Good Intentions, Bad Policy, and the Threat to the Clean Energy Transition
Insights |
By The Sol Systems Team
Why Additionality Should Not Be a Requirement for Corporate Clean Energy Goals
Electricity generation accounts for 25% of global CO₂ emissions, and addressing this through a transition to renewable energy sources - like solar or wind - is critical to solving the climate crisis. The good news is that corporations are stepping up to procure massive amounts of clean energy to minimize their carbon footprints, documented by retiring renewable energy certificates (RECs). The World Resource Institute (WRI) establishes the global ‘rules of the road’ for emissions accounting. But those rules – specifically its Scope 2 Guidance on indirect emissions from purchased electricity, steam, heat, or cooling – are under review to be changed, and the consequences could be catastrophic to the progress of the clean energy transition.
What’s at Stake
These new proposed rules will make accounting for voluntary purchases of renewable energy, specifically of unbundled RECs, much more challenging for corporations and threatens REC markets that are vital for the transition to renewable energy. These new rules, while well-intended, will actually slow down clean energy procurement at a time when we need it most.
Perspective from the Practitioners
Clean energy practitioners who develop, finance, build, operate, invest in, or purchase power from renewable energy projects widely agree that a more difficult process for corporations to make emissions claims is not a path forward that will bolster clean energy procurement - in fact, it will set us backward. In contrast to the proposed changes, the following principles represent a consensus among most practitioners – and the evidence included in our detailed white paper offers practical examples and explanations for why these principles should be adopted:
Market-Based Instruments are Criticaland Enabled by REC Markets: Market-based instruments, such as Virtual Power Purchase Agreements (VPPAs), or contracts that ensure the long-term financial backing of clean energy projects, and unbundled RECs, are critical to enable and motivate corporations to meet GHG emissions accounting requirements. REC markets are critical enablers for voluntary procurement. The new rules consider eliminating market-based accounting; this would discourage voluntary procurement of renewable energy.
An Additionality Requirement is Not Reasonable: A binary ‘additionality test’, or the requirement of clean energy projects to be new versus existing ones in order to “count” (as some academics propose), should not be a prerequisite for making an emissions reduction claim but could voluntarily be disclosed alongside such claim. Corporations simply won’t be able to buy as many ‘additional’ RECs, and the clean energy industry won’t be able to finance and build as many projects. Requiring additionality is a mistake and would be detrimental to the clean energy transition.
Time and Location Data Tracking is Critical: Time and location data tracking associated with customer load and renewable energy generation is essential to match, measure, and account for the underlying emissions impacts. There is broad consensus for working towards adapting GHG accounting guidance for emissionality, which reflects the avoided emissions. Renewable energy markets, particularly REC markets, will ultimately better reflect underlying carbon intensity and direct clean energy investments and procurements into carbon-intense markets where emissions reductions are most needed. Many of our recommendations to integrate emissionality into REC markets and Scope 2 requirements, shared in 2023 in our perspective on “Reimagining REC Markets,” are now being discussed for implementation.
A Better Path Forward
Continuing progress requires collaboration. We call on WRI to emphasize the practical evidence from clean energy buyers, developers, financiers, and our industry associations in the new accounting guidance so these rules support (not prohibit) the clean energy transition. We also call on the clean energy practitioner community to continue actively engaging in this critical debate and sharing their insights.
We recommend accounting frameworks and policies that support:
Emissions reduction claims that ultimately integrate carbon intensity into any reporting; corporations should be given the option of how to report depending on their capabilities
Flexibility of differentiating the impact of their emissions reduction claims through a hierarchy of voluntary contractual instruments under market-based accounting to bolster action
Reframing ‘additionality’ and ‘emissionality’ as a disclosure feature to allow for transparency and flexibility while driving ambition.
We all want a sustainable energy future that drastically reduces carbon emissions. Carbon accounting is not a purpose in itself – global emissions reduction is. To get there, we need conducive accounting frameworks and supportive policies, not prohibitive ones, to motivate the clean energy transition for diverse corporations that can provide immediate impact toward reaching our collective climate goals.
