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New data provided exclusively to Heatmap shows just how complicated it is to get money where it needs to go.
By the numbers, a new federal program designed to give low-income communities access to renewable energy looks like a smashing success. According to data provided exclusively to Heatmap, in its first year, the Low-Income Communities Bonus Credit Program steered nearly 50,000 solar projects to low-income communities and tribal lands, which are together expected to produce more than $270 million in annual energy savings.
But those topline numbers don’t say anything about who will actually see the savings, or how much the projects will benefit households that have historically been left behind. In reality, the majority of the projects — about 98% — were allocated funding simply for being located in low-income communities, with no hard requirement to deliver energy or financial savings to low-income residents.
A closer look at the data reveals a more complicated success story. While the program did make some clear strides in bridging the solar inequality gap, other factors — including the language in the law that created it — are also holding it back.
The Low-Income Communities Bonus Credit Program came out of the Inflation Reduction Act in August 2022. Though the goal is to increase solar access for low-income households, it’s not actually a tax credit for low income households. It’s for small wind and solar developers — and beginning in 2025, developers of other types of clean energy — whose projects meet certain criteria.
The law caps the total amount of energy the program can support at 1.8 gigawatts per year, and developers have to apply and get their project approved in order to claim funds. To be eligible, a project must produce less than 5 megawatts of power and fall under one of four categories: It must be located in a low-income community, be built on Indian land, be part of an affordable housing development, or distribute at least half its power (and guaranteed bill savings) to low-income households. The first two categories qualify for a 10% credit; the second two, which stipulate that at least some financial benefits go to low-income residents, qualify for 20%. In both cases, the credit can be stacked on top of the baseline 30% tax credit for clean energy projects that meet labor standards, meaning it could slash the cost of building a small solar or wind farm in half.
Each of these provisions has the potential to address at least some of the barriers disadvantaged communities face in accessing clean energy. Low-income homeowners may not have the money for a down payment for rooftop solar or the credit to find financing, for instance. But by giving developers a tax credit for projects located in low-income communities, solar leasing programs, in which homeowners lease panels from a third party in exchange for energy bill savings, now have an incentive to expand into these neighborhoods, and potentially offer lower lease rates. The program helped fund nearly 48,000 residential solar projects in the first year.
Tribal lands, meanwhile, account for more than 5% of solar generation potential in the U.S., but are still a largely untapped resource, for reasons including lack of representation in utility regulatory processes, complex land ownership structures, and limited tribal staff capacity. The program gives outside developers additional incentive to work through the challenges, and it also earmarks funds for tribe-owned development. Crucially, the IRA also opened the door for tribes, as well as other tax-exempt entities, to utilize clean energy incentives and receive a direct payment equal to the tax credits. The program supported 96 solar projects on tribal lands in the first year.
The third category attempts to overcome the famous “split incentive” problem for low-income renters whose landlords have little reason to spend money on a solar project that primarily benefits tenants. The program helped finance 805 solar projects on low-income residential buildings, where the developers are required to distribute at least 50% of the energy savings equitably among tenants.
Lastly, while renters in some states can subscribe to community solar projects, which offer utility bill credits in exchange for a small subscription fee, the subscriptions can be scooped up by wealthier customers if there’s no low-income requirement. The program sponsored 319 community solar projects where at least half the capacity had to go to low-income residents and offer at least 20% off their bills.
U.S. Deputy Secretary of the Treasury Wally Adeyemo declared the program a success. “These investments are already lowering costs, protecting families from energy price spikes, and creating new opportunities in our clean energy future,” he said.
Despite overwhelming demand during the four-month application period, however, the program ended up with capacity to spare. Although applications totaled more than 7 gigawatts, ultimately, the Department approved just over 49,000 projects equal to about 1.4 gigawatts, or roughly enough to power 200,000 average households. All of it was solar.
The gap between applications and awarded projects has to do with the program’s design. The Treasury divided the 1.8 gigawatt cap between the four categories, setting maximum amounts that could be awarded for each one. Within the four categories, the awards were further divided, with half set aside for applicants that met additional ownership or geographic criteria, such as tribal-owned companies, tax-exempt entities, or projects sited in areas with especially high energy costs relative to incomes.
For example, 200 megawatts were earmarked for Indian lands, with half reserved for applicants meeting those additional criteria, but only 40 megawatts were awarded. The fourth category, meanwhile, which was designed to encourage community solar development, was oversubscribed.
