The report, developed by graduating Master’s Students from the School of International and Public Affairs on behalf of Clean Tomorrow as their client, describes the ways that clean energy provides economic benefits to host communities, profiles policies in seven key states, and features project case studies.

Motivation and methodology

A team of 11 graduate student researchers pursuing Masters of Public Administration degrees in Environmental Science and Policy from Columbia University’s School of International Affairs completed a capstone project that details the policy mechanisms for clean energy projects to deliver economic benefits to communities. The final report, Widening the Lens: Options for Communities to Economically Benefit from Clean Energy, presents a framework for categorizing economic benefit mechanisms (e.g., landowner agreements, community benefit agreements, tax treatments such as Payment in Lieu of Taxes [PILOTs], etc.); describes economic benefit policies in seven states (California, Michigan, Nevada, New Mexico, New York, Ohio, and Texas); and analyzes how similar mechanisms are used across states. 

A key driver for the research was the concurrence of both an increase in the number of renewable energy projects added to the grid and a proliferation of local opposition to and restrictions on clean energy project development. The researchers sought to understand how economic benefits from renewable energy projects flow to communities and whether certain policy mechanisms are more effective at alleviating public opposition.  

The students supplemented their research with interviews of an array of experts. The researchers conducted 23 interviews with 26 experts, including academics, consultants, local officials, state regulators, and project developers. 

Key Findings

The research resulted in three key findings: 

1. There is wide variation in the benefits that communities want to receive and the reasons they oppose projects. Each benefit mechanism can deliver meaningful returns for communities and may help reduce opposition, but its full effect depends on local policy and cultural context.
2. Creating the circumstances where communities and developers can both say “yes” to new projects requires balancing meaningful benefits for communities with maintaining profitable project economics. Policymakers can help achieve that balance through policies that create opportunities for tangible, transparent benefits to community members and implementing tax mechanisms that provide long-term certainty for developers, such as abatements or reasonable tax rates.
3. The most effective benefit mechanisms are those that can be tailored to a community’s needs. Local context and flexibility in delivering benefits are critical elements; overprescription often fails.

Highlights

The researchers identified and sorted economic benefit mechanisms by individual agreements, community agreements, and tax structures. For each mechanism, the researchers identified risks and benefits, described impacts to public opinion and jobs, and indicated how frequently the mechanism was used by each of the states studied. Here are just a few of the students’ state-specific findings:

• In Michigan, the Renewable Ready Communities grant program, launched as part of the state’s siting reforms in 2024, will provide up to $30 million to local governments that adopt zoning ordinances with permissible standards for renewable energy projects. Localities will be able to access awards of $5,000 per MW for permitted projects. The program has already paid out more than $20 million to local governments hosting 29 clean energy projects, with the bulk of funds supporting municipal infrastructure and transportation.
• Nevada’s Renewable Energy Tax Abatement (RETA) program provides a 55% property tax abatement for 20 years and a partial abatement of sales and use taxes. This program has attracted more than $14 billion in capital investments across 68 projects and 7.4 GW of capacity, while creating more than 17,000 construction and 700 operational jobs. The vast majority of taxes paid through the program go to local governments, with school districts receiving almost 50% of payments; over the last five years, schools received more than $11 million in payments from renewable energy projects. 
• New Mexico has a fairly unique policy mechanism: industrial revenue bonds. The county takes title to a project’s assets and leases them back to the developer, providing the project with governmental tax status and lower borrowing costs. The revenue bonds exempt projects from property taxes but require PILOTs directly to local governments.

New York’s Host Community Benefit Program (HCBP) requires developers to pay into a fund on a dollar-per-MW basis, which is then used to credit ratepayers’ electricity bills. The researchers analyzed 30 projects totalling 5.5 GW and estimated the host community benefit per person to be $38 annually on average—likely too small an amount to notice on an electricity bill.

Future research

The students also highlighted topics that would be most impactful to examine in future research:

• Quantitative impact of development incentives. Future research could analyze how PILOT revenues compare to the property tax revenues they replace and examine how assumptions of inflation affect these tradeoffs. A deeper analysis of the impacts of a broader range of sales and use taxes, particularly on the distribution of taxes across different levels of government, would also be informative.
• Public acceptance. It is challenging to discern the extent to which benefit mechanisms improve public perception for projects among the local community. Insufficient data on this topic limited the researchers’ ability to extrapolate clear findings.
• Land ownership. Management and ownership of land between local, state, and federal governments complicates the collection and distribution of tax and leasing revenues. Further research is needed to unpack these dynamics.
• Long-term study. It’s difficult to analyze the impact of recently passed reforms. The researchers suggested tracking the impact of the economic benefit mechanisms created or changed by recent legislative reforms over a longer timespan.
• Additional states. The methodologies used to assess economic benefits could be extended to all 50 states.

If you’d like more information, or if there’s anything we’ve missed, please reach out to siting@cleantomorrow.org.