The native solar energy development future has never looked so bright, so fast. Thanks in large part to the impact of the Inflation Reduction Act, tribes can tap hundreds of millions of dollars for new energy projects, along with large federal loans with easy terms.
According to the White House, “The Inflation Reduction Act provides additional investments for the Tribal Energy Loan Guarantee Program, and increases loan guarantees for Tribal energy development from $2 billion to $20 billion.”
However state programs are also stepping up tribal support for alternative energy, like the California Energy Commission (CEC), which approved $31 million last fall for long-duration energy storage. The state’s Self-Generation Incentive Program (SGIP) is paying for half of a new project by Scale Microgrid Solutions for a 1.5 MW rooftop solar and a 6 MWh storage system for the Soboba Band of Luiseño Indians, located in Riverside County, California.
What this means for solar energy system providers, installers and EPCs is a chance at securing new — and hopefully repeat — business with increasingly well-advised, well-funded tribes. This is becoming easier as a result of expanding project development funding and matchmaking services from non-profit organizations like Grid Alternatives’ Tribal Solar Accelerator Fund (TSAF).
Non-profits tap corporate philanthropy
TSAF was formed in 2018 and has served 65 tribes awarding grants of up to $200,000 for solar projects situated on tribal authority land, and $50,000 grants per year for tribal energy plan proposals. As of the end of 2022, the fund had supported 751 kW of solar systems at 87 solar installations, including 27 grantees from 12 states, representing $3.2 million in grant awards. Among 2022 donors to the fund were Sempra Energy, General Motors, Wells Fargo, the Bezos Earth Fund, Intuit Foundation, Illumina and Grove Foundation.
Part of the mandate of the TSAF is to help tribes that are at ground-zero in terms of planning for a solar and/or storage project.
“Not all tribes are shovel ready to start building their renewable energy infrastructure. The purpose of our energy plan grants is to provide help for those tribes just starting out, coordinating with a handful of folks and decision makers to envision what renewable energy looks like,” says Tanksi Clairmont, TSAF’s managing director. “We also help hire consultants or energy expert that can help them think through the process.”
Tribal energy companies emerge
Tribal solar projects usually include heavy emphasis on local labor training and on helping to foster native energy management teams. While such assistance may require a lengthier project term, the upside can be an appreciative customer with substantial need for additional projects. There are also benefits that arise from the special legal status of tribal lands.
“Tribal partnerships offer business advantages not found anywhere else. With a tribal partnership you could enjoy lower taxes, favorable zoning, reduced liability, manageable labor laws and many more benefits,” according to the Migizi Economic Development Co., which is operated by the Saginaw Chippewa Indian tribal council, in Mt. Pleasant, Michigan.
Native solar companies also are very focused on energy equity. “The term ‘equity’ gets used a lot in the cutting-edge conversations around climate solutions and usually means ‘fairness.’ What we are doing is trying to develop equity for native communities in the business sense, meaning ‘ownership’ of renewable energy assets,” says says Matt Renner, VP of Seneca Solar, owned by the Seneca tribe in New York.
“A tribally owned company like Seneca Solar flips the old, extractive model of traditional energy development to focus on equitable outcomes for Native people. Tribally owned solar development companies are working toward an equitable renewable energy transition, rather than one that re-creates the systems that have led to the current climate crisis and economic inequality,” says Renner.
Partnerships between native energy companies and private sector solar companies is one way that tribal expertise will grow and that non-tribal installers and EPCs can break into the tribal solar market.
“With more Native communities participating in solar development, there’s a new opportunity now for solar companies across the U.S. to partner with tribally owned companies for all phases of the solar development process,” says Renner.
“Seneca Solar’s partnership with Alternative Energy Development Group (AEDG) provides an excellent example of these mutually beneficial partnerships. By working with tribally owned companies, private companies can center their work on climate justice and boost their ESG and DEI goals,” Renner adds.
AEDG has a $316 million portfolio of 102 commercial and industrial projects spanning 485 operating sites across 23 States. AEDG also is the managing partner for the $46M Alternative Energy Infrastructure Projects Fund I, L.P. (AEIP Fund I).
AEDG and Seneca Solar have collaborated since early 2022. Previous projects include conducting an extensive feasibility assessment for a Fortune 100 global company on a 10 MW solar project in Papua New Guinea, which President Biden recently planned to visit. The project would be built, owned, and operated by local Indigenous communities.
Tribal utilities emerge
A growing number of tribes are moving beyond merely adopting solar and storage and forming native solar companies, to developing tribally owned and managed electric utilities. U.S. Secretary of Commerce Gina Raimondo announced in April that the Department’s Economic Development Administration is awarding a $4 million grant to the Fort Mojave Aha Macav Power Service to develop a 2.3 MW solar system for the Fort Mojave Reservation, located in several states along the Colorado River. The project is expected to create or retain nearly 50 jobs, according to grantee estimates.
“[Fort Mohave] is one of only a handful of tribes in the United States that have established a tribally owned and operated electric and natural gas utility,” according to the tribe.
Another tribal utility, Pechanga Western Electric (PWE) — California’s first native utility — formed by the Pechanga Band of Indians in Temecula, CA, is working to clarify new IRS policy on Investment Tax Credits (ITC) as it applies to tribal solar developments under the IRA. Tribes are seeking to be able to take advantage of tax credits, be they for the tribe itself, a tribal energy company, or a third-party tax equity investor.
A recent letter to the IRS by Pi-Ta Pitt, general manager of PWE states:
“We request that all the costs of the upgrades, including systems study costs, and wholesale distribution system upgrades at substations or further along the distribution system, should be included in the direct payments/tax credits. These upgrades are conditions to the tribe’s ability to build many of its planned energy projects.”
New Mexico is likely soon to have a tribal utility, as well, given a bill now before the state legislature. SB-165 introduced by Senate Democrats Carrie Hamblen, of Las Cruces, and Liz Stefanics, of Cerrillos, would permit the formation of utilities much like California’s local/regional Community Choice Aggregation (CCA) system, including those that would be operated for and by tribes.
Charles W. Thurston is a contributor to Solar Builder.
Tags: Financing, ITC, storage, Tribal Communities, Tribal Energy Loan Guarantee Program, utility-scale