Since tax data is confidential, the Treasury Department could not share much detail about these projects, including where, exactly, they were, who developed them, or who will benefit from them. A map overview shows a concentration of awards across the sunbelt, with Illinois, New York, Maine, Massachusetts, and Puerto Rico also seeing a lot of uptake.
IRS, RAAS, Statistics of Income, August 2024
I reached out to more than a dozen nonprofits, tribal organizations, and other groups who advocate for or develop clean energy projects benefiting low-income communities to find examples of what the program was actually funding. The first person I was connected with was Richard Best, the director of capital projects and planning for Seattle Public Schools, who got a 10% tax credit for solar arrays on two new schools under construction in low-income neighborhoods. While the school system already planned to put solar on these schools, Best said the tax credits helped offset increased construction costs due to supply chain interruptions, preventing them from having to make compromises on design elements like classroom size.
“It's not insignificant,” he told me. “The solar array at Rainier Beach High School is in excess of a million dollars — just the rooftop solar array. That's $400,000 [in tax credits]. So these are significant dollars that we're receiving, and we're very appreciative.”
Jody Lincoln, an affordable housing development officer for the nonprofit ACTION-Housing in Pittsburgh, Pennsylvania, got a 10% tax credit to add solar to a former YMCA that the group recently converted to a 74-unit apartment building. The single room occupancy rental units serve men who are coming out of homelessness or incarceration. Lincoln told me the building operates “in the gray,” and that any cost saving measures they can make, including the energy savings from the solar array, enable it to continue to operate as affordable housing. When I asked if they could have built the solar project without access to the IRA’s tax credits, she didn’t hesitate: “No.”
These two examples show the program has potential to deliver benefits to low-income communities, even in cases where the energy savings aren’t going directly to low-income residents.
I also spoke with Alexandra Wyatt, the managing policy director and counsel at the nonprofit solar company Grid Alternatives. She told me Grid partnered with for-profit solar developers, such as the national solar company SunRun, who were approved for the tax credit bonus for rooftop solar lease projects on low-income single-family homes. In these cases, Grid helped pull together other sources of funding like state incentives for projects in disadvantaged communities to pre-pay the leases so that the homeowners could more fully benefit from the energy bill savings.
It’s unlikely that all of the nearly 48,000 residential rooftop solar projects in low-income communities that were approved for the credit in the first year had such virtuous outcomes. It’s also possible that projects installed on wealthier homeowners’ roofs in gentrifying neighborhoods were subsidized. In an email to me, a Treasury spokesperson said the Department recognizes that “simply being in a low-income community does not mean low-income households are being served,” and that it was required by statute to include this category. It was still the agency’s decision, however, to allocate such a large portion of the awards, 700 megawatts, to this category — a decision that some public comments on the program disagreed with.
Wyatt applauded the Treasury and the Department of Energy, which oversees the application process, for doing “an admirable job on a tight timeframe with a challenging program design handed to them by Congress.” She’s especially frustrated by the 1.8 gigawatt cap, which none of the other renewable energy tax credits have, and which changes it into a competitive grant that’s more burdensome both for developers and for the agencies. It adds an element of uncertainty to project finance, she said, since developers have to wait to see if their application for the credit was approved.
Wendolyn Holland, the senior advisor for policy, tax and government relations at the Alliance for Tribal Clean Energy told me there was tons of interest among indigenous communities and tribal clean energy developers in taking advantage of the IRA programs, but it wasn’t really happening. Holland cited challenges for tribes reaching the stage of “commercial readiness” required to apply for federal funding. Tribal developers have also said they are limited by the lack of transmission on tribal lands. When I asked the Treasury about the paltry number of projects on Indian Lands, a spokesperson said it was not for lack of trying. The Department and other federal agencies have conducted webinars and other forms of outreach, they said, through which they’ve heard that many tribes are struggling to access capital for energy projects, and that development on Indian lands has “unique challenges due to the history of allotment of Indian lands and status of some land as federal trust land.”
Holland is optimistic that things will change — in December, Biden issued an executive order committing to making it easier for tribes to access federal funding. The Alliance also recently petitioned the Federal Energy Regulatory Commission to address barriers for tribal energy development in its new rules that are supposed to get more transmission built.
The unallocated capacity from 2023 was carried over to the next year’s round of funding, so it wasn’t lost. But a dashboard tracking the second year of the program looks like it's following a similar pattern. While the community solar-oriented category, which was increased to allow for 900 megawatts, is nearly filled up, the tribal Lands category, which kept its 200 megawatt cap, has received applications to develop less than a sixth of that.
Wyatt said that so far, she does think the bonus credit has been successful in spurring good projects that might not otherwise have happened. Still, it will probably take a few years before it will be possible to assess how well it’s working. The good news is, as long as it doesn’t get repealed, the program could run for up to eight more years, leaving plenty of time to improve things. It’s already set to change in one key way. Beginning in 2025, it becomes tech-neutral, meaning that developers of small hydroelectric, geothermal heating or power, or nuclear projects, will be able to apply. (When asked why no wind projects were approved to date, a spokesperson for the Treasury said taxpayer privacy rules meant it couldn’t comment on applications, but they added that wind projects tend to be larger than 5 megawatts and take longer to develop.)
One thing is for sure, despite the heavy administrative burden of screening tens of thousands of applications, the agencies involved are clearly committed to implementing the program.
“I’m definitely pleased that they managed to get the program up and running as quickly as they did,” Wyatt told me. “I mean, it's kind of lightning speed for the IRS.”
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Paradise, California, is snatching up high-risk properties to create a defensive perimeter and prevent the town from burning again.
The 2018 Camp Fire was the deadliest wildfire in California’s history, wiping out 90% of the structures in the mountain town of Paradise and killing at least 85 people in a matter of hours. Investigations afterward found that Paradise’s town planners had ignored warnings of the fire risk to its residents and forgone common-sense preparations that would have saved lives. In the years since, the Camp Fire has consequently become a cautionary tale for similar communities in high-risk wildfire areas — places like Chinese Camp, a small historic landmark in the Sierra Nevada foothills that dramatically burned to the ground last week as part of the nearly 14,000-acre TCU September Lightning Complex.
More recently, Paradise has also become a model for how a town can rebuild wisely after a wildfire. At least some of that is due to the work of Dan Efseaff, the director of the Paradise Recreation and Park District, who has launched a program to identify and acquire some of the highest-risk, hardest-to-access properties in the Camp Fire burn scar. Though he has a limited total operating budget of around $5.5 million and relies heavily on the charity of local property owners (he’s currently in the process of applying for a $15 million grant with a $5 million match for the program) Efseaff has nevertheless managed to build the beginning of a defensible buffer of managed parkland around Paradise that could potentially buy the town time in the case of a future wildfire.
In order to better understand how communities can build back smarter after — or, ideally, before — a catastrophic fire, I spoke with Efseaff about his work in Paradise and how other communities might be able to replicate it. Our conversation has been lightly edited and condensed for clarity.
Do you live in Paradise? Were you there during the Camp Fire?
I actually live in Chico. We’ve lived here since the mid-‘90s, but I have a long connection to Paradise; I’ve worked for the district since 2017. I’m also a sea kayak instructor and during the Camp Fire, I was in South Carolina for a training. I was away from the phone until I got back at the end of the day and saw it blowing up with everything.
I have triplet daughters who were attending Butte College at the time, and they needed to be evacuated. There was a lot of uncertainty that day. But it gave me some perspective, because I couldn’t get back for two days. It gave me a chance to think, “Okay, what’s our response going to be?” Looking two days out, it was like: That would have been payroll, let’s get people together, and then let’s figure out what we’re going to do two weeks and two months from now.
It also got my mind thinking about what we would have done going backwards. If you’d had two weeks to prepare, you would have gotten your go-bag together, you’d have come up with your evacuation route — that type of thing. But when you run the movie backwards on what you would have done differently if you had two years or two decades, it would include prepping the landscape, making some safer community defensible space. That’s what got me started.
Was it your idea to buy up the high-risk properties in the burn scar?
I would say I adapted it. Everyone wants to say it was their idea, but I’ll tell you where it came from: Pre-fire, the thinking was that it would make sense for the town to have a perimeter trail from a recreation standpoint. But I was also trying to pitch it as a good idea from a fuel standpoint, so that if there was a wildfire, you could respond to it. Certainly, the idea took on a whole other dimension after the Camp Fire.
