States will be deciding factor in community solar’s IRA trajectory

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Community solar installation on New Jersey warehouse roof by Solar Landscape.

of Inflation control law It will benefit the entire solar industry, but few areas will benefit more than community solar. In addition to extending his ITC at 30% for 10 years, other tax credit adders intended to expand equity in solar deployment are particularly suitable for community solar development. I’m here.

First of all, a long ITC is welcome news for the community solar industry. This is because it takes time for state programs to go live. Laws Enabling Community Solar Due to its unique multiple off-taker structure, it must be properly aligned at the state level in order for the project to be built. Community solar developers typically sign contracts with utilities, often governed by state policy, under which subscribers can receive monthly utility credits for the electricity generated by their share of the solar project. I can do it.

“First you have to pass a law, then set up a program, then implement the program. It can take years before the solar panels are in the ground,” says the Coalition for Community Solar Access CCSA’s vice president of campaigns, Matt Hargarten. “Having 10 years of operation is very beneficial, especially for community solar.”

In addition to the 30% ITC available for community solar scale projects, there are additional factors that apply to this sector more than any other project. A surcharge of 10% applies to project locations within the ‘energy community’, such as brownfield sites and former centers of fossil fuel development.

“Since community solar projects are smaller projects, they are naturally a good fit for some of these brownfield sites. We are doing it,” said Hargarten.

IRA also allows projects under 5 MWAlternating current — This includes many community solar installations — Collect ITC for interconnection costs.these are cost jumped In recent years, as project queues have grown and the capacity available on aging grids has shrunk. Utility-scale developers can spend a lot of money on transformer upgrades, but small community solar developers cannot.

“In many cases, these costs can make these projects uneconomical. Currently, these costs are incorporated into the ITC, so we can receive tax credits for that portion of the project costs. ” said Hargarten.

Marc Palmer, founder of solar finance software company Conductor Solar, hopes the regulation will push marginalized projects into the economic realm.

“Where we needed a huge amount of projects and we weren’t saving hosts money, we’re going to be saving hosts money,” Palmer said.

The IRA also incentivizes solar projects that serve the lower middle income (LMI) segment, a region where community solar is already a leader. Projects under 5MWAlternating current Projects located on low-income community or tribal land may receive a 10% surcharge, projects servicing multifamily LMI buildings, or at least 50% of the economic benefits to eligible LMI households You can receive up to 20% extra for projects that offer The 20% credit applies only to the portion serving eligible low-income households.

“Community solar has already moved in that direction over the past five years, and with state programs across the country creating community solar carve-outs to serve LMI households, this is a big move for community solar projects to move forward. It’s a natural place to be,” Hargarten said.

One such state program is New Jersey, which is required to service solar projects in the region. At least 51% of LMI customersProject developer Solar Landscape has been working on these LMI focused projects since its inception in 2012.

“That’s all there is to business in community solar in New Jersey. From our perspective, it’s an integral part of community solar. We formalized it from the level,” said Mark Schottinger, president of Solar Landscape.

Solar Landscape conducts in-person training sessions to build the community’s solar workforce.

He believes the state’s new legislation will prioritize LMI requirements in line with the IRA as well as the state’s goals of equitable clean energy deployment. Illinois has already followed closely behind New Jersey, Community Solar Approved Rubric Based on community engagement and fairness factors.

“Community solar is increasingly becoming this very versatile tool, [federal] CCSA Senior Director of Public Relations and Communications Stephen Cortes said: “Community Solar has these built-in ways to reach out to all renters, businesses, organizations, churches and institutions that other forms of solar do not.”

The final big ticket item in the IRA to Benefit Community Solar is the Environmental Protection Agency’s (EPA) grant for state, city, tribal governments, and nonprofits to create distributed generation programs that benefit disadvantaged communities. $7 billion in grants. CCSA expects community solar to shine in this category as well.

“We believe a lot of this money will go into our community solar program, whether it helps us assess effectiveness, lower our cost base, or direct more money to the LMI community,” Hargarten said. says.

Community Solar was already on an explosive trajectory before the IRA. In an early August 2022 report, Wood Mackenzie predicted: at least 7GWDC Percentage of new community solar coming online in existing markets by 2027. As of September 2022, 22 states have policies in place to enable community solar to thrive. But that could miss out on a huge opportunity for 28 states to access new federal incentives.

“The federal government is currently drawing a line in the sand about where the dollars want to go, but unless states take action and pass legislation that allows these projects to develop, where will those dollars go? I’m not going,” said Hargarten.

CCSA encourages states to adopt community solar laws and helps develop the most effective local policies. Hargarten sees the IRA as another tool to motivate policy makers to action.

“This provides a platform to show that this form of energy is credible and that the funds are on the table to encourage them to move now,” he said. It’s free money on the table. Do they want to take advantage of it, or do they want their neighbors to take advantage of it?”

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