Policy - Local Level

Counties Investing in Green Strategies according to NACo Survey

September 28, 2010 - 11:42am -- Anonymous

WASHINGTON, D.C. - Driven by finding ways to reduce the cost of running local government, the nation's counties are implementing innovative green government strategies and say they have seen cost‐savings as a result, according to a new survey from the National Association of Counties (NACo).

Report Uses Cases Studies to Explore Community Wind

Lessons & Concepts for Advancing Community Wind, released by The Minnesota Project, seeks to advance the development of community-based wind projects in the United States by drawing keys to success and policy recommendations from three compelling Midwestern case studies.

Wind energy continues to experience double digit growth rates because of the relatively cheap technology and the widespread availability of wind resources, and numerous studies have now shown that locally-owned wind projects produce disproportionate benefits to the local community and region where they are built. This presents community wind energy development as a stand-out opportunity for communities across America to pursue locally-owned projects that will help meet their electricity needs and contribute to energy independence while also providing tremendous economic benefits. 

Report Contents:

  • Section I: Community Wind Case Studies
    • Winona County, MN
    • City of Willmar, MN
    • Miner County, SD
  • Section II: Keys to Success
    • Visioning & Planning
    • Project Leadership
    • Involving the Community
    • Financing & Pricing
  • Section III: Solutions for Advancing Community Wind
    • Dispersed Generation Studies
    • Siting & Permitting Standardization
    • Establishing or Improving C-BED Legislation
    • Rural Utility Service Loans
    • Investment Tax Credit or Cash Grant
    • Net Metering
    • Advanced Renewable Tariffs
    • Standard Offer Contracts
    • Increasing Renewable Portfolio Standards

Property Tax Financing Authorization

More states authorizing local governments to provide loans for small-scale renewable energy projects

In collaboration with Amanda Zidek-Vanega (DSIRE)

A growing number of states have adopted a policy that encourages development of renewable energy and energy efficiency projects: Property Tax Financing Authorization. The concept began in Colorado and California and has now gained momentum in a number of other states. These policies begin with the state legislature granting local units of government the authority to create a program that provides loans to property owners for the installation of energy efficiency upgrades and distributed renewable generation projects. It is then up to the local government to decide if and how they want to implement such a program. The key element of these programs is that repayment of the loan is through a special assessment fee on the property tax. Participation by local government is voluntary and only a handful of communities, described below, have implemented such programs.

The authorizing statutes promote on-site distributed renewable energy generation in addition to energy efficiency improvements. The authorizing statute may not specify the eligible renewable energy project size and instead leave that determination to the local government. Distributed generation projects are generally smaller-scale projects that consist of one to two wind turbines or solar panels that are geographically dispersed and located near the site of electricity demand. This type of project differs from large-scale solar arrays and corporate wind farms which are often located in remote, sparsely populated areas and can require transmission lines over significant distances to deliver the electricity.

The upfront costs of distributed generation can be, and often are, a significant barrier to homeowners and small businesses. Although many states offer tax credits, rebates, incentives and grants, these incentives only cover a portion of the costs of purchasing and installing a wind or solar system for on-site use. At some point an individual will need to come up with cash to move the project forward.

Property Tax Financing programs provide a direct way for individuals to cover some, if not all, of the costs of energy efficiency upgrades and distributed generation systems. This type of financing mechanism offers several major benefits. First, access to credit can help cover much of the upfront costs, and during tough economic times this program offers an alternative to people who cannot tap into home equity lines or gain low-interest personal loans. Second, the obligation to repay the loan stays with the property. Therefore, payments become the responsibility of whoever owns that property and is benefiting from the on-site electricity generation.

This type of program encourages participation by providing a way for individuals to access financing for the development of small-scale distributed renewable energy generation projects in their community. This in turn promotes local economic development by allowing energy dollars to remain in the community. It also provides opportunities for job creation in manufacturing, installation, and maintenance of the renewable energy systems. Local distributed generation projects can also decrease reliance on an overburdened and congested transmission grid and may reduce the need for expensive new high-voltage transmission lines. Distributed renewable energy generation teaches individuals and communities about the impact of human activity on our natural resources by self-generating a portion of their own electricity. To learn more about the benefits of local-ownership, visit:


Authorizing Statute

Available for wind energy?

