Federal investments provide opportunities for tribal communities

When the Infrastructure Investment and Jobs Act (IIJA) was passed in 2021, Congress made $13 billion available to invest directly in tribal communities. The Inflation Reduction Act (IRA), passed the following year, made at least another $720 million available for direct investment in tribal communities. This was just the tip of the iceberg, as dozens of federal programs under the IIJA and IRA made additional funds available to tribes through competitive grants and other funding mechanisms. In recent months, we have seen that many federal programs funded through IIJA and IRA are opening up incredible opportunities for tribal communities that will pay off for decades to come, but tribal communities must be well-prepared to take advantage of them. This article discusses just a few recent developments in Tribal financing opportunities in the clean energy space.

The IRA, potentially valued at $36 billion over ten years, has created two new tax-credit mechanisms that extend the full value of IRA energy tax benefits to organizations with no or little tax liability. This innovative mechanism, known as “optional payment” or “direct payment,” allows tax-exempt entities, including tribes, to receive tax benefits in the form of tax refunds. In February, the U.S. Department of Energy (DOE) outlined how this program will work to benefit tribes in its Resource Guide for Tribal Nations and Native Communities. On March 5, 2024, the U.S. Department of the Treasury published final regulations implementing the program. The Treasury Department is currently working on separate regulations that will provide greater transparency and flexibility for relevant entities that co-own clean energy projects and would like to benefit from direct compensation.

On April 4, 2024, the U.S. Environmental Protection Agency (EPA) announced it would invest $14 billion in IRA funds through the National Clean Investment Fund to support awards to three organizations. These organizations will, in turn, establish national clean finance programs that provide accessible and affordable financing for clean technology projects. The largest award went to the nearly $7 billion Climate United Fund, which will invest in “harder-to-reach market segments such as consumers, small businesses, small farms, utilities and schools.” Climate United Fund has committed to providing at least 60% of its investments to low-income and disadvantaged communities, 20% to rural communities and 10% to tribal communities, supporting projects such as energy efficiency home retrofits, electrification retrofits and solar installations. The Green Capital Coalition received $5 billion and Power Forward Communities received $2 billion. Both organizations have committed to making the majority of their investments in low-income and disadvantaged communities.

On April 22, 2024, EPA announced a $7 billion grant through the Solar for All program, also funded by the IRA, that will deliver residential solar projects to more than 900,000 households nationwide. More than $500 million in funding has been awarded to six tribal projects managed by Midwest Tribal Energy Resources Association Inc. (benefiting 35 tribes), Three Affiliated Tribes (serving tribes in five states), Tanana Chiefs Conference (benefiting tribal people throughout Alaska), Oweesta Corporation, Hopi Utilities Corporation and GRID Alternatives. Recipients of Solar for All grants are tasked with developing long-lasting solar programs to benefit tribal communities. For example, GRID Alternatives will partner with Tribal Nations in five states – along with partners that include the Alliance for Tribal Clean Energy, Native CDFI Network, Native Renewables and tribal and community colleges – to ensure that 50 percent of the installations and work development comes from local tribal labor.

Among recent announcements regarding federal funding for tribal energy priorities, we have seen a number of investments through clean energy accelerators. An accelerator is an organization or program that provides startups with support – often in the form of guidance, technical assistance, marketing, financing and/or access to investors – to help companies become independently viable. The accelerator may be financed from public or private funds.

In May 2023, the National Science Foundation awarded a grant to the Southern California Tribal Chairmen’s Association to lay the groundwork for a Tribal Energy Innovation Accelerator. The accelerator will “facilitate a combination of technical and non-technical collaborations to encourage new products in clean energy equipment and tribal enterprises, more resilient power generation systems, and workforce training services.” The project, funded under the CHIPS and Science Act, is intended to complement other tribal energy activities funded by the IRA.

In Alaska, the Launch Alaska climate technology deployment accelerator will use a $3.4 million Energyshed grant from the Department of Energy to support investments of at least $10 million in Southeast Alaska and the Arctic Northwest. The broader Launch Alaska program aims to support $1 billion to develop clean energy projects through 2030. But many of Launch Alaska’s beneficiaries – including the Alaska Native villages of Kivalina, Shungnak and Kotzebue – are remote tribal communities that rely on generators for power. diesel. operate their microgrids. Thanks to the Energyshed grant, at least three new projects will receive committed public and private financing.

The nation’s tribal energy accelerator, the Tribal Solar Accelerator Fund, has been able to provide matching financing to tribes that need cost-sharing financing, including outstanding Department of Energy matching funds requirements, thereby leveraging IRAs and other financing opportunities. The Fund administers a Tribal-led grant program that supports solar projects in Tribal communities across the country, offers Tribal solar grant opportunities for Tribal communities and Tribal-led nonprofit organizations, and leadership development programs.

The IRA itself has also established an EPA Clean Technology Accelerator to support distributed energy projects, net-zero buildings, and zero-emission transportation. Unlike the three accelerators identified above, the Clean Communities Investment Accelerator (CCIA) does not itself invest in or support start-up companies. Instead, CCIA invested $6 billion through five organizations “to establish centers to provide financing and technical assistance to community lenders working in low-income and disadvantaged communities, providing an immediate path to implementing projects in these communities.” The five CCIA funding recipients include the Native CDFI Network, which received $400 million to enable 63 community lenders – including 58 Native CDFIs – ​​to provide technical assistance, technical assistance financing and capitalization financing to expand clean energy lending opportunities in Native communities. According to the EPA, each selected person will provide capitalization financing (typically up to $10 million per community lender), technical assistance subgrants (typically up to $1 million per community lender), and technical assistance services so that community lenders can provide financial assistance to implement projects there, where they are needed most.

These federally funded projects, of course, are just a sample of the many initiatives underway across the country aimed at implementing clean energy infrastructure in tribal communities. For more information about funding opportunities available to support clean energy projects in tribal communities, we suggest visiting the following DOE website, which provides information on opportunities offered by DOE and other federal agencies, as well as several non-federal entities: