How Microgrids Fare in the Biden Infrastructure Plan

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With weather and climate-related disasters rising, President Joe Biden wants to bolster infrastructure resilience by spending billions on energy storage, renewable energy and electric vehicles — all components of microgrids.

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Biden’s proposed infrastructure plan calls for spending $2.3 trillion over eight years as well as extending clean energy tax credits and adding new ones.

“The American Jobs Plan will lead to a transformational progress in our effort to tackle climate change with American jobs and American ingenuity,” Biden said March 31 in Pittsburgh. “[It will] protect our community from billions of dollars of damage from historic superstorms, floods, wildfires, droughts year after year by making our infrastructure more secure and resilient.”

Money for microgrids in resilience spending?

In an area that could directly affect microgrid development, the plan would spend $50 billion to improve infrastructure resilience, including in communities vulnerable to climate-driven disasters, according to a summary of the plan that is short on details and doesn’t specifically mention microgrids.

Some of that funding would increase spending for the Federal Emergency Management Agency’s Building Resilient Infrastructure and Communities (BRIC) program, a grant source some towns and cities plan to use for microgrid development.

The BRIC program this year is offering $500 million in grants. The program’s annual funding varies depending on the number and severity of disasters each year.

Other programs that would see increased resilience-related funding under the infrastructure plan are the Department of Housing and Urban Development’s Community Development Block Grant program, new initiatives at the Department of Transportation and a tax credit to provide incentives to low- and middle-income families and to small businesses to invest in disaster resilience, according to the plan summary.

Plan offers new, extended tax credits

In an area that could affect microgrid components, Biden’s plan includes a 10-year extension of production and investment tax credits for renewable energy generation and fuel cells. The plan extends the tax credit to energy storage. It also creates a tax incentive for producing hydrogen using carbon-free electricity.

Extending the tax credits, which are being phased out, would provide a major boost to the already fast growing wind, solar and fuel cell sectors, Morgan Stanley analysts said April 1. It could also give customers and regulators greater confidence in long-term decisions that favor rapid growth in clean energy, they said.

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The plan would also provide a direct-pay alternative to the tax credits. Renewable energy advocates have been pressing for direct-pay credits, in part, because its become harder to find third-party tax equity investors, especially for smaller developers. The inability to take advantage of the tax credits has stalled or killed otherwise viable projects.

Pointing to widespread power outages in Texas in mid-February, the infrastructure plan calls for spending $100 billion for renewable energy and transmission development.

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The summary said the plan would offer state, local and tribal governments clean energy block grants that can be used to support clean energy, worker empowerment and environmental justice programs.

The plan proposes creating a $27 billion Clean Energy and Sustainability Accelerator to spur private investment in distributed energy resources, retrofits of residential, commercial and municipal buildings, and clean transportation.

Biden proposes $35 billion in climate-related research and development, including utility-scale energy storage.

Under the proposal, the Biden administration intends to use “smart, coordinated infrastructure permitting to expedite federal decisions while prioritizing stakeholder engagement, community consultation, and maximizing equity, health and environmental benefits.”

As part of the Biden administration’s focus on environmental justice, the plan said that 40% of the “benefits” of the climate and clean infrastructure investments go to disadvantaged communities.

Electric vehicles

The plan calls for spending $174 billion to spur the market for electric vehicles (EVs), partly on point-of-sale rebates and tax incentives for US-made EVs.

It would set up grant and incentive programs for state and local governments and the private sector to build a network of 500,000 EV chargers by 2030. It also calls for electrifying at least 20% of school buses, 50,000 municipal transit buses and all federal vehicles.

Nothing for the distribution system?

Biden’s plan appears to fall short in its support for microgrid development by offering nothing to bolster the distribution system, according to Kay Aikin, founder and CEO of Dynamic Grid.

On balance, the proposal is a step in the right direction, but it doesn’t include long-term planning, Aikin said. It throws money at big-ticket items instead of looking at the core problems like distribution systems that are needed to support beneficial electrification and distributed energy, she said.

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Congressional outlook

Many elements of the infrastructure package are similar to bills passed or supported by Congressional leaders.

“I commend the president for including a national Clean Electricity Standard in his plan that meets the same aggressive targets of the CLEAN Future Act and the investments necessary to make it a reality,” said Rep. Frank Pallone Jr., D-N.J. Besides requiring utilities to get their electricity from carbon-free sources by 2035, the CLEAN Future Act includes $1.5 billion for microgrid development.

Another bill introduced in the Senate on March 25 would allow for direct payments of investment and production tax credits in line with Biden’s proposal on the issue.

Biden would pay for the infrastructure plan by raising various corporate taxes and reducing subsidies and credits for the fossil fuel industry, which the administration said would raise about $2 trillion over 15 years. The proposed tax hikes drew Republican criticism.

Facing likely Republican opposition, Democrats may need to pass any legislation based on Biden’s plan using budget reconciliation, a process used to match federal spending with revenue. The process allows legislation to pass the Senate with a simple majority and cannot be filibustered. To qualify for the process, the legislation must change taxation or spending and cannot increase the federal deficit after 10 years.

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