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Congress Lays Out a Clean Energy Buffet for EBCE and Its Customers

image credit: Photo by Israel Franca, via Pexels.
Alec Ward's picture
Principal Legislative Manager East Bay Community Energy

Alec manages EBCE’s participation in federal and state legislative and regulatory policy matters. Prior to joining EBCE, Alec served the California Public Utilities Commission, leading the Public...

  • Member since 2022
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  • Nov 22, 2022
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With passage of the Inflation Reduction Act (IRA) and the Infrastructure Investment and Jobs Act (IIJA), Congress has created an all-you-can-eat banquet for clean energy gourmands like East Bay Community Energy (EBCE) and its customers.

Funding in the laws opens the door to a potential transformation of the US energy system. Since many of the provisions align with where EBCE was already headed, the laws may get us there faster and with lower costs.

With energy incentives in the IRA estimated by Congressional analysts at $374 billion over ten years, the new law represents the largest action Congress has ever taken on clean energy and climate change.

But a recent research note from Credit Suisse suggests the law will have even bigger impacts. Some of the biggest incentives are tax credits, which are uncapped, and the bank expects a much larger response from developers, resulting in a total cost to the Treasury of over $800 billion and $1.7 trillion in new investment.

The smorgasbord

The IRA fits in with a number of EBCE priorities and plans, such as more renewables, decarbonizing buildings, and environmental justice.

•   More renewable energy generation. The law expands and extends federal tax credits for renewables for ten years, transitioning to a technology-agnostic zero-emission credit in 2025. It creates bonuses for projects that pay prevailing wages, use US-made equipment, and are built in communities with many low-income households or that used to have many fossil fuel jobs.

One especially revolutionary aspect for EBCE is that the law allows tax credits to be paid out as cash to non-taxable entities -- like EBCE. EBCE up until now has bought power under contract from for-profit developers who could take advantage of the 30% tax credits. Now EBCE and other community choice and publicly owned energy providers will be able to own power plants directly.

“By eliminating the middlemen, plus using our access to low-cost capital, I think we can see serious savings,” says Nick Chaset, EBCE CEO. "Suddenly, we don't have to make the choice between being clean and being cheap; we can do both.”

•   Building decarbonization. The IRA creates new programs and funds existing programs to cut carbon emissions from energy use in buildings. A $4.3 billion grant program to states will support whole-house energy savings retrofits for single-family and multi-family homes. Rebate rates are double for low-income housing, covering up to 80% of the total project cost.

Another $1 billion grant program will be managed by the Department of Housing and Urban Development to support energy improvements in affordable housing.

•   Environmental Justice. One of the biggest pots of money from the IRA is the new Greenhouse Gas Reduction Fund, administered by the US Environmental Protection Agency. The program will provide $15 billion for the deployment of clean energy technologies in low-income and disadvantaged communities, plus $12 billion to establish state, local, and tribal green banks that can in turn finance projects.

Another $3 billion will be given out as Environmental and Climate Justice Block Grants to support community-led projects, including $200 million to provide technical assistance to communities. And the Neighborhood Access and Equity Grant Program will provide $3 billion to improve transportation access and mitigate negative safety or environmental impacts in underserved communities.

“I think these are the provisions that will have the biggest near term impact on DACs,” Chaset told S&P Global. “Transportation pollution is the number one source of emissions and one of the leading causes of asthma in our region. The incentives for transportation electrification will provide a critical signal for the transition from fossil fuels to electrification. We stand ready to support operators of fleets and large customers with clean energy to fuel the vehicles and with investments in infrastructure.”

Another $5 billion is available for a wide-ranging competitive grant program for plans to reduce climate pollution, plus $2.25 billion to clean up pollution from ports through electrification.

New incentives support electrifying freight trucks, a major source of pollution in the East Bay.  (Photo by Dennis Schroeder, NREL)

Plenty for customers too

There are even more incentives for EBCE customers to take action on efficiency, electrification, and clean energy.

The bill extends the long-running residential solar tax credit, boosting it to 30% of the installation cost and adding a new credit for batteries.

A bevy of rebates are now available under the High Efficiency Electric Home program, including for heat pump space heaters, water heaters and dryers, electric ranges, and wiring upgrades to make electrification possible. These rebates can total up to $14,000 per home or 50% of the total project cost for middle-income households and 100% for low-income households or apartments with a majority of low-income tenants. More tax credits are available for weatherization, like insulation and new windows.

This calculator from Rewiring America determines eligibility for the incentives based on location, income, and other factors.

The Clean Vehicle Tax Credit extends an existing $7,500 incentive for electric cars, depending on domestic manufacturing of the car and the origin of critical battery minerals like lithium and cobalt. It also creates a new incentive of $4,000 for low-income buyers of used electric cars. And it removes the cap on vehicles from a single manufacturer, meaning cars from Fremont-based Tesla will again qualify.

There is also a credit for commercial vehicles, with $7,500 for light-duty and $40,000 for heavy-duty electric vehicles, along with 30% of the cost of EV chargers, up to $100,000. The charger incentive can be paid out in cash for non-taxable entities like local governments.

Combined with California’s Advanced Clean Trucks Regulation and Advanced Clean Fleets program, and further incentives from EBCE, the new incentives should drive more clean trucks and EV charging in our service territory, cleaning up pollution from freight shipping.

Let’s not forget the infrastructure bill

As if that wasn’t enough, the IRA was preceded in November 2021 by the Infrastructure Investment and Jobs Act (IIJA), also known as the Bipartisan Infrastructure Law. For the next five years, the IIJA will create 60 new programs at the Department of Energy, including 16 demonstration and 32 deployment programs, and expand funding for 12 existing Research, Development, Demonstration, and Deployment (RDD&D) programs.

The IIJA creates a series of funding opportunities focused on transportation, power, industry buildings, and innovation. The programs can fund everything from carbon capture to energy efficient schools.

EBCE is particularly excited about harnessing IIJA funds to increase our work on electric vehicle charging infrastructure, on improving energy resilience, and promoting energy efficiency. At least $7.5 billion is dedicated to EV charging nationwide, with California receiving $384 million under the National Electric Vehicle Infrastructure (NEVI) Program.

“My hope is that these funds help accelerate our adoption and build of renewable energy and other clean energy programs,” says Chaset. “Our target is 100% clean by 2030 but this should help us get there faster while not impacting our customers’ bills.”

 

For further reading

Discussions
Matt Chester's picture
Matt Chester on Nov 22, 2022

No doubt, one of the more exciting times to be in this line of work!

Audra Drazga's picture
Audra Drazga on Nov 23, 2022

Alec - thanks for this post - I love your theme

"Congress has created an all-you-can-eat banquet for clean energy gourmands like East Bay Community Energy (EBCE) and its customers."

It will be interesting to watch how and when these programs start rolling out to see their impacts.  It seems like right now, everyone is still trying to get their arms around these two bills to understand where the money will go.  I would love to hear more from you in the community as things progress! 

Alec Ward's picture
Thank Alec for the Post!
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