From Vision to Impact: Sol Systems’ Journey Towards a Community-Focused Clean Energy Economy
Community Impact |
By Adaora Ifebigh
In the three years following our inaugural Power Purchase Agreement announcement with Microsoft in 2020, we have significantly expanded our commitment to invest in under-resourced communities and climate change-impacted communities. This groundbreaking strategy started with 5 community organizations in Washington, DC, Philadelphia, and Baltimore. In 2023, we concluded the year by supporting 15 community impact organizations across the Eastern Seaboard of the United States backed by funding and support from two additional corporate customers, Google, and Gas South.
Leaning into Sol Systems’ focus on a “Pathway to Solarization” especially for under-resourced communities, our partnerships have been instrumental in creating community-centered programs that promote clean energy access, facilitate critical home repairs for energy efficiency, and bolster education and workforce development programs that provide wraparound services for program participants. These initiatives are designed to provide comprehensive support to participants. We shared our journey, lessons learned, and opportunities at various events throughout the year, collaborating closely with our partners, industry experts, and federal agency representatives.
Sol Systems Community Impact Engagement Series
The Sol Systems Community Impact Engagement Series hosted two significant webinars. The first, "From IRA to BIL – Available Funding to Accelerate Clean Energy, Energy Efficiency, and Equitable Workforce Development," offered insights into funding opportunities under the Inflation Reduction Act (IRA) and the Bipartisan Infrastructure Law (BIL). The second webinar, "Reducing Energy Burden: Enabling Access to Solar and Resiliency through Pre-Weatherization and Energy Efficiency," showcased our integrated approach to ensuring universal clean energy access.
Industry Partner Events
A key highlight was our participation in the Rural Renaissance Roadshow, organized by Groundswell, Inc., in Northwest Arkansas. This event brought together rural energy practitioners to discuss the future of local clean energy, innovative partnerships, and funding for rural community programs.
Joined by our partners, Appalachian Voices, and Aiken Electric Cooperative, we hosted a session, “The Power of Partnerships: Leveraging Scale for a Successful Community-Centered Clean Energy Development,” which emphasized the importance of collaboration in achieving impactful community-centered clean energy projects.
A Rewarding Journey
Since launching our first-of-its-kind impact initiative, our journey has been filled with learning experiences and achievements, affirming our dedication to making clean energy accessible to all, especially for under-resourced communities. Celebrating the solar installation at the City of Refuge in Baltimore, a faith-based organization that supports families and individuals on their path out of a crisis with Groundswell in October was a memorable and rewarding moment. This event symbolized the tangible impact of our collaborative approach to expanding access to clean energy in communities where it is needed the most.
New Partnerships
While continuing our commitment to nurturing early career exposure to the clean energy industry, we fostered a new partnership to support middle and high schools in Gwinnett County Public Schools, Georgia. To date, over 20 teachers have participated in the KidWind training to implement renewable energy curriculum in their classrooms, and it is estimated that over 64,000 students will be impacted by this curriculum over time. Furthermore, we strengthened our relationship with electric cooperatives, who provide services to 92% of the counties in the United States facing persistent poverty. This was achieved through a targeted initiative in the Carolinas, designed to "close the pre-weatherization gap" by addressing essential health and safety home repairs in over 100 homes across the region producing an estimated 604 MWh of energy savings, $74,000 of electricity cost savings per year, and over 400 MT of CO2 avoided.
Future Possibilities
Inspired by Dr. Seuss's "Oh, the Places You'll Go," we are excited about the future possibilities. Our ongoing and new partnerships, especially around our solar project sites, promise even greater impacts in the years to come. We look forward to the journey ahead, committed to expanding our community impact and fostering an equitable transition to a clean energy economy.
DC Greens: Building Impact Through a Sustainable and Resilient Food System
Community Impact |
By Anna-Liisa Eklund
The Well at Oxon Run, DC Greens’ urban farm located in Southeast DC
“Advancing health equity by building a just and resilient food system,” is the powerful mission statement which drives DC Greens, one of Sol Systems’ newest community partners. DC Greens is a Black-led, multiracial organization actively making healthy and local food accessible to underserved DC communities.
