Q&A: Impacts of $7 billion Solar for All Funding | Jeff Cramer, CCSA

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In April, the U.S. Environmental Protection Agency announced 60 selectees that will receive $7 billion in grant awards through the Solar for All grant program. The funding will support the deployment of robust solar developments to serve low-income and disadvantaged communities. Among the 60 selections awarded funding were states, territories, tribal governments, municipalities and nonprofits that are seeking to develop or expand long-lasting solar programs.

One way to fulfill the promise of Solar for All is through community solar programs, according to Jeff Cramer, president and CEO of the Coalition for Community Solar Access (CCSA).

In a Kramer vs. Cramer tête-à-tête, we discussed what the Solar for All funding means for the expansion of community solar in the United States. What follows is a transcription of our conversation, edited for length and clarity.

But first: Check out the CCSA’s Community Solar Innovation Summit, June 13-14, in Denver. The event will feature presentations on Solar for All, as well as myriad other topics to highlight the growing community solar market.

Brad Kramer: Just to start things off, could you give me a little background about CCSA, and the Solar for All program?

Jeff Cramer: CCSA is the national trade association for the community solar sector. We represent over 120 businesses and nonprofits deploying community solar across the country. We serve as an educator and an advocate for the development and expansion of community solar programs across the country.

We do most of our work in states, but at the federal level we have been engaged in the creation of programs like the EPA’s Solar for All program. That program came out of the Inflation Reduction Act. The federal government can do a lot to support and develop policies to support utility-scale solar, but distributed solar, and any kind of resource that goes on the distribution system, is typically in the purview of the states. What the federal government could do was to incentivize states to create and expand programs, and in this case, particularly programs that serve low-income customers and disadvantaged communities. And so, $7 billion is being deployed in states across the country to assist in creating and expanding programs that serve these populations and these households.

There are a handful of states that already know how to do this, think New York, Massachusetts, Illinois and Colorado, but the majority of states don’t. And so, what this program is going to do is:

  1. Have these states either pass legislation to create programs to access this funding, or
  2. Expand and stand up programs based on existing legislation.

That’s going to be a big task for the states. But we’re already seeing it animate markets. And this funding goes to states to stand up these programs and may serve as grants that can be awarded to make sure these projects are reaching the populations. But they’re also spurring things like permitting reform or interconnection reform. So, it’s really serving as a catalyst, and it can serve as a catalyst to animate market development, to bring in private capital, that will ideally serve as a multiplier effect on that $7 billion to achieve multiples of that in private investment.

Kramer: Is the $7 billion a one-time thing? Will there be more funding available in the future?

Cramer: For now, it’s a one-time thing. It’s a one-time appropriation, and all the money’s got to [be allocated] by the end of the year, or federal fiscal year, which is in September. Then EPA will allow states to draw down on that funding over the course of five or six years. If the program goes as well as we hope it will, this will be something that that the federal government can use to expand upon in the future. But you got to get the program right to start.

Kramer: Who benefits the most from this program?

Cramer: Well, you can argue that first and foremost it’s the low-income communities. The vast majority of American households, regardless of income don’t have access to solar on their roof because they rent it. They don’t have a proper roof for solar. Community solar serves as a more realistic and achievable way to access and deploy local solar for American households. This program will serve those populations, but also serve on site ability through single-family homes, multifamily homes and properties.

Given the fact that these programs have to serve low-income customers and provide meaningful benefits, I think we’re going to see this program killing two birds with one stone. One, by deploying more local solar through program creation at the state level that may not have been there in the first place. And then second, reaching low-income households that have been traditionally left behind by the clean energy transition in providing meaningful electric bill savings of 20% or more a month.

But then, the grid benefits and all the ratepayers benefit, because as we deploy more of this stuff, research shows that the more distributed solar and storage we deploy, the more we’ll be able to reduce stress and the bulk power system, which benefits all customers.

Kramer: How else is the expansion of solar into these low-income communities and underserved communities impactful?

Cramer: Oh, there’s a lot of reasons. There’s the basic reasons that there’s demand. They want access to it. And if states don’t have programs in the first place, this encourages states to do it.

You actually saw 46 states receive funding, so that means you’ve got a bunch of red states that have applied for funding under the Solar for All program and IRA program.

Second, the grid benefits and the grid demand that we know is there. You can go down the list then and think about the environmental and injustices of the past. Usually, fossil fuel and peaker plants or coal plants are located closer to more disadvantaged communities. We need to reprioritize access and deliver the benefits of zero carbon generation resources to these communities. And when you get even more innovative by providing the ability to create programs that have distributed solar and distributed storage facilities, you can increase resilience to communities that have been traditionally living in areas of high or very low reliability, or relatively low reliability.

Kramer: Why would you say community solar is the best solution for expanding solar to these communities?

Cramer: I wouldn’t say best, but it’s a very good solution. There are multiple good solutions. But the unique benefit of community solar is the fact that you don’t need a suitable roof and the flexibility of participation. Five, six years ago, community solar was still in a phase where you had to take out a loan on your own property or a private loan to participate in a program. It’s become as easy as signing up for a Netflix subscription with no cancellation fees. If you move state to state, you can easily cancel a program and participate in a new one should that state have it.

Kramer: One of the things you mentioned earlier is the ability for this program to unlock the private equity to multiply the funding. How does that happen?

