Google’s latest climate plan? Skip grid backlog, mimic community solar

Corporations have become the biggest driver of new clean energy projects in the U.S., but many of the projects they’re bankrolling face yearslong backlogs to get connected to the grid. And even when they do get plugged in, big corporate clean power deals aren’t necessarily helping drive down fast-rising utility bills for communities least able to afford them.

On Monday, Google and clean energy developer EDP Renewables (EDPR) North America unveiled a novel approach to solving these challenges — what some are calling ​“synthetic” community solar. 

First, they plan to build utility-scale amounts of solar in community-solar-sized chunks that can more easily connect to the grid. Second, they’ll structure these solar projects to ensure that at least 10 percent of the money they make flows to at least 25,000 ​“high-energy-burden” households, including those located in communities that host the solar farms themselves.

The plan calls for EDPR NA Distributed Generation, the developer’s distributed-solar arm, to build a 500-megawatt portfolio of solar across about 80 community-scale projects in the 13-state region served by grid operator PJM. Google will use that solar power to further its goal of achieving round-the-clock clean energy by 2030, with a focus on cleaning up the energy consumption of its data centers in Ohio.

The initiative has a significant environmental-justice component: At least one-third of the solar projects will be built in low- and moderate-income communities, creating jobs and tax revenue on top of the reduced energy costs they’ll deliver. Google and EDPR expect to announce target communities in the coming months, said Richard Dovere, chief investment officer at EDPR NA Distributed Generation. 

This structure could help expand the benefits of community-solar projects — such as lower bills and local economic development — to people who have so far been left out, he said.

Yesenia Rivera, executive director of Energy Allies, formerly the nonprofit arm of community-solar company Solstice, said she was ​“cautiously optimistic” that Google and EDPR’s approach could deliver the community benefits it’s promising. 

“Every community is going to be different and will have different needs,” she said. ​“The fact that they’re tailoring each of these projects to these communities’ needs is a good thing.” 

And once Google and EDPR have done it, other companies and clean energy developers can follow, Amanda Peterson Corio, Google’s global head of data center energy, said. ​“We can bring in other developers, we can have other corporates who may not know how to do this directly, to give them the playbook to do it themselves,” she said. 

A community-solar-like model that surmounts community-solar barriers

Google and EDPR’s program will function much like community-solar programs, which allow developers to build smaller-scale projects and sell the power to individual subscribers to defray a portion of their utility bills. 

Community-solar programs now exist in 22 states plus Washington, D.C., and an increasing number of them feature requirements or incentives to target lower-income customers and disadvantaged communities.

But, as Peterson Corio noted, a significant portion of the 30 million U.S. households facing high energy burdens — many of them Black, Hispanic and Native American — are ​“excluded from the financial benefits of our transition to clean energy, partly because they don’t qualify for most state and utility-led community-solar” programs.

More than half of states don’t have community-solar programs at all, including the PJM states of Ohio, Pennsylvania and West Virginia. 

Michelle Moore, CEO of Washington, D.C.–based community-solar development nonprofit Groundswell, said, ​“Having a major clean energy purchaser like Google making a large-scale purchase that’s designed to benefit low- and moderate-income residents, and meet community needs where they are, is an important innovation.”

“It’s a 50-state market for community solar in the U.S.,” she said. ​“There’s not just one way to do community solar. There are lots of ways to do community solar.” 

Even many states that have passed community-solar legislation, such as the PJM states of Illinois, Maryland and New Jersey, often set limits on how much new solar can qualify, Dovere noted. These program caps have tended to lead to boom-bust cycles in which community-solar developers either get their projects approved or find themselves unable to continue until the state expands funding for the program yet again, he said.

EDPR and Google’s method, by contrast, ​“allows for us to effectively and synthetically create the economic benefits of community solar,” Dovere said. While this structure only works in regions with competitive wholesale markets like PJM’s, those markets serve about two-thirds of the U.S. population. And in those regions, ​“we don’t have to wait for the next community-solar tariff to come out.”

A corporate clean energy workaround to interconnection logjams

Splitting a 500-megawatt solar portfolio across 80 or so individual smaller-scale projects is also a way to circumvent a significant barrier to expanding clean energy in the U.S., Dovere said — the yearslong interconnection backlogs.

PJM faces a bigger backlog than any other U.S. grid operator, with more than 250 gigawatts of clean energy in the queue, according to data from the Department of Energy’s Lawrence Berkeley National Laboratory. 

