Massachusetts to recharge solar programs for low-income residents with $156M federal grant

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A $156 million federal grant is expected to fund a transformative investment in residential solar for low-income households in Massachusetts, advocates and officials say.

The U.S. Environmental Protection Agency’s Solar for All program awarded Massachusetts the money for its plans to provide zero-interest loans, financial subsidies, and technical assistance to solar projects benefiting low-income households and public housing facilities. The state’s proposal was largely designed to take advantage of existing programs and resources to maximize the impact of federal funding. 

The grant is the largest any New England state received from the program, but well below the $250 million Massachusetts requested. Still, the state expects to go ahead with all the initiatives outlined in its application, though planners are now working to reallocate money across intended programs to maximize impact.

“We were shooting for the stars,” said Elizabeth Mahony, commissioner of the state Department of Energy Resources. “This was an extremely competitive award process.”

Solar for All is a $7 billion program created in 2022 by the Inflation Reduction Act, an economic stimulus bill that included $369 billion in spending on energy and climate change programs. Solar for All will give grants to states, territories, nonprofits, tribal governments, and municipalities to increase solar development with the goal of reducing greenhouse gas emissions, creating energy savings for overburdened households, and building markets for renewable energy businesses. The grants will target low-income and other marginalized communities where renewable energy has historically been less accessible.

Last month, the EPA announced the selection of 60 applicants for grants ranging from $25 million to $250 million. Only five grantees received larger awards than Massachusetts; 22 received the same amount. 

Massachusetts’ proposal is structured around initiatives in three program areas: small residential buildings, multi-family housing, and community solar. The programs will be administered by a coalition of agencies including the Massachusetts Clean Energy Center, the Boston Housing Authority, and MassHousing. 

“They got a really strong coalition of major players involved,” said Kyle Murray, Massachusetts program director for climate nonprofit the Acadia Center. “While it’s disappointing that we did not get the full award, I cannot stress enough how much this money is going to be a game-changer for getting solar to low-income and disadvantaged communities.”

The small residential portion of the programming — originally slated to receive $40 million — includes two main initiatives. The first would provide low-income households with zero-interest loans to pay for solar panels. The program would be modeled after the MassSave Heat Loan program and the Mass Solar Loan, which sunsetted in 2020, having made some 3,000 loans to low-income borrowers for the installation of solar panels.

“We’re going back to that and reviving it because it was quite successful,” Mahony said. 

The initial proposal also allocated $65 million to programs that would install solar panels on affordable housing and public housing, with the benefits flowing to the residents. In housing developments where tenants pay for their own utilities, they would receive savings from lower electricity bills. In housing where utilities are included in the rent, that benefit could be something other than energy bill savings: free wi-fi or improved facilities, for example. 

Another provision of the Inflation Reduction Act will further amplify the financial power of installing solar panels on public and affordable housing. In the past, nonprofits were not eligible to receive clean energy tax credits because they paid no taxes. Now, clean energy tax credits are available to nonprofits in the form of a direct payment. 

“It means we can then bring more federal resources into the state of Massachusetts,” said Joel Wool, deputy administrator for sustainability and capital transformation for the Boston Housing Authority, which will be administering the public housing portions of the grant programming statewide. “Every dollar that we can save on operating costs in public housing is a dollar we can put into making housing better.”

The community solar segment of the plan builds upon the state’s existing Solar Massachusetts Renewable Target, or SMART, program. All community solar projects receiving grant money will have to meet SMART’s existing requirement that at least half of the project’s offtakers are low-income residential customers. Additional points will be given to projects that offer deeper savings, serve a higher percentage of low-income households, or have members — such as nonprofits or affordable housing facilities — that benefit the community.

At the same time, the state is in the process of updating SMART to meet current environmental and economic needs. The Solar for All community solar program is likely to be tightly interwoven with these changes, Mahony said. 

“We’re really leaning in hard on SMART when it comes to community shared solar that serves low-income customers in a way we never have before,” she said. 

Smaller pools of money in the original plan were to be used to fund upgrades — such as roof replacements or wiring updates — needed to prepare buildings for solar panels, and to provide outreach and community engagement, workforce development, and technical assistance. 

In addition to the environmental benefits and the savings for low-income residents, backers of the plan expect the influx of funds to have a long-term effect on the growth and stability of all facets of the renewable energy industry. 

“That really enables the commonwealth and surrounding states to make those investments in their workforce and their supply chain, knowing that there will be demand for that equipment and those services in the years ahead,” said Maggie Super Church, director of policies and programs for the Massachusetts Community Climate Bank, a part of MassHousing. 

The state is now in the midst of negotiating the final grant contract with the EPA, a process it expects to conclude this spring. The goal is to start rolling out the first programs in the fall. 

“The numbers are still striking for what we can do,” Mahony said. “It’s just going to look a little different than how we laid it out in the first place.”

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