I’m a restoration ecologist, so I’ve done a lot of river floodplain work. There are a lot of analogies there. The trend has been to give nature a little bit more room: You’re not going to stop a flood, but you can minimize damage to human infrastructure. Putting levees too close to the river makes them more prone to failing and puts people at risk — but if you can set the levee back a little bit, it gives the flood waters room to go through. That’s why I thought we need a little bit of a buffer in Paradise and some protection around the community. We need a transition between an area that is going to burn, and that we can let burn, but not in a way that is catastrophic.
How hard has it been to find willing sellers? Do most people in the area want to rebuild — or need to because of their mortgages?
Ironically, the biggest challenge for us is finding adequate funding. A lot of the property we have so far has been donated to us. It’s probably upwards of — oh, let’s see, at least half a dozen properties have been donated, probably close to 200 acres at this point.
We are applying for some federal grants right now, and we’ll see how that goes. What’s evolved quite a bit on this in recent years, though, is that — because we’ve done some modeling — instead of thinking of the buffer as areas that are managed uniformly around the community, we’re much more strategic. These fire events are wind-driven, and there are only a couple of directions where the wind blows sufficiently long enough and powerful enough for the other conditions to fall into play. That’s not to say other events couldn’t happen, but we’re going after the most likely events that would cause catastrophic fires, and that would be from the Diablo winds, or north winds, that come through our area. That was what happened in the Camp Fire scenario, and another one our models caught what sure looked a lot like the [2024] Park Fire.
One thing that I want to make clear is that some people think, “Oh, this is a fire break. It’s devoid of vegetation.” No, what we’re talking about is a well-managed habitat. These are shaded fuel breaks. You maintain the big trees, you get rid of the ladder fuels, and you get rid of the dead wood that’s on the ground. We have good examples with our partners, like the Butte Fire Safe Council, on how this works, and it looks like it helped protect the community of Cohasset during the Park Fire. They did some work on some strips there, and the fire essentially dropped to the ground before it came to Paradise Lake. You didn’t have an aerial tanker dropping retardant, you didn’t have a $2-million-per-day fire crew out there doing work. It was modest work done early and in the right place that actually changed the behavior of the fire.
Tell me a little more about the modeling you’ve been doing.
We looked at fire pathways with a group called XyloPlan out of the Bay Area. The concept is that you simulate a series of ignitions with certain wind conditions, terrain, and vegetation. The model looked very much like a Camp Fire scenario; it followed the same pathway, going towards the community in a little gulch that channeled high winds. You need to interrupt that pathway — and that doesn’t necessarily mean creating an area devoid of vegetation, but if you have these areas where the fire behavior changes and drops down to the ground, then it slows the travel. I found this hard to believe, but in the modeling results, in a scenario like the Camp Fire, it could buy you up to eight hours. With modern California firefighting, you could empty out the community in a systematic way in that time. You could have a vigorous fire response. You could have aircraft potentially ready. It’s a game-changing situation, rather than the 30 minutes Paradise had when the Camp Fire started.
How does this work when you’re dealing with private property owners, though? How do you convince them to move or donate their land?
We’re a Park and Recreation District so we don’t have regulatory authority. We are just trying to run with a good idea with the properties that we have so far — those from willing donors mostly, but there have been a couple of sales. If we’re unable to get federal funding or state support, though, I ultimately think this idea will still have to be here — whether it’s five, 10, 15, or 50 years from now. We have to manage this area in a comprehensive way.
Private property rights are very important, and we don’t want to impinge on that. And yet, what a person does on their property has a huge impact on the 30,000 people who may be downwind of them. It’s an unusual situation: In a hurricane, if you have a hurricane-rated roof and your neighbor doesn’t, and theirs blows off, you feel sorry for your neighbor but it’s probably not going to harm your property much. In a wildfire, what your neighbor has done with the wood, or how they treat vegetation, has a significant impact on your home and whether your family is going to survive. It’s a fundamentally different kind of event than some of the other disasters we look at.
Do you have any advice for community leaders who might want to consider creating buffer zones or something similar to what you’re doing in Paradise?
Start today. You have to think about these things with some urgency, but they’re not something people think about until it happens. Paradise, for many decades, did not have a single escaped wildfire make it into the community. Then, overnight, the community is essentially wiped out. But in so many places, these events are foreseeable; we’re just not wired to think about them or prepare for them.
