Utility-scale renewables development has ground to a halt in at least 15% of U.S. counties due to a combination of bans, moratoriums, and overly strict zoning and land-use restrictions, according to a February analysis by USA Today.
Lawmakers in Michigan, New York, Illinois and other states with 100% carbon-free electricity goals are pushing back with policies that centralize renewables permitting at the state level, provide financial incentives for more permissive local ordinances, or both. Though initiatives like Michigan’s Renewables Ready Communities Award program are too new to have had an observable impact, the early success of two New York programs is heartening for advocates of community-oriented approaches that include tangible financial benefits for municipalities and utility customers.
“There is no question that these packages help [developers] gain public support,” said Dan Spitzer, who co-leads New York-based law firm Hodgson Russ’s cleantech and renewable energy practice.
Such efforts could accelerate onshore wind and solar development, keeping state and federal governments on track to reach their clean electricity goals in the short term. But experts worry that the backlash to state policies perceived as unfair by host communities could entrench local opposition to utility-scale renewables, spur litigation and ultimately slow the energy transition. The most effective state policies, they say, incentivize constructive local participation in siting and permitting processes and nudge developers to treat host communities fairly while limiting opportunities for opponents to delay or kill mutually beneficial projects.
“Ørsted favors working directly with local governments, but the local units often need or ask for a common framework to guide development in addition to incentives offered by states,” said Hayes Framme, head of new markets and growth for Ørsted, which has a 3-GW onshore wind portfolio and nearly 700 MW of utility-scale solar and energy storage under construction.
A carrot-and-stick model in Michigan
Several Michigan townships and counties have enacted moratoriums on utility-scale solar development — and, in at least one case, all large-scale renewables development — in the past two years, citing perceived negative impacts on rural vistas, property values, soil and water health, and the availability of prime farmland.
Michigan’s Renewables Ready Communities Award, or RRCA, program — which was authorized last year as part of Michigan’s landmark clean energy legislative package and will remain in effect for at least two more years after a repeal effort failed to gather enough signatures to appear on the November ballot — follows that model, said Sarah Mills, director of the Center for EmPowering Communities at the University of Michigan’s Graham Sustainability Institute.
The $30 million pilot program awards $5,000/MW to communities that permit and physically host utility-scale renewable energy projects or $2,500/MW to communities that do one or the other. To qualify for the award, a community must approve a project through a local siting ordinance, according to a Michigan Department of Environment, Great Lakes and Energy, or EGLE, fact sheet.
If the host community has no local siting ordinance that “is perceived as generally favorable enough for development,” the developer can use a state siting process that includes a less generous community benefit payment of $2,000/MW.
Unlike the RRCA program’s higher local benefit, that $2,000/MW payment comes out of the developer’s pocket. So while potentially less restrictive than the local ordinance, the state process is costly for developers, EGLE says.
“The goal is to encourage developers and communities to work it out at the local level rather than go through the state-level process,” Mills said.
According to Mills, RRCA is unique among state clean energy development programs for disbursing some funds when construction begins, rather than waiting until a project is operational.
RRCA is also notable for the high dollar value of its renewables-friendly community awards and the fact that the funds “can be used for basically any community benefit,” said Ian O’Leary, a departmental analyst at EGLE who co-manages and helped design the program.
RRCA-eligible projects must have at least 50 MW of capacity, so the minimum grant per project is $125,000 at the $2,500/MW level or $250,000 at the $5,000/MW level. Though some projects span multiple local government units, the program still promises significant — and potentially decisive — funding for sparsely populated rural townships, O’Leary said.
“The tax revenues brought in by projects are often not enough to convince local governments [to approve them],” said Zona Martin, another RRCA co-manager and co-designer.
With support from EGLE, the Center for EmPowering Communities’ Renewable Energy Academy helps local governments proactively develop zoning ordinances compatible with Michigan’s clean energy legislation, Martin said.
The RRCA program, state permitting backstop and Renewable Energy Academy are intended to work together to “make a watertight renewable energy system” in Michigan, O’Leary said.
That effort got a boost on July 22 when the U.S. Environmental Protection Agency issued a $129.1 million grant to help Michigan expand RRCA and related emissions reduction programs.
Though long permitting timelines mean projects enabled by RRCA and the state permitting backstop likely won’t begin construction until next year, they’ve moved the needle for at least one major renewables developer.
Thanks to the new policy, “Michigan [is now] one of Ørsted’s high-priority states,” said Framme. “In its absence, it was challenging to see a meaningful path forward for developing projects in Michigan.”
Bill credits and ‘bribes’ in New York
In New York, utility-scale wind proposals have for years drawn opposition in upstate communities concerned about views, impacts on farmland and the misconception that the projects only benefit downstate population centers, said Hodgson Russ’s Spitzer. More recently, wealthy coastal residents have opposed onshore infrastructure to serve the state’s nascent offshore wind industry, he said.
Like Michigan’s RRCA scheme, New York’s Host Community Benefit Program incentivizes local governments to support renewables development. A second, potentially more impactful New York program requires project developers to detail in project applications the public benefits they plan to provide to host communities, which has helped convince skeptics of the value of local energy generation, Spitzer said.