Local Government Programs Implemented as of July 09?


CA Streets and Highways Code § 5898.10 et. seq.

TBD at local level

Palm Desert;
Sonoma County


CRS § 1-24-38.7


Boulder County


Act 348 R.S. 33:130.790




Md Code: Property Tax § 9-1501-743-24

TBD at local level


New Mexico

S.B. 647




HB 1




S.B. 668

TBD at local level



Texas Statutes § 12-A-376

TBD at local level



H.B. 446




Va. Code § 15.2-958.3

TBD at local level



Wis. Stat. § Act 11

TBD at local level



As of July 2009, 11 states have passed legislation authorizing local units of government to provide loans to their residents for renewable energy and/or energy efficiency improvements: California, Colorado, Louisiana, Maryland, New Mexico, Ohio, Oklahoma, Texas, Vermont, Virginia, and Wisconsin. As seen in the chart above the details of each program, including eligible technology, project size, loan amount, repayment terms, are often determined at the local level. So far, only two of these states have local governments that have implemented such loan programs: Colorado and California.


In Boulder County residents can obtain a loan for a variety of energy efficiency improvements and renewable energy technologies. The loans are available in amounts ranging from $3,000-$50,000 and repaid over 15 years through a special assessment on the property tax. Applications for the first round of funding were due on April 10, 2009. According to the ClimateSmart Loan Program staff, 394 projects were funded. Two-thirds of the projects were directly related to energy efficiency, and one-third were directly related to solar installations. There were no applications for wind energy projects in this first round because of publicity and timing—the majority of the applications came from property owners in the city of Boulder, an urban area that is not suitable for wind energy installations. Although the ClimateSmart Loan Program focused heavily on energy efficiency improvement in this first round of funding, it hopes to reach out to rural areas in their county to encourage more applicants interested in wind energy.

See the Database of State Incentives for Renewables and Efficiency for more information on the Boulder County ClimateSmart Loan Program.


Three communities in California have implemented clean energy financing programs: Palm Desert, Berkeley, and Sonoma County. Specifics of their programs vary; in Berkeley financing is only available for photovoltaics, while in Palm Desert and Sonoma County certain energy efficiency technologies and solar water heating are eligible as well. The diversity of these programs highlights the importance of allowing individual local governments to create and implement their own program. This flexibility allows local governments to tailor their programs to promote certain renewable or efficiency technologies over others based on resource availability and conditions or preferences of the community.

See the Database of State Incentives for Renewables and Efficiency for more information on:

For more information and updates on these types of financing programs across the country, see the recent report published by the Institute for Local Self Reliance "Municipal Energy Financing: Lessons Learned".

Frequently Asked Questions

1. How is this different from other loans for home improvements?

 The major differences are that repayment happens through a special assessment on the homeowner's property tax and that the loan would transfer (along with the distributed generation benefits) to the new homeowner if the property were sold before the loan matures. These loans are intended to be low-interest loans, but that does not guarantee that they are the lowest available. Interested applicants are advised to shop around as they would normally do when seeking a loan (the local bank might have lower rates). Keep in mind that unlike the Property Tax Financing programs which are repaid through taxes on the particular property, you will remain personally responsible to pay off a lower interest bank loan even if you sell the property.

Additionally, a study by the Lawrence Berkeley National Laboratory and the Clean Energy States Alliance has found the interest paid on Property Tax Financing loans will likely be tax deductible for federal tax purposes. As more states adopt this policy, the IRS may specifically address this issue. However, until they do be sure to consult with a tax professional to discuss your particular situation.

