harmful diesel emissions. Clean Energy Works is providing technical assistance to the Alliance for Electric School Buses on this transition and will continue to build on utilities’ important role in school bus electrification and transportation decarbonization overall.

The NEVI Formula Program funds the implementation of a nationwide electric vehicle charging network. While the onus is on each state’s transportation department to identify its alternative fuel corridors it is also on them to ensure that there is an effective, inclusive public engagement process. Clean Energy Works’ Senior Associate, Terea Macomber, supported the review updates to the state’s plans in the Southeast. Utilities are critical stakeholders in the deployment of these chargers to ensure that there is enough power for consistent charging access.

These federal funding opportunities are shaping the landscape of clean energy in profound ways. Clean Energy Works is excited to be working to leverage these opportunities through inclusive utility investments and other means to help the benefits of a clean energy economy flow to all communities.

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