By Lori Bird and Katrina McLaughlin
The U.S. Inflation Reduction Act directs unprecedented investment in clean energy development and climate investments — a whopping $369 billion or more over the next decade. But finance is just one piece of the puzzle for delivering the country’s clean energy goals.
Building renewable energy and transmission projects in the U.S. at the speed and scale the climate crisis requires will require reforms to the way they’re sited and permitted — at the federal, state and local levels.
The current timeframes needed to permit, build and interconnect systems are not aligned with the Biden administration’s target of decarbonizing the power sector by 2035. To reach this goal and mitigate the worst impacts of climate change, the U.S. must double or triple the level of renewable energy deployment and double the expansion of transmission.
Meanwhile, one analysis found that the project build time — including permitting, siting and construction — for utility-scale solar and wind facility projects averages four years. Permitting alone can take years before construction can begin. Transmission lines, which are needed to increase grid resiliency and bring wind and solar energy to their point of use, can take around 10 years to complete — substantially longer than the time needed to develop wind and solar projects.
Recent Federal Action on Energy Permitting
Congress and the administration are focusing on clean energy permitting reform at the federal level, with a particular focus on inter-regional transmission, or power lines that extend across states, which have been very challenging to build. The Infrastructure Investment and Jobs Act of 2021 made some policy changes to expedite permitting and siting, particularly for transmission and offshore wind projects. This included financing assistance for transmission projects and clarifying and strengthening backstop siting authority of the Federal Energy Reform Commission (FERC) for interstate transmission lines within certain corridors (known as National Interest Electric Transmission Corridors). This change means that if states do not issue permits within one year for a transmission line within these priority corridors, then FERC can issue the permit.
While this was an important step, it’s far from sufficient and does not address the significant barriers to building interstate transmission. Even under this new change, it could still take many years to build new interstate transmission lines given the myriad other factors involved in financing and building interstate transmission, such as siting and cost allocation. And this backstop siting authority is still less than FERC’s siting authorities for other assets, namely natural gas pipelines, where the agency has authority over states.
Given the challenges to building interstate transmission, further federal action and collaboration across jurisdictional scales is needed. The most visible Congressional effort to date is the stalled Manchin permitting reform proposal. This bill would have created a streamlined permitting system for energy assets, including renewable energy projects and natural gas and fossil projects, and would have authorized specific projects like the Mountain Valley gas pipeline. The proposal also would have allowed the U.S. Department of Energy (DOE) to designate transmission lines in the national interest and enable FERC to allocate the costs of these projects to ratepayers across the region who would benefit from them. While the bill contained controversial provisions and ultimately stalled, transmission issues are a critical topic for federal policymakers to address. Debates on this issue are expected to continue in the 118th Congress.
Meanwhile, administrative actions by agencies or the administration may be viable to address some elements of needed permitting reform, such as setting clear or expedited timelines and improving coordination across agencies, although such actions can be changed or reversed by future administrations.
Siting and Permitting Reform at the State and Local Levels
But addressing clean energy siting and permitting challenges will require work at multiple jurisdictional scales — not just the federal level. Interconnection policies happen at the utility and regional grid operator level. And much of renewable energy siting falls under state or local jurisdiction. So how can states and cities expedite their renewable power development? Recent examples are helpful in looking for solutions to these problems.
Recent State Actions to Address Siting and Permitting
States and local governments are critical actors in siting and permitting energy projects. States differ on whether utility-scale renewable energy siting authority predominantly occurs at the state or local level, with some states taking a hybrid approach. States may have rules that give the authority for siting facilities over a certain size to a state entity, usually a public utility commission or a state siting commission. For example, in Ohio, wind projects larger than 5 megawatts (MW) fall under the jurisdiction of the Ohio Power Siting Board.
Many of these state siting commissions and procedures were developed for large generation facilities, such as coal-fired power plants. Further complicating the picture, wind and solar may not be treated uniformly by state and local jurisdictions due to different land use and siting concerns.
Some states are beginning to revisit these existing processes for renewable energy and transmission projects in order to meet state clean energy goals. For example, Washington’s HB 1812 modifies an existing energy siting commission by separating it from the public utility commission, and adds additional study requirements and engagement processes. Other state reforms have been more limited. For example, in 2022, Illinois enacted legislation that limits the ability of local entities such as cities to restrict certain renewable energy projects like wind and establishes minimum setback requirements and height and sound limitations.
Two states, California and New York, recently undertook more comprehensive permitting reform, which can offer lessons for other states.
New York Creates Renewable Energy Permitting Office
New York passed the Accelerated Renewable Energy Growth and Community Benefit Act as part of the 2020-21 state budget (A9508-B). The Act created the Office of Renewable Energy Siting (ORES), the nation’s first dedicated office for siting large renewable energy projects.
ORES serves as a one-stop shop for all necessary state permits and environmental reviews for renewable energy projects greater than 25 MW. Slightly smaller projects between 20-25 MW may also opt-in to use the ORES single-permit process. ORES must act upon permit applications within one year for standard projects, and 6 months for projects proposed on certain commercial and industrial sites. The legislation also designates a preference for build-ready or previously developed sites, such as brownfields.