Sol Systems is partnering with DC Greens as a part of the Sol Profit Share initiative. Sol’s Solar Renewable Energy Certificates (“SREC”) aggregation customers can select a Sol Profit Share contract which provides customers with a guaranteed, fixed payment per SREC, plus, additional profit when SREC prices rise. In conjunction, Sol Systems also donates five percent (5%) of its net Sol Profit Share profits to non-profit organizations working to support renewable energy access and sustainability. With the 2022 profits from the Sol Profit Share initiative, Sol Systems funds support DC Greens as they continue serving Washington, DC communities through urban farming and food education initiatives.
At “The Well at Oxon Run,” DC Greens’ farm in Southeast DC, the team cultivates crops, hosts nutrition education seminars, and fosters local engagement through volunteer opportunities. The Well’s farm staff utilize sustainable farming practices, including companion planting, rainwater capture, and natural pest management, indicative of DC Greens’ commitment to local environmental stewardship. The crops grown at The Well are packaged into produce boxes and distributed to community members, an initiative strengthened by DC Greens’ collaboration with Capital Area Food Bank. Additionally, the team spearheads a Produce Prescription program to enable doctors to prescribe fresh fruit and vegetables to patients experiencing diet-related, chronic illnesses. The program has supported over 1,400 adults and 900 children on Medicaid to access healthy food through participating grocery stores – reflecting DC Greens’ efforts to advance health and wellbeing through nutrition.
Squash, beans, and corn grown using the “Three Sisters,” companion planting method
Through the 2022 Sol Profit Share funding, DC Greens will purchase a growing season’s worth of compost, soil, and woodchips to ensure The Well can remain a productive hub for crop cultivation. Already, both DC Greens and Sol Systems use services from Veteran Compost, a locally run, veteran-owned business. Sol Systems sends food waste from our DC office to Veteran Compost’s processing facilities, and DC Greens purchases compost to enrich the growing soil; this transformation of waste to fresh food between the three organizations will continue in future years.
Overall, Sol Systems is looking forward to continuing to engage DC Greens and their farming operations at The Well. Sol’s SREC Profit Share customers have helped make the community partnership opportunity possible, advancing Sol Systems’ ambition to create impact through infrastructure and local collaboration. To learn more about how DC Greens is supporting a sustainable and resilient food system in the Washington DC area, please visit their website at: dcgreens.org.
The Well’s “Donor Wall,” highlighting their strong network of community support
Infrastructure + Impact Spotlight: Q&A with Lynn Heller of Climate Access Fund
Community Impact |
By Adaora Ifebigh
Lynn Heller is a social entrepreneur with extensive experience in the nonprofit sector. Prior to launching the Climate Access Fund, Lynn served as Vice President of the Abell Foundation, where she oversaw the foundation’s operations and managed the Foundation’s environmental grants portfolio. Lynn has worked as a nonprofit strategic planning and management consultant and has launched political and economic development programs in Baltimore, California, and Indonesia. Lynn is Board Chair of the Maryland League of Conservation Voters, a past member of the Maryland Climate Change Commission, and a founding member of the Baltimore Sustainability Commission.
I hope you enjoy learning more about expanding low-income community solar through partnerships, innovative financing, and advocacy in the summary of our conversation below.
-Adaora Ifebigh
Lynn Heller - Credit: Climate Access Fund
For those who might not know, what is the Climate Access Fund?
The Climate Access Fund (CAF) is a nonprofit green bank that uses flexible capital to increase community solar development in and for historically disinvested communities in Maryland. As we know, environmental harms and the impact of climate change disproportionately affect historically disinvested communities as well as neighborhoods with greater percentages of low-income people of color. In Maryland alone, there are 400,000+ low-income households, yet only a fraction have participated in Maryland’s Community Solar Pilot Program since the program’s inception six years ago.