It’s actively reforming its interconnection processes, but that is expected to take years, leaving more than 1,000 projects in limbo until it’s completed. 

Even projects that do win permission to interconnect to the grid are often required to pay for extensive grid upgrades that can turn them from money-makers into money-losers. The Federal Energy Regulatory Commission is working on reforms meant to address these issues nationwide, but those reforms will likely also take years to have an impact.

For Google, these long wait times have stood in the way of its goals for powering itself with 24/7 carbon-free energy, making clean energy harder to obtain in some regions than others. This map indicates how the availability of clean power for Google operations differs across the country (and around the world), including in PJM states like Ohio and Virginia where there are still significant shortages. 

“We have a large presence in PJM,” said Google’s Peterson Corio. ​“It’s a deregulated market, which is great — we can start to do a lot of interesting things. But it’s also been a challenging market to decarbonize for a number of reasons, not the least of which is transmission bottlenecks.”

Building distributed solar could offer a way around those transmission bottlenecks. LBNL data indicates that projects of less than 20 megawatts — developments that typically connect to lower-voltage distribution grids rather than transmission grids — tend to be able to execute interconnection agreements much more quickly than larger projects.

That’s not to say it’s easy to build these projects — many states with large-scale community-solar programs are facing distribution connection problems of their own. But unlike the region-wide backlog in PJM, it’s a challenge that can be taken on utility by utility.

Google won’t be consuming all the power these solar projects generate, Peterson Corio noted. Instead, EDPR will be buying and selling energy from the projects on PJM’s wholesale electricity market. That’s an unusual structure for corporate clean energy deals, which tend to be built around supplying a company’s own energy needs. 

One of the main reasons that large corporate clean energy buyers like Google haven’t done as much distributed solar is that their appetite for hundreds of megawatts of clean power has to date been best served by large-scale projects, Dovere said. But a portfolio of dozens of distributed projects can achieve the same scale. ​“We wanted to try to work through a structure with Google that would afford for a meaningful participation in the distributed-generation market.” 

Having a major corporate partner such as Google ​“anchoring” such an ambitious distributed-energy portfolio is important, Dovere said. ​“Doing this for 10 megawatts or doing this for 20 megawatts or doing this for 100 megawatts would not be profound,” he said. ​“We’re going to prove out the thesis that this is the right way to do distributed-generation investment and create community benefits.”

Tying clean power growth to energy equity 

Achieving the community benefits that Google and EDPR are after requires setting up some relatively novel structures, Dovere said. For example, neither Google nor EDPR is a utility or retail electricity provider, nor are they operating within the terms of state-level community-solar programs. In other words, they aren’t authorized to provide direct discounts on the utility bills of customers. 

To circumvent this, the companies will provide the equivalent of these bill credits in the form of payments to participating customers, Dovere said. 

Dovere said that Google and EDPR will in the coming weeks announce a ​“beneficiary acquisition partner,” or an entity that will be tasked with identifying the individual customers to be targeted for these discounts.

Eligibility will be granted to customers who live in affordable housing, participate in utility income-based bill-assistance programs, and reside in census tracts where median household incomes are below 80 percent of median incomes in the surrounding area.

In keeping with a broader energy-efficiency push, Google also plans to provide Nest thermostats to some participants to help them track and control energy costs and participate in demand-response programs that pay customers to reduce energy use when the power grid is under stress.

Google and EDPR will be setting up local community investment funds to target fire stations, police stations, schools and other community institutions for payments to reduce their electricity costs, Dovere said. The companies have also committed to creating a $12 million community impact fund that will work to reduce energy poverty in areas where the solar projects are built, on top of the 10 percent of project revenue that will be steered to lower-income communities. 

Dovere also stressed that the projects that EDPR is developing with Google won’t be priced at a premium compared to corporate energy projects now being developed in U.S. markets. EDPR wouldn’t be seeking ​“additional profits,” he said. Instead, ​“any of the additional value is either reinvested into additional scope of the program or into increasing the amount of the community benefit.”

And the long-term success of this approach will ultimately depend on making sure that it’s economically competitive with the universe of clean energy options out there, Peterson Corio said. That’s true not just for Google and EDPR but also for other companies and clean-energy developers that might choose to emulate it, she noted.

“It’s about taking the time to be thoughtful about what we do,” she said. ​“We need to decarbonize the grid — but in the right way.”