What Happened?
Cities are investing in large-scale renewable energy developments to take advantage of income generated from the assets. Municipalities will pay landowners a lump sum payment in exchange for access to the profits from wind, solar and biomass energy leases.
Goal
Cities are purchasing the entitlement to the income from the renewable energy leases, while the landowners maintain control of the property. The city can enjoy a steady stream of income from the development, while the landowner has immediate access to capital to reinvest in other properties or development projects, Farmers Weekly reported.
Furthermore, landowners can benefit from a single capital gains tax on the lump sum, rather than a higher income tax rate on the stream of income generated from the lease. Cities are investing in renewable energy leases in instances of large-scale developments with long leases of more than 20 years.
Small Scale Solar
While cities may invest in large-scale renewable energy developments to boost revenue streams, many are also working to increase access to clean technology – such as solar - at the individual household level. Because solar technology has high upfront costs for installation, many low-income neighborhoods are unable to take advantage of the assets to reduce consumption and energy costs. A lack of homeownership and low credit scores can be serious hindrances to renewable energy adoption.
According to Renewable Energy World, there are three approaches municipalities can take to ensure solar technology is incorporated into low-income communities:
- Group Discount Programs The Solarize model helps a low-income community purchase solar panels at a lower price when bought in large quantities. If a neighborhood can generate enough interest among residents to invest in solar technology, the cost per individual household drops significantly.
- Affordable Leases
Some renewable energy providers are working with banks to keep leases on the assets low, often requiring no credit check. Others are also leveraging solar tax credits to further incentivize investments in household energy efficiency products. The federal Residential Renewable Energy Tax Program provides a 30 percent credit to residents that acquire at least half their household energy from solar technology.
- Community Solar Installations Even if residents can purchase solar technology, many buildings are not suitable for solar installations due to a number of barriers such as roof access, angles or density of trees nearby. Community solar installations enable local residents to buy solar power that is produced in a large development, such as a solar farm.
Community solar installations make it possible for residents to utilize clean energy without the upfront costs of installation or meeting building requirements. Furthermore, they often do not require credit checks to buy into community installation projects. Many communities are adding solar farms to former brownfields or landfills to make better use of available land while generating clean energy options.
The New Face of Energy
Gov1 has reported on a variety of energy initiatives designed to increase savings and support long-term sustainability strategies.