As the world reels from the financial blow of COVID-19, local governments in the United States are under huge pressure as cities and counties face severe budget shortfalls. This is forcing cuts to crucial spending on education and infrastructure as well as layoffs, furloughs and hiring freezes. Losing critical funds could have seriously hindered U.S. local governments’ continued progress on renewable energy.
Despite the immense obstacles, U.S. local governments bought more renewable energy in 2020 than ever before, according to new data from the Local Government Renewables Action Tracker. Nearly 100 cities and counties across 33 states completed 143 deals, adding 3,683 megawatts (MW) of renewable energy capacity. This is a 23% increase from 2019 and represents enough energy to power 811,000 households annually.
Cities across the United States inked deals of all types and sizes, a positive shift toward renewable energy that cities must continue to pursue in order to achieve broader sustainability goals. Here are four noteworthy ways that local governments purchased renewable energy in 2020:
1. Signing Deals of Record-Breaking Sizes
The biggest solar and wind deals ever signed by U.S. cities were both announced in 2020. In April, just after announcing its Climate Action Plan, Houston signed a retail contract for an estimated 492 MW of solar capacity, the largest ever solar deal signed by a city. Five months later, the Los Angeles Department of Water and Power added the Red Cloud Wind Farm in New Mexico to the city’s renewable energy portfolio through a 331 MW off-site physical PPA.
These two examples are representative of an overall positive trend: the average size of local government deals in the United States almost doubled from 14 MW in 2015 to 26 MW in 2020. Off-site physical PPAs, which accounted for over 40% of all deals by local governments in 2020, helped make this possible by allowing cities to buy large amounts of electricity and renewable energy certificates (RECs) at agreed-upon prices for fixed periods directly from solar or wind farms. These large-scale, off-site purchases can help cities plan better by creating certainty about future energy costs, moving cities significantly closer to their goals of achieving 100% renewable energy.
2. Collaborating with Regional Partners
While some cities can get clean energy through off-site physical PPAs, some local governments don’t have this option. As a result, they have taken a different path: working with utilities to access large-scale renewable energy projects they could not otherwise. In 2020, the City of Charlotte, North Carolina, signed a contract to purchase electricity from a 35 MW local solar project through Duke Energy’s Green Source Advantage. This program, an example of a utility green tariff, allows Charlotte to negotiate directly with a renewables developer on pricing and timing, after which Duke Energy then delivers the energy to the city. In Arizona, the City of Tempe, the Town of Gilbert and the Salt River Pima-Maricopa Indian Community joined Salt River Project’s green tariff program separately to get a small portion of the energy from a 300 MW local solar facility. In Virginia, Arlington County partnered with Dominion Energy to purchase 32% of the energy generated from a new 120 MW solar farm, while Amazon purchased the remainder.
In addition to working with their utilities, some cities are establishing public-private partnerships with other local institutions to buy electricity. The City of Nashville and Vanderbilt University joined the Tennessee Valley Authority’s green tariff program, Green Invest, to build and buy solar from a 100 MW local project. By joining together, the city and the university were able to not only support each other through the procurement process, but also leverage their collective buying power to meet climate goals more affordably and efficiently.
3. Incorporating Job Training and Social Benefits
Local governments have begun including equity considerations and job training programs in their renewable energy deals, showing that renewables can help governments meet social and economic goals, in addition to their climate goals. For instance, Denver, Colorado has reserved at least 20% of the solar power from its nine upcoming community solar projects for low- and moderate-income residents, which will lower their energy bills. Denver is also developing an associated paid training program, which will employ about 20 residents during construction.
The City of Madison, Wisconsin took a similar approach with its 240 kilowatt solar array on the local Metro Transit building — the largest in the city’s history. This project was built by GreenPower, a full-time employment and job training program that teaches residents with little experience to install solar panels, allowing some participants to secure permanent employment in the industry. Since the program’s creation in 2016, diverse groups of trainees have installed more than 17 systems on city facilities. Combined, those installations amount to about 80% of the 1 MW solar capacity added by the city to date.
4. Using Creative Financing Approaches
In the face of the COVID-19 crisis and ensuing financial fallout, some local governments and regional authorities have turned to innovative financing approaches to help move their deals toward completion. One example is the Washington Metropolitan Area Transit Authority (WMATA) in the Washington, DC region. Facing subsidy cuts due to COVID-19, WMATA decided to lease 13 football fields’ worth of space at four of its rail stations for the installation of 12.8 MW of solar on carports and canopies. With this deal, WMATA isn’t just hosting one of the largest community solar projects in the United States but has also created a funding stream for itself through 2047.
Other governments, such as Knox County in Maine, chose to use federal funds received through the Coronavirus Aid, Relief, and Economic Security (CARES) Act in support of renewable energy. After considering a solar farm for years, the county was finally able to purchase its own 5-MW solar facility right next to the Knox County Regional Airport via a $17.9 million grant, setting itself up for an almost 70% return on investment that will help the airport become financially independent from taxpayers.
Keeping Up the Momentum Post-COVID-19
Cities and counties across the United States have purchased unprecedented amounts of clean energy over the last year, in spite of enormous difficulties due to the COVID-19 pandemic. These examples from across the country — from cities large and small, areas rural and urban — highlight both the ambition and resourcefulness of local governments in their continued fight against climate change. Signing larger contracts helps local governments achieve their climate goals more efficiently, while tapping into diverse funding sources makes more clean energy projects possible. Partnering with utilities and local buyers, in turn, can help cities access large-scale projects and enable greater economic and climate benefits. Last but not least, including social and equity considerations in renewable energy plans can also create jobs and provide support for low- and moderate-income communities.
Most importantly though, these deals prove that cities and counties across the country have made significant progress on climate in a time of uncertainty. This made 2020 a landmark year for renewable energy in the United States, but there is still work to be done. Local governments must keep up this momentum and remain undaunted in their push for a cleaner, more sustainable world post-COVID-19.
This blog was originally published on WRI’s Insights.
Yuning Liu is a Senior Associate on the City Renewables Accelerator team at Rocky Mountain Institute.
Tatsatom Gonçalves is a Research Analyst at WRI’s Energy Program.