Buffers around communities make a lot of sense, even from a road network standpoint. Even from a trash pickup standpoint. You don’t think about this, but if your community is really strung out, making it a little more thoughtfully laid out also makes it more economically viable to provide services to people. Some things we look for now are long roads that don’t have any connections — that were one-way in and no way out. I don’t think [the traffic jams and deaths in] Paradise would have happened with what we know now, but I kind of think [authorities] did know better beforehand. It just wasn’t economically viable at the time; they didn’t think it was a big deal, but they built the roads anyway. We can be doing a lot of things smarter.
A war of attrition is now turning in opponents’ favor.
A solar developer’s defeat in Massachusetts last week reveals just how much stronger project opponents are on the battlefield after the de facto repeal of the Inflation Reduction Act.
Last week, solar developer PureSky pulled five projects under development around the western Massachusetts town of Shutesbury. PureSky’s facilities had been in the works for years and would together represent what the developer has claimed would be one of the state’s largest solar projects thus far. In a statement, the company laid blame on “broader policy and regulatory headwinds,” including the state’s existing renewables incentives not keeping pace with rising costs and “federal policy updates,” which PureSky said were “making it harder to finance projects like those proposed near Shutesbury.”
But tucked in its press release was an admission from the company’s vice president of development Derek Moretz: this was also about the town, which had enacted a bylaw significantly restricting solar development that the company was until recently fighting vigorously in court.
“There are very few areas in the Commonwealth that are feasible to reach its clean energy goals,” Moretz stated. “We respect the Town’s conservation go als, but it is clear that systemic reforms are needed for Massachusetts to source its own energy.”
This stems from a story that probably sounds familiar: after proposing the projects, PureSky began reckoning with a burgeoning opposition campaign centered around nature conservation. Led by a fresh opposition group, Smart Solar Shutesbury, activists successfully pushed the town to drastically curtail development in 2023, pointing to the amount of forest acreage that would potentially be cleared in order to construct the projects. The town had previously not permitted facilities larger than 15 acres, but the fresh change went further, essentially banning battery storage and solar projects in most areas.
When this first happened, the state Attorney General’s office actually had PureSky’s back, challenging the legality of the bylaw that would block construction. And PureSky filed a lawsuit that was, until recently, ongoing with no signs of stopping. But last week, shortly after the Treasury Department unveiled its rules for implementing Trump’s new tax and spending law, which basically repealed the Inflation Reduction Act, PureSky settled with the town and dropped the lawsuit – and the projects went away along with the court fight.
What does this tell us? Well, things out in the country must be getting quite bleak for solar developers in areas with strident and locked-in opposition that could be costly to fight. Where before project developers might have been able to stomach the struggle, money talks – and the dollars are starting to tell executives to lay down their arms.
The picture gets worse on the macro level: On Monday, the Solar Energy Industries Association released a report declaring that federal policy changes brought about by phasing out federal tax incentives would put the U.S. at risk of losing upwards of 55 gigawatts of solar project development by 2030, representing a loss of more than 20 percent of the project pipeline.
But the trade group said most of that total – 44 gigawatts – was linked specifically to the Trump administration’s decision to halt federal permitting for renewable energy facilities, a decision that may impact generation out west but has little-to-know bearing on most large solar projects because those are almost always on private land.
Heatmap Pro can tell us how much is at stake here. To give you a sense of perspective, across the U.S., over 81 gigawatts worth of renewable energy projects are being contested right now, with non-Western states – the Northeast, South and Midwest – making up almost 60% of that potential capacity.
If historical trends hold, you’d expect a staggering 49% of those projects to be canceled. That would be on top of the totals SEIA suggests could be at risk from new Trump permitting policies.
I suspect the rate of cancellations in the face of project opposition will increase. And if this policy landscape is helping activists kill projects in blue states in desperate need of power, like Massachusetts, then the future may be more difficult to swallow than we can imagine at the moment.
And more on the week’s most important conflicts around renewables.
1. Wells County, Indiana – One of the nation’s most at-risk solar projects may now be prompting a full on moratorium.
2. Clark County, Ohio – Another Ohio county has significantly restricted renewable energy development, this time with big political implications.
3. Daviess County, Kentucky – NextEra’s having some problems getting past this county’s setbacks.
4. Columbia County, Georgia – Sometimes the wealthy will just say no to a solar farm.
5. Ottawa County, Michigan – A proposed battery storage facility in the Mitten State looks like it is about to test the state’s new permitting primacy law.