Most community solar projects are located on large tracts of land and serve higher income families because these are the projects that tend to provide the most attractive financial returns for investors. Yet smaller (<1 MW) projects located on commercial rooftops and parking lots in underserved communities have the potential to offer a range of community benefits in addition to electricity bill savings. These “co-benefits'' can include, but are not limited to, job training, employment and educational opportunities, and wealth creation through shared ownership of the solar asset itself. CAF’s low-cost financing – raised from a combination of public, private, and corporate sources – makes these projects viable.
What inspired you to start the Climate Access Fund?
I was working at a private foundation that had a history of supporting efforts to tackle and alleviate poverty. The foundation had a focus on Baltimore City and a history of social impact investing. I had long been passionate about environmental sustainability, reducing the impact of climate change, and advancing social justice efforts, and while at the foundation, I was focused on making sure that low-income households would not be left out of the clean energy transition.
After the 2016 election, I felt moved to do more on this issue because I sensed there would be less motivation at the federal level in the coming years. The more I learned about low-income household access to solar, the more I discovered: (a) the real potential of community solar to reach low-income households at scale; and (b) a clear financing gap was preventing private solar development from benefitting low-income households. CAF was launched to plug that financing gap using social impact capital.
Through a community impact partnership with Sol Systems and Microsoft, Climate Access Fund is implementing a community solar project “Solar4Us @ Henderson-Hopkins” in Baltimore, MD. Can you share the history and details of this project?
Elmer A. Henderson: A Johns Hopkins Partnership School (or as most people refer to it, Henderson-Hopkins) is a Title I, K-8 school in the heart of East Baltimore. It is a few blocks away from Johns Hopkins Facilities – the hospital, the Bloomberg School of Public Health, and the School of Medicine. Henderson-Hopkins is a contract school (like a charter school) that serves a school community that is over 95% Black/African American, with 100% of its students eligible for free and reduced lunch. The K-8 school is part of a state-of-the-art school campus that also includes the Harry and Jeanette Weinberg Early Childhood Center, a local pioneer serving families eligible for Head Start alongside families paying market rate.
Henderson-Hopkins operates as a community school, which is a school that places focus on supporting and building partnerships with residents in addition to academics and student outcomes. During the height of the pandemic, I went to Henderson-Hopkins as a volunteer, and I delivered food to residents who were lining up in their cars. Impressed by the ethos of the school and their community school approach, I reached out to school leadership to introduce the concept of a rooftop solar array that would benefit the families in their school community as well as other neighborhood residents. Henderson-Hopkins was enthusiastic about this idea and agreed to be our demonstration site, and Solar4Us @ Henderson-Hopkins was born. Henderson-Hopkins agreed to use 100% of all power generated for the benefit of the school community as opposed to drawing energy for the benefit of the school campus. The project anticipates serving ~150 - 175 low-income households. Each household that enrolls will experience a 25% savings on their electricity bills.
Our approach also emphasizes the necessity of other co-benefits, such as workforce and education-related opportunities. The construction of the system will create solar-related jobs in the neighborhood, and we prioritize local hiring. We are also working with a local nonprofit, CivicWorks, to offer paid apprenticeships to graduates of their solar installation job training program. Furthermore, we are sponsoring an after-school club for Henderson-Hopkins middle school students that focuses on environmental sustainability and clean energy, and with the solar panels being an on-site, provide an experiential learning tool. Ultimately, our target is to offset 27,000 metric tons of C02, the equivalent of ~3.04 M gallons of gas consumed and generate $1.1 M in household savings over the projected 35-year lifespan of the solar panels.
Why is this project important for the area where it is located?
The opening of the Henderson-Hopkins campus in 2014 represented progress toward the fulfillment of a commitment made by Johns Hopkins University to families in the Old Town/Middle East neighborhoods of East Baltimore. In these neighborhoods, the median income is less than $25,000, and over 50% of children live below the poverty line. It is a predominantly Black neighborhood, and 90.8% of residents identify as Black, Indigenous, People of Color (BIPOC). Over 50% of the adult population is unemployed. For participating families, the 25% discount on monthly electricity bills could very well be the difference between a paid bill and cut off electricity, which negatively impacts children and families from financial, health, and well-being standpoints.
What would you say are the benefits of partnerships when trying to address challenges facing our communities today?