Cramer: If a state creates any kind of distributed solar program, and they say, hey:

  • You’re able to now interconnect your project to the grid,
  • You’re able to access that bill to provide benefits to that customer.
  • And most importantly, you have a fair compensation rate for the power that the project delivers.

Now, a private financier can say, ‘oh, I will invest in these projects.’ And because I make my marginal return, and then split that return with the homeowner. So now, rather than using ratepayer capital and utility control, you are using third-party private capital to deploy more local solar while also serving social needs, like access to solar for low-income customers.

Kramer: I know that the announcement of this funding is pretty recent, but how soon can we expect to see the expansion of solar in these areas?

Cramer: If you look at Massachusetts for example, they have a very sophisticated program … so the states that have already created programs can just double down and scale. For those, you could see projects rolling out the door next year in 2025.

For states that have yet to consider programs, it may take a year or so longer. If they’re passing a new bill, like for example in Pennsylvania or California probably more accurately, if California finally ends their years of delays and red tape from the California Public Utilities Commission, they could be deploying projects as soon as next year that are beneficial to all ratepayers and that serve millions of Californians that have been traditionally left behind in the clean energy transition.

[Editor’s note: Whelp, CPUC went ahead and torpedoed a plan to boost community solar in California in the short time between our conversation and publishing.]

Then, there’s a last category of states that, if they’re going to pass a bill next year or the year after, and then they stand up a program, it still may be three or four years before they are building projects. But that’s why the EPA has offered that kind of flexibility for states.

Kramer: With the funding announcement, did you notice any trends in the type of areas or groups that applied?

Cramer: You’ve got a couple of group types.

  • You’ve got states themselves, and that’s usually through an energy office that’s making the application that will create a statewide program.
  • Then there are nonprofits working in states that did not submit an application to provide access through a third-party mechanism, which can still work. All you need is a grant-making entity to work with the public utility commission, so that can work in those states.
  • And then there’s a third category that we’re watching, which are utility-type entities that are looking to capture the funding.

There’s a significant worry that if a utility takes the funding for a program like this, the utility can sort of say, ‘we’re developing a capacity limited program, check the box, and offer the minimum amount of benefits and not expand from there, so it doesn’t have the catalytic effect. That’s the danger of a utility captured program, which we’re watching closely. Because if you look at history, any state that has a community solar program that’s run by the utility, its capacity is limited and it doesn’t offer savings to customers, because there’s no competition.

Kramer: Looking ahead, what are the immediate impacts of this announcement on the solar industry that you’re seeing?

Cramer: There’s still a waiting game because the states are finalizing their contracts, and they’re developing work plans going into the fall. A key piece is that if a state develops a program that doesn’t work or doesn’t meet a best practice, because this can be complicated, it won’t have that catalytic effect. It’ll be the equivalent of giving someone a fish rather than teaching them to fish.

It’ll be really important to get these programs right. We’re working with the EPA and others in the DOD and other stakeholders to make sure that best practices for program design are implemented and upheld in the process. That’s a really key piece to this, because if you look at state distributed solar programs… they’re not overly complicated, but they take work. And they take work to get to exacting levels. They take design, and they take thoughtful intention.

I think that’s a fair point to think of. Where states have already done it, there actually is action in the solar industry. Think of Massachusetts, as I said before, their application, I believe they even made it public, so the industry is clear on what they’re trying to do. And they’re already moving forward with things like interconnection and permitting reform to accompany this sort of work, which is affecting directly the solar industry. So it’s having that sort of catalytic effect already.

Kramer: You mentioned following best practices, what are those best practices in your mind?

Cramer: There’s a whole suite of them. That’s where you get back to my points about interconnection, bill credits and fair compensation. When a state is creating a distributed solar program, it has to have principles within those three elements, which are around fair compensation for the energy that’s produced, ease in ability to interconnect and site a project, and then ability to access and easily and transparently manage bill credits for those customers.

Then there’s a fourth leg that is specific to low-income programs and ensuring that the right populations are receiving the benefits, and that there’s fair and level ways to screen and approve access to the populations most in need.

Kramer: Conversely, what are some of the challenges that these programs could face?

Cramer: Lack of education. A lot of states may not know that they don’t know. That’s where these best practices are going to be important.

There’s going to be utility engagement and, in some cases, obstruction. In all ways, the utility can be a great partner, but they also can be a hindrance if they’re not working well, and we’ve got examples on both sides.

Lastly, and most importantly, a number of these states will require legislation to create a program. That’s where you see a lot of bills sitting in there, and they’re bipartisan bills, bills that are run by Democrats and bills that are run by Republicans, and they run into the utility buzzsaw, the monopoly buzzsaw.

Kramer: To put a bow on it, how do you see this all playing out with Solar for All and community solar?

Cramer: There are three realities. The utopian reality is every state uses those best practices, and over time creates programs and the states learn from each other. There’s a catalytic effect that once you achieve levels of economies of scale, you reduce costs and expand access. You start seeing $7 billion turned into $30 billion to $40 billion and beyond, because it just has its own momentum after a while. You achieve millions of households of low-income customers receiving community solar and rooftop solar.

I think the worst-case scenario is you only see a few states that know what they’re doing, do this right, and you end up seeing a number of other states stall, and the money ends up having to go back to the EPA.

The reality is probably somewhere in the middle. We can’t expect every state to be perfect, but we’re working hard with our community and stakeholders to help states achieve what’s most possible.

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