6. Top Biden Picks Yellen, Deese and Regan Will Strengthen Environment for Solar Tax Equity Investments
YELLEN INTO THE VOID
By Omar Blayton, Chief Financial Officer
In the sixth installment of our Banking on Solar series, we examine how a trio of top Biden picks will strengthen the solar market. To start at the beginning of the series, read Banking on Solar.
Renewable energy has grown steadily over the last four years, even without support from federal agencies. In the midst of the current economic recession, renewable energy - and solar in particular - can play a key role in revitalizing local economies, while continuing to fight climate change. To capture the full benefit that solar and renewable energy can provide, we need strong, experienced leadership in the executive branch.
Three encouraging picks in the new Biden administration have the experience to provide this leadership, making investing in solar energy through tax equity even more attractive. The nominations of Janet Yellen for Treasury Secretary, Brian Deese as head of the National Economic Council, and Michael Regan to lead the EPA portend a brighter future for the solar industry and its ability to optimize and democratize its impact across the country. Here’s how we think it will play out:
Yellen has often spoken of the importance of mitigating climate change and will likely welcome the opportunity to use the Treasury to achieve Biden’s dual aim of climate protection and economic growth. Through the Treasury, Yellen will be responsible for administering any tax credits and grants for solar projects. Providing clarity and certainty around the process and regulations regarding the allocation of tax credits and cash funds will go a long way to promoting and stabilizing an already growing solar energy industry. This stability with make it easier for firms like Sunwealth to democratize the benefits of its solar project through living wage jobs and power bill savings.
Our solar installation at Christ the King Regional High School in Queens, NY delivers over $400K in lifetime energy savings to the school and provides 11 lifetime person job years for local solar workers.
Yellen can also address climate change through the Financial Stability Oversight Council. As chair, she can play a critical role in requiring banks to account for the threat of climate change to the financial system. The Council can seek enhanced regulation surrounding banks’ efforts to mitigate the threats of climate change to their financial integrity, which would further incentivize banks to increase investment in renewable projects. Solar Tax Equity investment can serve this purpose while still providing banks with superior risk-adjusted after-tax returns.
Deese comes to the NEC as a climate change expert. The former Obama aide and head of Sustainable Investing at BlackRock is expected to use that expertise to inform his policy recommendations regarding stemming the current economic crisis. One way to do this is to direct a portion of any new stimulus money towards renewable energy. This stimulus can fund job training programs, loans or grants for community-based solar projects and other incentives for disadvantaged communities. Any of these stimulus measures would help achieve the dual purpose of combating climate change and promoting economic growth as they provide significant tailwinds for the solar industry.
Sunwealth’s solar project for Dorchester Bay Economic Development Corporation provides clean energy to help power the Bornstein & Pearl Food Production Small Business Center, a multi-tenant food manufacturing facility in Dorchester, MA.
Regan will likely play the role of a more pure play environmentalist, with a focus on environmental justice and inclusion. As head of the North Carolina Department of Environmental Quality, Regan negotiated a multi-billion-dollar cleanup settlement with Duke Energy and established an environmental justice advisory board. His work for environmental protections for disadvantaged communities, rumored to be a primary reason why he won the post, will likely continue at the EPA. Environmental justice is a key component to Sunwealth’s business model, so we are excited to see what initiatives Regan will promote during his tenure.
Takeaway: The nominations of Yellen, Deese and Regan are great signs for distributed solar energy investors like Sunwealth and our tax equity partners. Filling three key roles with climate allies provides a strong indicator of the Biden administration’s interest in taking aim at climate change while promoting sustainable and inclusive economic growth. Sunwealth and the community-based solar projects we finance are uniquely positioned to play a key in addressing all of these goals. We look forward to working with our investor and development partners to maximize the potential of what local community-based solar can do.
Read the next post in our Banking on Solar series: Solar Investment Tax Credit Extension.
Return to the homepage to check out our other Banking on Solar blog posts.
Want to learn more about solar tax equity investing? Reach out to Darreck Mitchell at darreck@sunwealth.com.
Omar Blayton is Chief Financial Officer at Sunwealth. He has over a decade of experience in renewable energy investment, finance and management. Omar is on the Board and serves as Treasurer of the Solar Business Association of New England (SEBANE), whose membership includes the best small- and medium-sized solar installers in the Northeast. He also serves on the Finance Committee for the Friends of the Public Garden.