At the fundamental level the only reason CAF is doing this is because of our partnership with the school. We are so fortunate to have such an enthusiastic and values-aligned partner like Henderson-Hopkins for our first demonstration of this community solar approach. We recently filled our last fundraising gap through a crowdfunding effort and should begin construction in Fall 2023.
Funding from Sol Systems has been critically important in the financing of this project because it has allowed us to do things like create a working capital fund, which every solar project needs. It also allowed us to establish necessary reserves, which we wouldn’t otherwise have. We also appreciate Sol Systems sharing their significant expertise with CAF, as well as sending us relevant funding opportunities as they learn of them to help us leverage additional funding.
We are intentional about cultivating mutually beneficial partnerships at every level. This includes large national coalitions, peers in the green banking and solar development fields, elected officials, and quasi-public agencies at all levels of government; community-based organizations and resident leaders, renewable energy and environmental justice advocates, and other mission-aligned organizations. Partnership development is an area of work for which we care deeply about, and as we grow, we look forward to having more internal capacity to expand our reach.
In short, our work has really taken a village. Solar4Us @ Henderson-Hopkins would not be possible without partnerships with the public and private sectors, other nonprofit groups, and philanthropy. Many stakeholders have come to the table to make this happen, which is especially important since we are doing something new– new because it is renewable energy with community solar, new to Baltimore City, and new because of the innovative ways to finance this project. This project is a first of its kind in almost every respect, and when you are attempting to implement a project of that nature, a multitude of committed partners is necessary.
Do you see your approach to community solar as a new way of bringing economic fairness to under-resourced areas? What makes your approach unique in addressing urban disinvestment?
Absolutely. I see this as a unique approach. Most community solar projects are built on large tracts of open, arable land. That’s where the economies of scale tend to be more beneficial. Bigger projects yield a greater return on investment. The revenue-to-cost ratio is higher, and naturally, the market gravitates towards those larger projects. This is great from a renewable energy perspective, but these projects typically do not prioritize enrolling low-income households, and the household savings rate tends to be lower.
However, rarely do private developers approach community solar as a broader economic development tool in low-income communities. It is often the case that it is out-of-state investors who own the projects and reap the long-term economic benefits in Maryland, and there are no co-benefits like community education and job training and apprenticeships. Local hiring is not usually a priority unless it is a public project. Private solar developers are not trying to figure out how to share the benefits of long-term asset ownership with the community members themselves. All these kinds of co-benefits tend to not exist in other types of larger scale solar development, and even community solar development generally.
Complementing our work as a green bank, CAF also has an advocacy angle that has been instrumental in paving the way for this holistic way of approaching community solar. In 2022, CAF originated HB 1039, which exempts community solar projects on rooftops, parking lots, and landfills that are at least 50% low and moderate income (LMI) from personal property taxes. In 2023, CAF was at the table to strengthen and advocate for HB 908, which made permanent the statewide community solar pilot program, eliminated the pilot program’s arbitrary cap on community solar projects at 580 MW, required that every project reserve at least 40% of its power for low-income households, and made bill consolidation mandatory for utilities.
In the pursuit of a more sustainable future, those of us involved in renewable energy have become pioneers of the green revolution. We build renewable energy projects, partner with environmentally progressive companies, and support renewable offtake in communities across the United States. However, despite these efforts, our near-term progress is threatened by the interconnection bottleneck.
The issue of interconnection—the process of connecting all projects to the grid—is the single biggest obstacle holding back the U.S. energy transition. Oversubscribed transmission lines, high transmissions system upgrade costs, and cumbersome interconnection processes have all impeded the growth of renewable energy over the last decade. This must change.
Together, we can usher in a new era and help craft solutions to reduce the interconnection bottleneck and improve our aging transmission infrastructure.
Growing demand for new renewable energy —and interconnection
At the federal level, the Inflation Reduction Act (IRA) and a multitude of state policies strive to position the U.S. at the forefront of clean energy innovation. According to American Clean Power's (ACP) 2022 Market Report, with the injection of federal funding and tax incentives (i.e., the 10-year Investment Tax Credit or ITC), renewable development is likely to more than triple over the next decade.