2. What about using rebates and grants to help pay for these improvements?

In the states that offer rebates and grants, the available funding is usually limited—leaving some interested parties without support. When grants and rebates are available, they cover only a portion of cost of the distributed generation system and significant up-front costs can remain. Property Tax Financing programs can help cover these remaining costs and fill-in gaps that grant and rebate programs may not cover, such as for certain technologies or renewable energy applications. However, keep in mind that the local government will implement their own Property Tax Financing program and the rules may vary from location to location.

3. How does the local government get the money for these loans?

It depends; in certain states local governments are authorized to issue bonds to cover the costs of the programs. In other states local governments are authorized to enter into a partnership with a local financial institution to implement the program, where the financial institution would issue the loan but repayment would still happen via an assessment on the property tax.

4. Can a business owner access this type of financing for renewable energy sited at the business?

Local and state governments determine eligible participants. For example, the Boulder program is only open to residential customers; while the programs in California are open to commercial and residential (and in Palm Desert agricultural property owners as well). The state laws in New Mexico and Wisconsin limit the programs to providing financing to residential property owners. In the other states, commercial and residential property owners would be eligible if the local government program implemented includes them—that determination would be up to the local government.

5. When will there be a clean energy financing program near me?

If you live in one of the states where this policy has been adopted, you may be able to expect certain local governments to start adopting and rolling out programs over the next year. It takes time for the local governments to get approval (in some states, they need voter approval or they have to pass an ordinance) and develop the program specifics. Some local governments do not even know about this yet, so there can be a time lag before some local communities realize they can implement such programs. There may also be other concerns the local government is likely to address first, such as a troubled housing market or significant job losses. And, even though a state may have a policy authorizing this type of program, local governments are not obligated to participate. If you are interested and you live in a state that has authorized local governments to implement these programs, encourage your local officials to explore the possibilities.

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Analysis of Renewable Energy Feed-in Tariffs in the U.S.

The National Renewable Energy Laboratory (NREL) has published a report analyzing the impacts that state level feed-in tariff policies can have on the renewable energy industry across the country. The report uses data and reports from around the world to highlight the various benefits that a feed-in tariff type of policy can have on renewable energy development.

A feed-in tariff is an energy policy that provides for a guarantee of payment to renewable energy developers for the energy that is produced. This type of policy can be thought of as an advanced form of a production-based incentive because payments are made for the actual electricity produced and not for how much capacity is installed. The most common feed-in tariff payment is based on the actual levelized cost of renewable energy generation. This method of payment provides a price adequate to ensure a reasonable rate of return on for investors. 

The authors of the report delve into the various advantages of feed-in tariff policies and the number of challenges to implementing feed-in tariff policies in the U.S. The report also provides a review of the current state-level and utility-level feed-in tariff policies that are currently in place across the county and compares them with the successful models found in Europe. These states include Gainesville, Florida; various Wisconsin utilities; California; Vermont (report was written prior to passage of the state-wide feed-in tariff so this analysis focuses on the two utility-specific programs); Washington; and Oregon. The authors wrap up the report with a discussion of best practices for feed-in tariff policy design and implementation, followed by an analysis on how to use a feed-in tariff policy to achieve state renewable energy goals.

The authors highlight one of the most important elements of a feed-in tariff policy - that it allows for more participants in renewable energy project development. In their analysis the authors state that there are significant impacts of a feed-in tariff on developing community ownership, but it will depend on how the program is structured and payments determined. 

You can read the full report here (PDF).

Introduction to Feed-in Tariffs

The phrase “feed-in tariff” has recently entered the daily dialogue of not only renewable energy advocates, but policy makers as well. A feed-in tariffs is a policy mechanism that provides a renewable energy facility with a guarantee of interconnection to the electrical grid and a set price paid for that renewable energy. Feed-in tariffs are proven to be the most successful policy for the rapid development of significant amounts of renewable energy world-wide, and have experienced increasing attention in North America over the last year. Feed-in tariffs work because they are more equitable than other policies. They enable everyone - including homeowners, farmers, cooperatives, and businesses large and small - to profit from renewable energy.