The Host Community Benefit Program requires project owners to make annual payments to the host utility of $500/MW for solar projects or $1,000/MW for wind projects larger than 25 MW for the first 10 years of operation, according to a Hodgson Russ summary. The fees fund utility bill credits for electric utility customers in the host community.
With hundreds or thousands of residential customers in many host communities, “it’s a fair statement” that the bill credit benefit can be diluted, Spitzer said.
Under the second program, project developers have donated to local park and library systems or contributed funds for public building upgrades, Spitzer said. The 35-MW Steel Winds facility funded “a new community center, a commerce center … and a 110-acre greenway and bike trail,” on a former steel mill site in Lackawanna, New York, according to a 2020 handbook developed by the New York State Energy Research and Development Authority.
All of this — along with the potential for revenue from larger renewables facilities to “virtually wipe out town taxes” — “fits into the broader definition of host benefits,” Spitzer said.
But it doesn’t always work. Under New York’s state licensing process, a host community can agree to waive local siting and permitting rules as part of its community benefits agreement, potentially speeding up preconstruction review and locking in developer-paid benefits. Communities where public opposition to renewables development runs deep may chafe at the loss of local control over the process, “see any offer [of benefits] as a bribe” and hire attorneys to fight the project, Spitzer said.
“Frankly, a lot of what you’re fighting as a developer is flat-out NIMBYism,” he said. “States [like New York] that have greater home rule authority are slower to achieve their clean energy goals because host communities look for ways not to cooperate.”
Corn Belt contrast
In 2021, Illinois became the first Midwestern state to commit to 100% carbon-free electricity generation. There was just one issue: The mandate included no significant siting or permitting reform, leaving the fate of its 2050 deadline in the hands of largely rural local governments with very different politics from the Democratic-dominated Illinois state legislature.
An Illinois law passed last year reset the dynamic in favor of developers by setting state standards for utility-scale wind and solar projects that preempt stricter local ordinances and require local governments to approve state-compliant proposals.
The new law is a "release valve," providing state policy guidelines that can remove some of the pressure that local decision-makers may feel as they consider wind and solar projects, Apex Clean Energy Senior Director of Government Affairs Chris Kunkle said.
The law creates a “stable, predictable permitting environment [that helps Apex decide] where we want to invest our time and resources, which are finite,” he said.
The new law also opens up wind-rich Illinois counties that were effectively off-limits due to restrictive ordinances. Apex never stopped prospecting in the state, but the company “doubled down” after the 2023 law, Kunkle said.
“We feel great about Illinois, to say the least,” he said.
But utility-scale renewables remain contentious in some parts of rural Illinois. Officials in Piatt County in March 2023 denied Apex’s application for the 300-MW Prosperity Wind project, voiding a $10 million revenue-sharing agreement with Apex. Before approving a resubmitted application in October, several county board members said the new law forced them to vote yes on the project despite personally opposing it. One said voting down the project meant “gambling with 8 to 10 percent of our yearly budget.”
The state’s decision to strip authority from local governments “created a tremendous amount of bad blood,” and it’s not yet clear that the Illinois law has spurred new renewables development, said Brian Ross, vice president of renewable energy at the Great Plains Institute. Illinois’ development queue is about the same size as neighboring Indiana’s despite Indiana’s far gentler — and, thus far, unfunded — incentives for permissive local permitting, Ross said.
Under a new state law, the Indiana Commercial Solar and Wind Energy Ready Communities Development Center provides general information about renewables development and offers a certification program for communities that implement wind- and solar-friendly ordinances. Certified communities are eligible to receive incentive payments for operational projects from the Indiana Office of Energy Development, or OED, at $1/MWh for 10 years, according to the development center’s website.
But the program “is entirely voluntary and does not bypass any of the local permitting processes, or mandate local units of government doing anything that they don’t want to do,” said Greg Cook, OED communications manager.
Despite the lack of funding, the Indiana program may help demystify renewables siting, permitting and development for rural communities, said Tamara Ogle, community development regional educator for Purdue Extension.
Negotiations between communities and developers can drag on for years, creating space for misinformation to flourish and hardening local opposition to proposed projects, Ogle said. Even without OED funding in the near term, certified communities may feel empowered to better negotiate with developers around financial compensation, local hiring and procurement, and other benefits, she said.
Those conversations can be mutually beneficial, Framme said.
“Every single one of our projects looks different at the end of the community engagement process than it did at the beginning,” he said. “We work to modify project parameters [based on concerns about] viewshed, construction schedules, traffic, soil condition and other issues.”
Whether they see homegrown renewable energy as a precursor to deep decarbonization or primarily as an economic development engine, local, regional and state governments should apply some of that creativity toward new community-benefit models, Hodgson Russ’ Spitzer said.
Those could include programs that support agrivoltaics so that “[solar] facilities can stay farms,” the creation of public utilities with aggressive clean energy goals, or the development of “energy districts” that can leverage tax-exempt bonding, Spitzer said.
“You can create a water district — why not an energy district?” he said