The massive investment in renewable energy has led to unprecedented growth in renewable development. This has also spiked demand for interconnection with more than 400 GW of capacity entering the queues of just four markets – PJM, MISO, ERCOT, and SPP. This flurry of applications is exacerbating the existing interconnection bottleneck and worsening issues with transmission infrastructure.
While federal incentives and commercial demand speak to the promise and importance of increasing renewable energy capacity, the capacity of existing lines falls short of meeting demand, and ideal locations for renewable generation often lack proper transmission infrastructure. We need independent system operators (ISOs, who manage the grid) to be proactive and work with the energy sector and the federal government to pick up the pace to upgrade our aging infrastructure.
ISO Response to Aging Infrastructure and Long Interconnection Queues
U.S. grid operators have all taken different approaches to managing interconnection. It’s a delicate task of balancing speed, risk, and cost: while ERCOT uses a “connect and manage” approach, other grid operators take an “invest and connect” approach. However, the failure to marry these approaches has meant no operator has landed on the optimal approach for managing interconnection—or the risk-prone request process for interconnection studies.
Many ISOs use the cluster-study approach. During a time period known as an “open window,” all generators—including several renewable energy generators—put in a request for an interconnection study as a cluster, adding their request to an extensive queue. All projects within a cluster have equal standing and ISOs have dedicated phases during which they carry out a series of interconnection studies and system impact studies. These studies help them determine the final set of systems upgrades and costs for all projects within the cluster that are necessary to reliably interconnect to the grid.
But ISOs are lagging in analyzing these clusters. The process can take anywhere between three to five years (Southwest Power Pool is currently evaluating projects that entered their interconnection queue in 2018) and during this time most projects may be withdrawn, usually due to cost implications. For context, only 21% of projects that were in the queue between 2000-2017 reached commercial operations by 2022.[1]
The process is painful for everyone. Lengthy wait times in interconnection queues lead to later-stage withdrawals that are costly and may trigger a restudy for the cluster. The enormous burden on utility companies and ISOs has also led to suggestions that the entire interconnection process be paused in some jurisdictions like PJM. As a result, only a fraction of the proposed capacity will come online. Although renewable industry remains hopeful after PJM’s new interconnection reform has now officially kicked off based on “First Ready – First Served” principle, it’s going to take several years before they can clear all the backlog.
Collaboration and innovation is necessary to break the interconnection bottleneck
Those of us in the renewable energy space have always been pioneering collaborators and innovators. We have an opportunity—even a responsibility—to leverage our partnerships and innovative thinking to tackle this challenge. By embracing our role as builders and innovators we can offer interconnection solutions, contributing to the overall improvement of the transmission grid.
Renewable developers can collaborate to advance new solutions and develop new policy ideas. Sol Systems has partnered with stakeholders like Working for Advanced Transmission Technologies (WATT) to reimagine the near-term solution to allow for the longer-term transmission system interconnection overhaul.
Instead of relying on the construction of new transmission infrastructure to be built (which takes several years), we can develop and leverage technology and innovation to optimize the existing system as an interim solution. It is critical that we include the benefits of technological advancement in energy storage as we craft future interconnection and system upgrades policy. Storage can serve as an energy generator—one that can be both a shock absorber and an energy producer. This will help bridge the gap when building new transmission lines may be unrealistic in the near-term.
Finally, federal support can alleviate funding debates between states and enable the delivery of renewable energy to under-served communities and communities disproportionally impacted by climate change.
In conclusion, the issue of interconnection has posed significant challenges to the growth of renewable energy, hindering progress and thwarting necessary transmission system upgrades. To break the cycle, we need more proactive and collaborative action from ISOs and non-ISO utilities to be able to make the necessary grid upgrades and to create innovative solutions that will not only enable the rapid expansion of renewable energy across the U.S. but will bring American clean energy to the communities that need it the most.
[1] Lawrence Berkeley National Laboratory: https://emp.lbl.gov/sites/default/files/queued_up_2022_04-06-2023.pdf
