By Richard Dovere
August 23, 2021 at 5:00 am ET
Extreme weather events fueled by climate change are straining America’s aging power grids more than ever. From crippling heat waves to winter storms in Texas, where a catastrophic system failure led to blackouts across the state and dozens of deaths, to triple-digit temperatures in California that sparked the state’s first rolling blackouts in almost 20 years, the need for sustainable and reliable power could hardly be more urgent.
Upgrading America’s energy infrastructure will undoubtedly fuel prosperity, resiliency, equitability and affordability. It will also, at least at first, cost billions of dollars. And on the heels of immense government spending during the COVID-19 pandemic, plus a trio of presidential administrations that slashed taxes, not to mention an ambitious — and needed — $1 trillion federal infrastructure proposal, families and businesses should be preparing for higher tax bills.
For everyday families and business owners, there isn’t much you can do to influence tax policy. But you can take steps to save money while helping build a more resilient electricity grid — in turn, offsetting the impact of steeper tax bills, or better yet, putting extra cash in your pocket.
What’s more, renewables are not only clean, they’re cost-competitive with or cheaper than fossil fuels, further slashing energy bills.
How? By embracing what’s known as distributed generation, including community solar.
Distributed generation refers to electricity production that occurs on-site or nearby — from rooftop solar panels, to small- and midsize community solar arrays and wind-energy farms shared among a few dozen businesses and households.
Distributed generation offers additional advantages too: Delivering power locally avoids the transmission losses that can occur over longer distances, making distributed resources efficient and complementing existing utility-scale infrastructure. Meanwhile, there are fewer power lines vulnerable to impacts. In the event of severe weather, such as in Texas or California, swaths of the grid network can continue delivering vital electricity to homes and businesses, even if others are impacted.
There’s no uniform path to tapping into distributed generation, but the easiest route is connecting directly with an electric utility, which cuts out the middleman. Families and businesses can also seek out community solar programs, such as a leading program in New York state, which sponsors distributed generation projects that lower electric bills and have a cleaner, greener impact on the local power grid.
Organizations such as the Coalition for Community Solar Access can help find a community solar program near you. Community solar provides a more equitable opportunity to access solar energy, especially for those that traditionally didn’t have access before — due to not having adequate roof space or accessible financing — and serves those most needing solar, including small businesses and low-to-medium income communities.
For businesses in particular, there’s tax equity, empowering business owners to invest money that would normally go toward their tax bills in renewable energy projects instead — producing not only a lower tax bill, but cheaper electricity costs, greater resiliency, concrete steps toward ESG goals and of course a nice bit of internal and external PR.
Lawmakers and regulators can help accelerate this shift. The rules for distributed-generation programs vary from state to state, causing confusion and creating an environment where families and businesses can’t take full advantage of programs designed to help them. Congress can get on board by directing the Federal Energy Regulatory Commission to start developing a nationwide framework for community solar and distributed generation — and give every American the chance to help the planet and their bottom line at the same time.
Distributed generation and community solar are key to lowering costs and protecting community power supply, especially during natural disasters and extreme weather. As we look to accelerate our country’s shift to a clean energy economy, and provide resilient electricity for American homes and businesses, locally generated power provides the sustainable, affordable, and reliable energy that families and businesses need now more than ever.
Richard Dovere is chief investment officer – distributed generation at EDP Renewables.
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