Energy Democracy: Community Scale Green Energy Solutions

8/7/2019 Energy Democracy: Community Scale Green Energy Solutions

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community-scalegreenenergysolutions

energydemocracy


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The Center for Social Inclusion (CSI) wishes to epress our profound appreciation for

the leadership and knowledge shared by participants in this project. They generously

shard thir ti with CSI sta, dostratig a dsir to dp th owldg

of the opportunities, assets, and practices shaping the inolement of communities of

color in the green economy.

W ar gratful to th Quixot Foudatio for its acial support ad for its log-trcommitment to a racially just society on a healthy planet.

Amy McKnight Fazen and Kimberly James proided critical research and intellectual

support to this white paper.

Ladrs i rg, virotal justic, couit ac, ad couit orgaiz-

ing hae partnered with CSI, making up the adisory board for this endeaor. This brain

trust has ad a collaborativ ort to crat pathwas to a raciall just ad sustai -

able America. We particularly acknowledge the contributions of Nellis Kennedy (Honor

the Earth, Callaway, MN), Penn Loh (Alternaties for Community and Enironment,

Boston), Bruce Lincoln (Columbia Uniersity, New York), Daid Morris (Institute for

Local Self-Reliance, Minneapolis) and John Sorensen (Neighborhood Natural Energy,Portland, OR) for the commitment, creatiity, and insight they demonstrated through

the course of this work.

ACKNOW

LEDG

EMENTS


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Calin Allen

PROGRAM DIRECTOR

THE CONSERvATION FUND

Carlton Brown

CHIEF OPERATING OFFICER

FULL SPECTRUM OF NY

Melissa Bradley-Burns

SENIOR STRATEGIST

GREEN FOR ALL

Roger Clay

ExECUTIvE DIRECTOR

INSIGHT CENTER FOR COMMUNITY

ECONOMIC DEvELOPMENT

Jason Corburn

ASSISTANT PROFESSOR

UNIvERSITY OF CALIFORNIA,

BERKELEY

Omar Freilla

ExECUTIvE DIRECTOR

GREENWORKER COOPERATIvE

Michael Gelobter

CEO

COOLER

Bruce Lincoln

EDUCATION TECHNOLOGIST

COLUMBIA UNIvERSITY

Paul Hudson

CEO

BROADWAY FEDERAL BANK

Joseph James

PRESIDENT & CEO

THE CORPORATION FOR ECONOMIC

OPPORTUNITY

Penn S. Loh

FORMER ExECUTIvE DIRECTOR

ALTERNATIvES FOR COMMUNITY &

ENvIRONMENT

Tzipora Lubarr

PROGRAM MANAGER

NEW YORK INDUSTRIAL RETENTION

NETWORK

Daid Morris

vICE PRESIDENT

INSTITUTE FOR LOCAL SELF RELIANCE

Roald Shia

PROFESSOR

PRATT INSTITUTE

Gail Small

ExECUTIvE DIRECTOR

NATIvE ACTION

vernice Miller-Trais

vICE CHAIR

MARYLAND STATE COMMISSION ON

ENvIRONMENTAL JUSTICE AND

SUSTAINABLE COMMUNITIES

ADvISORYBO

ARD


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TABLEOFCONTENTS

Acknowledgements 3

Adisory Board 4

Eecutie Summary 6

Introduction 8

Communities of Color and Energy 10

The Emerging Energy Landscape 13

Renewables 13

Small-Scale Generators 14

Consumption & Pricing 15

Distributed Generation 18

Structural Hurdles to Energy Democracy 21

Ownership & Control 21

Shallow Depth of Financial Tools 22

Information Access & Education 22

Transmission & Distribution 23

Model Programs & Policies 24

village EnergyScalable, Gridless Solar Energy Inclusion (Bangladesh) 24

United PowerThe First Solar Farm Cooperatie (Brighton, Colorado) 24

Ontario Green Energy Communities (Ontario, Canada) 25Eergreen InitiatieOwning Our Jobs (Cleeland, Ohio) 26

Energy Improement District s (Stamford, Connecticut) 27

Recommendations 28

For the Federal Goernment 28

For State, Local & Regional Goernments 29

For Community Building Organizations & Social Entrepreneurs 29


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Priority Recommendations:

Makecommunityrenewableenergypolicyafederalpriority

Decision makers at all leels will respond to federal measures and incenties that signal

the national importance of community renewable energy policy. These measures and

incenties should be eplicitly connected to national renewable energy goals. Agencies

including the Federal Energy Regulatory Commission (FERC) and the EnironmentalProtection Agency (EPA) must direct public resources to appropriate projects,which, in

turn, will draw priate inestment.