The act also amended existing state authorities and gave the state stronger override authority of local laws restricting renewable energy projects between 25-200 MW in size. The ORES process still requires project review and feedback opportunities and consultation with local communities. ORES is directed to consider local laws and regulations, but may ultimately override them if they are “unreasonably burdensome.” Localities are then able to hold a public hearing, but may not overturn ORES’ decision.
Before ORES, projects over 25 MW were subject to what was known as an “Article 10 process,” a multi-stage endeavor requiring approval from the New York State Board on Electric Generation Siting and the Environment. New York’s renewable energy projects took 5 – 10 years to be completed under Article 10, significantly hindering the build-out of renewable energy.
Importantly, the new permitting process also requires projects to provide benefits to their host communities, including financial incentives such as payment in lieu of taxes to compensate local entities for lost tax revenues. The Act also directs the Public Service Commission to determine how to provide compensation to areas for hosting projects, including utility bill credits.
And finally, the legislation makes funds available to support intervention in the permitting process. The explicit inclusion of these two elements — benefit-sharing and intervention — address distributive and procedural equity, making sure that communities see tangible benefits to hosting a project and ensuring funds for them to participate in the regulatory process.
California Clarifies Renewable Energy Siting Authority in Existing Agency
As part of the 2022 budget process, California enacted AB 205, a budget trailer bill that contains a package of energy-related items. Along with other significant energy items, AB 205 contains substantial changes to clean energy permitting.
The reform gives a single agency, the California Energy Commission (CEC), authority for a consolidated permitting process that replaces all federal, state and local requirements (with a few exceptions for water quality and coastal permits). The CEC already performs this role for fossil-fuel thermal plants. AB 205 expands this CEC authority to wind, solar and energy storage projects over 50 MW; non-fossil thermal plants such as geothermal; and transmission lines from these projects. The consolidated permit may also be used for wind, solar and energy storage manufacturing facilities.
The new authority is opt-in, meaning eligible projects must choose to pursue this streamlined permitting approach.
The new process attempts to limit the permitting timeline to roughly one year. Upon receiving an eligible project’s permit application, the CEC must decide on its completeness within 30 days. The CEC then acts as lead agency for the California Environmental Quality Act (CEQA) process and must prepare an environmental impact review (EIR), follow steps for public outreach and Tribal consultation, and host a public meeting as close as possible to the proposed project site once the draft EIR is released.
AB 205 sets a time limit for this EIR process, requiring CEQ to determine whether to approve it within 270 days of the completeness finding. The bill also allows for expedited resolution of litigation arising from the EIR process, limiting it to 270 days from the court filing (with more details on the expedited resolution to be established by December 31, 2023).
In order for a permit application to be deemed complete, the project must follow certain labor and prevailing wage standards and have a net-positive economic impact on the local community. The project must also have a written community benefits plan in place with a signatory community partner, such as a local government entity, a community organization, Tribal entities or a social justice organization.
These community benefit plans must be written contracts demonstrating mutual benefits, and may include requirements related to job quality and access, workforce training, and community investments such as parks and bike paths.
Next Steps for Federal, State and Local Policymakers to Expedite Clean Energy Permitting and Siting
Recent state permitting reforms provide potential lessons for other states and Congress, given the ongoing need for reforms at multiple levels of government. The California and New York permitting reforms share a few common approaches, including:
- Creating a single office with expedited review of all permits needed under relevant state authority;
- Including requirements for community engagement and benefits as part of the project development and permit review process;
- Setting maximum permit review timelines, and limited subsequent litigation timelines; and
- Both were passed as part of budget processes alongside other energy provisions, suggesting that permitting reform might be more successful as part of a package than a stand-alone item.
Key to any reforms are mechanisms for early and effective community engagement, as well as consideration of the cumulative impact within communities. A recent Data for Progress memo found high support for community benefits as part of renewable energy project development, such as funding for cleaning up polluted sites, funding for community centers, and programs for youth and seniors. Policymakers should create forums for local stakeholder engagement as part of any centralized permit review process and facilitate early meetings between communities and project developers.
For state policymakers considering taking up this issue, potential next steps may include:
- Reviewing existing state permitting processes for clean energy and transmission projects, including any existing data on average project timelines;
- Evaluating opportunities for interagency coordination, including within peer agencies, (e.g. between state agencies) and improved coordination and parallel processing with agencies from other jurisdictions (e.g. between state and federal agencies).
- Making sure agencies are adequately staffed and funded. Lack of adequate staffing can be a primary driver of permit delays.
- Working with stakeholders — including local governments and associations, community-based groups, project developers and grid operators — to begin conversations on current challenges and potential solutions
These actions, along with complementary reforms at federal and local levels, can be a first step in adjusting permitting practices to build a clean and resilient grid. Actions at the state, federal and local levels will all be necessary to build the clean energy generation and grid infrastructure needed to avoid the worst impacts of climate change.
This article has been sourced from World Resources Institute and can be accessed here