Once a feed-in tariff is implemented, utilities are required to purchase the electricity produced from a qualified renewable energy facility at a set price, or tariff, per kilowatt-hour generated. The cost of purchasing this energy is paid for by the utility and energy consumer, just like any other electricity generation source, and not with government incentives paid for by taxpayers who may not be using the energy. To ensure the tariff rate is successful, it should be set at a level that allows recovery of the cost of the facility plus a return on the investment. This is similar to how regulations of utility rates happen in many parts of the country and is a familiar concept for the industry. A feed-in tariff is separate from net-metering because the electricity generated is not used on-site. All of the output from the facility is purchased by the utility and the facility owner continues to pull electricity from the grid as before.


This type of policy has had notable success in Europe, particularly in Germany where as of 2008, over 75 percent of the electricity generated from renewable sources was purchased according to the tariffs under the Renewable Energy Sources Act (EEG), Germany’s feed-in tariff. The additional costs associated with this program for 2008 accounted for an additional 1.05cent/kWh. An average German household had an increase of 3.10 euro in their monthly electricity bill as a result of the feed-in tariff. The German Ministry for the Environment, Natural Conservation and Nuclear Safety issues an annual report on the status of renewable energy in Germany that analyzes these figures. You can read the 2008 preliminary report here.



In North America this type of policy has been slow to gain support despite efforts on both the federal and state levels. However, the past year has witnessed major strides in implementing feed-in tariff policies. According to the Alliance for Renewable Energy, there are 20 states that have considered feed-in tariff style policies. Below are some highlights from a few of these efforts: California’s Start; The Gainesville Story; Vermont Joins In; The Canadian Perspective. 


California’s Start

In early 2008 the California Public Utilities Commission announced the availability of two expansions of a tariff designed to support and encourage the development of up to 480MW of renewable energy from small generating facilities throughout the state. This program is targeted specifically to the publicly owned water and wastewater treatment facilities.

The key elements of the tariff are:


A fixed price, non-negotiable contract for 10, 15, or 20 years


A project size cap of 1.5MW


According to the order establishing this tariff, an eligible facility is one that is defined in PUC code § 399.12 which requires the facility to meet the definition of § 25741 of that code. The definition includes wind facilities that are located within the state of California and generally requires the first point of interconnection to be within the state.


Any customer may sell to Edison or PG&E


Only water and waste water customers may sell to the other four utilities: San Diego Gas and Electric Company, PacifiCorp, Sierra Pacific Power Company, Bear Valley Electric Service Division of Golden State Water Company, and Mountain Utilities


The tariff rate is determined by the following formula:


Price paid in $/kWh = (kWh of energy distributed onto the grid at a certain time) * (the baseload market price reference fixed at time of actual commercial operation) * (the time of delivery adjustment)


More information on these factors can be found in the order establishing the tariff from the CA PUC 

Electricity purchased by the utility under this tariff may be used to satisfy the state renewable energy standards.


Wind Energy Symposium


As the possibilities for harnessing wind energy as a viable renewable energy source and job provider sweep across West Michigan, local governments face the challenges of establishing zoning ordinances that regulate the use of residential and commercial wind turbines.

A Wind Energy Symposium, developed by the Ottawa County Planning Commission and the Michigan State University Extension office, aims to offer solutions for local leaders and residents.

Event type: 
Geographic Area: 

"Wind Energy Guide for County Commissioners" from NACO

This guide from the National Association of Counties was released in November, 2006. According to the NACO website, "this publication is designed to provide county commissioners, planners, and other local county government officials with a practical overview of information required to successfully implement commercial wind energy projects in their county."

Click here to download the guide from the NACO website.


South Dakota PUC Interconnection Workshop


The South Dakota Public Utilities Commission will host an interconnection workshop March 18-19, 2008, in Pierre. The workshop will be held at the Kings Inn Hotel and Conference Center, 110 E. Sioux Ave. This will be the first of several workshops designed to develop a statewide best practices model for connecting small generating facilities to the electric grid.

Event type: 
Geographic Area: 


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