Want to know how your city and county can help meet global decarbonization goals? Take a look at the nearly 100 U.S. local governments that procured more than 3,600 megawatts of clean power last year.
That’s the purpose of last week’s report from the American Cities Climate Challenge Renewables Accelerator, a joint program of RMI and the World Resources Institute (WRI). The Bloomberg Philanthropies-funded group exists to help the more than 180 cities and counties with zero-carbon commitments find clean-energy buying opportunities that fit their regulatory environments.
In the past five years, the number of buyers and the size of clean energy deals they are making have grown rapidly, tripling to 3,600 megawatts across 143 deals by 95 governments in 33 states in 2020, according to the latest data.
That’s nearly one-tenth of the nationwide total of annual clean power additions through 2025 needed to keep the country on a path to keeping global warming below 2 degrees Fahrenheit, said Tatsatom Gonçalves, research analyst for WRI’s Energy Program, in a webinar last week.
As in years past, the biggest share came in the form of physical power-purchase agreements (PPAs) with new solar and wind projects, he said.
PPAs remain the predominant pathway for contracting for new clean power projects. California, where municipalities and community choice aggregators are adding gigawatts of renewables and energy storage, and Texas, where falling wind and solar costs are driving cities to sign project deals with retail energy providers, led the pack, with nearly four-fifths of the megawatt total.
Two record-breaking deals for local governments completed in 2020 fit this profile. The first was the Los Angeles Department of Water and Power’s 331 MW wind power procurement from the Red Cloud Wind project in New Mexico. The second was the city of Houston’s deal with its retail energy provider, Reliant Energy, to purchase the roughly 1 million megawatt-hours per year it needs to serve its municipal operations from a newly built solar project in Texas.
But 10 other states broke new local government contracting records, according to the group’s local government renewables transaction tracker. In Tennessee, the city of Nashville teamed up with Vanderbilt University on a 125 MW solar farm deal through the federal Tennessee Valley Authority’s Green Invest program. Colorado Springs, Colo. and Boston, Mass. also inked 100-megawatt PPAs last year, joining similarly large deals in Orlando, Fla., Kansas City, Kan. and Wisconsin rural electric cooperative WPPI Energy over the past three years.
“This is great news, because power-purchase agreements entail agreed-upon prices for fixed periods of time, which helps cities plan for future energy costs,” Gonçalves said, meaning that it's easier to align cheap wind and solar with local climate goals.
Houston was able to hit its goal of supplying 100 percent of its municipal operations with carbon-free electricity one week after setting it, Lara Cottingham, the city’s chief sustainability officer, said in last week’s webinar.
“That was really a result of timing” with “so much renewable energy coming on in Houston and the Texas region,” she said.
Beyond PPAs: Green tariff programs and community solar
Not all local governments can sign PPAs on their own, however. Cities and counties in states with vertically integrated energy markets can’t contract directly for wind and solar projects if they don’t have their own municipal utility. But they can tap a number of alternative arrangements being created from state to state.
The most prevalent are “green tariff” programs that allow customers to source 100 percent clean energy from their utility. Green tariffs are now available in 15 states, according to this map from the Renewable Energy Buyers Association and WRI, while another five states have seen one-on-one deals akin to green tariffs executed between utilities and corporate or local government customers.
RMI and WRI have tracked 33 green tariff transactions in their database, said Stephen Abbott, manager of RMI’s Business Renewables Center Marketplace platform. Charlotte, North Carolina is the most populous city to tap a green tariff program for clean power to date, via its 35 MW deal with Duke Energy.
Another option on a state-by-state basis are community solar programs that allow midsize solar projects to sell their power to a variety of offtakers. While community solar is limited in size, it does offer cities opportunities to link new solar development to local employment and social justice goals, Gonçalves said.
The city and county of Denver’s community solar gardens project will provide 20 percent of its power to low-income customers and will commit to employing at least 10 percent of its workforce from job training programs run by low-income and disadvantaged community development specialist Grid Alternatives.
“Because of the way community solar is structured, we can more easily share that power with our city facilities and members of the local community,” said Jonathan Rogers, a renewable energy specialist with the city and county of Denver.
Madison, Wisconsin took a similar tack with its program to deploy 1 MW of solar on city property, employing workers from its Green Power job training programs for 80 percent of the work involved, Stacie Reece, the city’s sustainability program coordinator, said during last week’s webinar.
Expanding partnerships and financing to grow local government buying power
Making projects like these pencil out economically against available utility energy rates requires careful alignment, Rogers said. Much of Denver's community solar is going on municipal buildings and on parking lot canopies — a similar arrangement to that the Washington, D.C. metropolitan transit authority put together last year to contract for 12.8 MW of community solar.
Denver also secured a $1 million state renewable energy grant and has structured the projects with developer Unico Solar Investors to reduce the share borne by the government’s budget.
Creative financing arrangements and broadening partnerships are important to expand the scope of city and county renewables growth, Gonçalves said. In Arizona, for example, the cities of Gilbert and Tempe and the Salt River Pima-Maricopa Indian Community secured more than 4 megawatts of a 100-megawatt PPA involving 21 buyers and utility Salt River Project.
Virginia’s Arlington County last year secured 38 MW of off-site solar by linking up with corporate buyer Amazon in a virtual PPA with utility Dominion Energy. It’s the first U.S. local government to engage in a virtual PPA transaction, a structure that’s taken an increased share of corporate clean energy deals in recent years.
The federal-to-local government connection
While federal funding for local government clean energy procurement was scarce during the Trump administration, Knox County, Maine used funds from the March 2020 Coronavirus Aid, Relief and Economic Security (CARES) Act to build a 5 MW solar array to serve its regional airport.
The Biden administration’s multitrillion-dollar climate and infrastructure plans could provide a major boost to local governments' clean energy procurement plans, and not just by directing funds to municipal governments facing COVID-19-related budget shortfalls.
As part of the nearly $1 trillion in climate-related spending plans outlined in the American Jobs Plan unveiled last week, the administration is proposing state, local and tribal government “clean energy block grants that can be used to support clean energy, worker empowerment, and environmental justice.”
“We’re excited to have a federal partner again that is not just talking about this, but is leading on day one,” Houston’s Cottingham said. Given that economic activity is more and more concentrated in the country’s most populous cities and counties, federal aid directed at local governments could have an outsized impact on boosting their already burgeoning climate ambitions.
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