By Ben Sosne
The Berkshire Innovation Center recently installed this array of solar panels at its building in the William Stanley Business Park of the Berkshires in Pittsfield.
This past August marked the one-year anniversary of the Inflation Reduction Act (IRA), which mobilized an estimated $370 billion in federal incentives toward the goal of shifting the US grid to 80 percent clean energy and cutting climate pollution by 40 percent by 2030. This has, among other things, prompted a manufacturing boom for clean energy technologies, supercharged the shift to EV adoption, and incentivized the decarbonization of buildings and the electricity. It has also pushed state governments, including the Healey-Driscoll Administration here in Massachusetts, which has envisioned a climate corridor from the Berkshires to Barnstable, to vigorously compete for federal funds.
At the Berkshire Innovation Center, we are pushing members and partners to seize all available opportunities to make Berkshire County a leader in the clean energy transformation, as well as all opportunities to bring the federal dollars back home. We are also walking the walk and taking advantage of the incentives to reduce our carbon footprint and our monthly energy bill.
Governmental incentives, like those offered by the IRA, are designed to spur acceptance and deployment of technology. The technology itself often also creates its own cost savings. Occasionally, technology and incentives align to create extraordinary savings. That’s happening right now with clean energy.
Companies like Amazon, WalMart, and Citibank are embracing clean energy to reduce their carbon footprint, but also because it’s actually cheaper now too. Solar panels, the predominant clean energy technology, are silicon-based. Like most such technologies, they become more efficient and less expensive over time, so their economics get better. Meanwhile, finite fossil fuels trend upward long term. Right now, clean energy may be at a cost-benefit peak. This is due to a remarkable intersection of lower costs and, most importantly, extraordinary incentives.
“In 31 years in energy, I’ve never seen incentives like these. The amount of money and breadth of programs is simply unprecedented,”
said Malcolm Smith, the CEO of Sustaine Inc., a BIC member company that helps businesses get cheaper and cleaner energy.
Smith described some of the key incentives, as well as how they particularly help Berkshire County. To begin with, every business can claim a tax credit for 30% of energy investments. That increases to 40% in low-income areas, like the BIC’s location in Pittsfield. Better yet, for non-profits like us that don’t pay taxes, a direct payment from the IRS is newly available.
“Any building can get 30% to 40% of an energy project paid for by the federal government,”
Smith added. “But it gets better, especially locally.” Smith went on to explain that 50% grants are available through the Department of Agriculture’s Rural Electrification for America Program. The so-called “REAP” grants are for rural small businesses only. All of Berkshire County is designated rural, Smith explained, and while “small” is complicated, a good litmus test is under 500 employees and $30M annual revenue.
REAP grant applications are competitively scored, he added. Businesses in distressed zones according to USDA get a 15% bonus, which is compelling. That turns a C+ grade into an A. Moreover, most of the distressed zones in Massachusetts are in urban areas–which aren’t eligible for REAP grants. But Berkshire County has multiple distressed rural zones, including most of Pittsfield, Adams, North Adams and around Stockbridge.
“Here’s the really exciting part,” Smith added.
“The REAP grants and the tax credits work together. Many companies are seeing 30-40% reductions in their energy costs, after incentives pay for 65-70% of their project. That could be happening all over Berkshire County–if more businesses become aware of the opportunity.”
One area business already pursuing this advantage is Excelsior Integrated in Lee. Rooftop solar panels have offset half of Excelsior's usage for years. Company owners David and Christopher Crane have been looking for ways to reduce their carbon footprint even further. With today’s rich incentives in mind, Excelsior is moving now to double their solar coverage, and eliminate a significant portion of their remaining carbon footprint—all while reducing their energy bills, too.
One challenge with clean energy is the plethora of solutions available. Solar photovoltaics are popular, but other options include solar thermal, combined heat and power, battery storage and a wide array of efficiency measures for space heating and cooling, lighting and major equipment. Tax credits and grants apply to all of them, often in different ways. So finding your most cost-effective solution can get complicated quickly.
At the BIC, Sustaine helped us navigate the myriad of options several years ago. We provided our energy bill and Sustaine calculated what each energy option and incentive was worth to us. Their software generated an energy scorecard, revealing that offsite solar was the best start for us–simple but effective. With a little paperwork, we began cutting energy costs by 10%.
When the IRA was passed last year, we heard that direct payments – in lieu of tax credits – were now available to help non-profits transition. This was a massive shift, and a rooftop solar project suddenly made tremendous financial sense. And so, this Fall, Solect Energy of Hopkinton, MA, will be installing a 75 kw solar array atop the BIC. It will generate 40% of our energy, and including financing by Berkshire Bank, we’ll be saving about 24% compared to our old energy bill.
“We’re proud to help enable this important clean-energy project for the BIC, which can serve as a model for other organizations looking to move to cleaner, greener energy sources. Thanks to federal, state and local incentives, it’s never been easier for organizations to leverage clean energy projects to drive a benefit to their bottom line, the environment and community,”
stated Gary Levante, Berkshire Bank’s senior vice president of corporate responsibility.
Because the BIC is a non-profit, we aren’t eligible for a REAP grant. That said, we still see immediate cost savings and get another key advantage: budget certainty. With the energy from solar, we don’t have to worry about rising energy costs for the useful life of the project, which is 25-30 years. In the last decade, those costs have risen 4% per year. If that continues, we’re insulated from it.
At the BIC, we work hard to make sure our members and regional partners are well positioned to access any available public funds. As a rural area in an urban-dominated state, this can sometimes be challenging. At other times, our rural setting out on Commonwealth’s western edge plays to our advantage. REAP grants make this one of those occasions.
Moreover, relatively high energy costs in Berkshire County make alternative energy all the more cost-effective for us. Coupled with today’s extraordinary incentives, local businesses have the opportunity to lock in lower costs for decades to come. Indeed, forward-looking Berkshire businesses are turning a current deficit into a long-term advantage–especially those that act decisively.
“It’s likely that something this good can’t last,” cautions Malcolm Smith. “The REAP grants are awarded quarterly, and Massachusetts has about $2M per quarter to distribute. That’s terrific, but the program is only funded through September of 2024. After that, we anticipate less generous incentives–quite possibly a great deal less.”
Governor Healey speaks of a climate corridor stretching from the Berkshires to Barnstable. Her administration is competing to bring previous federal dollars back to Massachusetts. The Berkshires has an opportunity to be a leader, and an immediate opportunity to leverage available federal dollars to move to cheaper and cleaner energy. Let’s act and act fast!