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Latitude Media Features Clean Energy Fund’s Solar For All Project

“Nothing on this scale has ever been attempted,” Briscoe said. “And we are all hustling to get the capital deployed where it is most needed.”
Latitude Media

The transformational challenge of deploying Solar For All dollars

The level of excitement for the program’s potential is high, but making sure the money is used efficiently comes with challenges.
by Bianca Giacobone

Latitude Media, June 27, 2024

Across the United States, organizations large and small are readying themselves to receive their share of the $7 billion in federal money awarded as part of the Greenhouse Gas Reduction Fund’s Solar for All program.

The top line: The Environmental Protection Agency’s September 30 deadline to obligate funds to its 60 Solar for All awardees approaches, leaving those state agencies and community leaders grappling with how to absorb and distribute the cash to come. While excitement for the program’s potential to create and expand distributed solar access is high, making sure the money is used quickly and efficiently comes with roadblocks — many of which are emblematic of the ones the GGRF faces more broadly.

The current take: Amanda Li, chief operating officer and co-founder of Banyan Infrastructure, a software platform that simplifies transactions for sustainable infrastructure projects, attributed the challenges both to the novelty of the program, as well as to the inherent difficulty of financing distributed infrastructure on a larger scale. Nevertheless, she told Latitude Media, the program is “transformational.”

Billy Briscoe, chief executive officer of the Clean Energy Fund of Texas, a multistate nonprofit which was awarded $156.1 million as part of the program, concurred with Li’s assessment.

“Nothing on this scale has ever been attempted,” Briscoe said. “And we are all hustling to get the capital deployed where it is most needed.”

The awards range from $25 million to nearly $250 million. They have to be used within five years, with awardees including state agencies, non-profits, and green banks deciding whether they need to devote one of those five years to planning or not. Awardees can use up to 20% of the money they’re receiving to improve internal capacity, training, hiring people, and community outreach.

The Solar for All program’s stated, and arguably ambitious, goal is to deliver solar to more than 900,000 low-income and disadvantaged households. Meeting it will involve many small projects — the exact sort of small-scale distributed assets that have always been harder to finance than the mammoth utility-scale assets that lenders tend to favor.

“If I’m a lender, why would I want to try and figure out a project finance angle for a $1 million asset, when I could be doing it for a $10 million or $100 million asset?” said Li. “Streamlining distributed small-scale investments has been a challenge in the industry overall. And guess what? This program is focused basically only on those.”

And from there the challenges multiply.

Lack of standards

For one, small-scale and distributed infrastructure projects suffer from a lack of standards and best practices for financing them.

“In real estate, I can get a mortgage almost the same day as I ask for it, because there’s an understanding around underwriting, and a really uniform financial product,” said Li. “In renewable energy, we need to avoid every single million-dollar check being a little bit different.”

For example, a community lender like the Hawai’i Green Infrastructure Authority, which was awarded $62.4 million, has been approving loans based on estimated energy savings thresholds since 2018. And those can take time to calculate.

“It’s based on bill savings, and every bill is different,” said Gwen Yamamoto Lau, the authority’s executive director. “Depending on the size of your bill, the system that you want to install, and your energy usage pattern, it comes up with different savings.”

Yamamoto Lau said coming up with that calculator has been a core struggle for the authority.

Platforms like Banyan as well as recipients like Inclusive Prosperity Capital, which leads the Community Power Coalition that received a multi-state $249.3 million award, are aiming to help. That middleman work involves developing and scaling models and streamlining how small community lenders handle spreadsheets, checklists, and carbon calculators. Ideally, the same tools can be applied to a wide range of projects.

“We are working on and thinking about innovative models for community solar that we can scale up,” Kerry O’Neill, Inclusive Prosperity Capital’s chief executive officer, said. “And then to train hundreds of developers to develop community solar projects in communities all across the country.”

Balancing demand with urgency

Solar for All awardees had the option to decide whether to start their clocks at the beginning of this past May or at the beginning of September. Once it begins ticking, awardees have five years to deploy all the money they’re granted. (Regardless of the start date selected, no has received the money yet.)

The timeline, paired with the uncertainty presented by the upcoming presidential elections, gives the program a keen sense of urgency, especially for entities in the 25 or more states and territories that have never had a low-income solar program before.

Yamamoto Lau said the Hawai’i Green Infrastructure Authority is aware the process will take time, given how much infrastructure still needs to be put in place. A major challenge is finding the right people, she said.

“We’re stuck between climate and finance, so every single employee I hire needs to be trained,” she said. “I can hire a climate person, but they don’t understand finance. I can hire a lender from a bank, but they don’t understand climate.”

There’s also a question of whether the demand is there — or whether it will rise to meet the same rushed timeline.

“We’re excited, but we’re nervous, too,” said Rebecca Respicio, director of the Guam energy office, which received $62.4 million alongside other partners. She says that a solar-specific award targeted at community lending is a first for the island. The award will benefit a set of families that wouldn’t normally qualify for a loan.

“We just want to make sure that we’re not putting families into further debt and that they are going to be financially stable even after receiving a loan like this,” she added.

And for a place like Guam, the novelty of the program comes with questions that are hard to answer before the funding arrives and work gets started. (The office has yet to hire a project manager, because the funds haven’t been delivered yet.)

“How many low-income families are running to get loans?” Respicio said. “We still don’t know how this is going to be received by the community. When we do get the money, that’s when we’ll start educating the island about Solar for All.”

Well aware that not every state is ready to hit the ground running, Inclusive Prosperity Capital categorized the country into “early action,” “priority” and “long-term” states to better coordinate its training efforts. Early action states like California and New York already have everything in place to get going, while long-term states like Iowa or Louisiana might take a couple of years to see projects come through.

“We need more companies; we need more developers; we need more communities to learn how to do this work,” said O’Neill. “They need resources to learn how to do this, and we have a program that’s designed to do that over five years.”

Despite the hurdles, though, there’s a real sense of excitement in the industry about the imminent access to those resources. Briscoe, at the Clean Energy Fund of Texas, said the potential is “huge,” especially for communities who haven’t historically had access to clean energy.

“Readiness is a big concern,” said Li. “But it’s a transformative program. And the people getting towards readiness are moving at the speed of light. It’s amazing to see.”

Want to learn more about the on-the-ground realities of deploying Solar For All funds? Join Banyan Infrastructure’s Amanda Li, Clean Energy Fund of Texas’ Billy Briscoe, and Latitude’s Stephen Lacey for a live, interactive discussion on July 18.