SupportFeed-in-Taris

The Federal Energy Regulatory Commission and the state utility commissions must

wor togthr to support Fd-i-Taris (FiT). To stiulat rwabl rg gra-

tion and consumption, FiT requires utilities to purchase electricity from renewable elec-

tricit sst owrs at log-tr, xd rats stablishd b utilitis ad/or rgulator

commissions. The program can pay producers higher than market rates to put their re-

newable energy on the grid based on factors such as the technology used or how much

of the project is locally owned. FiTs are widely used around the world and are emerging

in states (vermont, Washington, and California) and cities (Gainesille, FL, and Sacra-mento, CA) across the country. Federal leadership is essential to support state and mu-

nicipal incenties to ensure that FiT programs reach community-scale projects. As sug-

gested by the National Renewable Energy Laboratory (NREL), FERC should conduct an

administratie inquiry and rulemaking process to create clear guidelines for states to

set prices that utilities pay to producers under a FiT program. Congress should amend

the Public Utility Regulatory Policy Act (PURPA) and the Federal Power Act (FPA) to

remoe or reduce eisting statutory constraints to state-leel FiT.

Createlegalstructurestofacilitatecommunityenergyproduction

Green jobs and equity ownership are mutually reinforcing building blocks of political

and economic power. The Eergreen Initiatie in Cleeland is an eample of how

community hiring initiaties, green jobs, and equity ownership can successfully come

together. No single structure is a magic bullet. Howeer, states must accommodate

lgal structurs with sipl, traspart ruls ad ictivs for owr/plos to

own more as they work. Legal structures must also allow for a range of inestors to

participate in community-scale entures without burdensome regulations.

Prioritizecommunityrenewableenergypolicyinlandusedecisions

The Federal Interagency Partnership for Sustainable Communities must support

equitable Energy Improement Districts (EID). Congress approed $150 million in FY

2010 for HUD as part of th itragc or t to support rgioal plaig grats ad

capital funds to implement the plans. HUD and partner agencies should gie priority

status for funding to Energy Improement Districts that deelop community-scale

renewable facilities, use municipal funds to pay for the construction of locally sited

power grids, rely on participatory planning processes, adopt inclusie zoning, and setsocial and economic equity goals.


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INTRODUCTIO

N

Leaders and eperts around the world hae been raising a clarion callenironmental

stability and the global economy are imperiled by the worlds eponential growth in

energy consumption and dependence on fossil fuels.

World energy consumption is projected to increase 37% by 2030.5 This outpaces pro-

jected global population growth by nearly 20%. In the United States, for eery one

percent increase in population, national electricity demand increases two percent. It

is not surprising then that the gap between domestic production and consumption is

epected to widen oer the net two decades (see Figure). How we satisfy electricity

dad ad bco or rg cit will hav dp cultural, virotal, co-

nomic, and social implications.

We need solutions as innoatie as the problems are comple. According to the Inter-

goernmental Panel on Climate Change, the planet is increasingly eposed to a host

of aderse conditions due to the rise in temperature associated with fossil fuel emis-

sionsfrom increased human mortality to the loss of biodiersity, from increasing food

scarcity to more intense and frequent etreme weather.

Around the world, the race is on to make greater use of renewable energy. Wind, solar,

gothral, ad biofuls or clar altrativs to fossil fuls ad pottiall ix-

haustible supplies of energy. Technology is adancing rapidly toward making energy

deried from renewable sources accessible and competitie.

Now is the time for Energy Democracy. Its goal is to create community-owned or con-trolled renewable energy and to inest that capacity with democratic principles that

foster interdependence, conseration, wealth-building, political autonomy, and eco-

nomic opportunity.

Small-scale, locally owned or controlled renewable energy projects can be structured

to allow local inestment, sweat equity, and a transparent process for setting fair pric-

es. This ision of Energy Democracy has the power to transform neglected and isolated

communities, often poor, often communities of color, into energy generators able to

5 International Forecast

Data, Energy Information

Administration.

Energy Supply and Demand Overview

Source: Annual Energy Outlook 2010 Energy Information Administration

0

50

100

150

200

2007 2010 2013 2016 2019 2031 2034

(Quadrillion BTUs)

Actual Projected

20 22 20 25 20 28

IMPORT GAP

Nuclear

Renewables (non-hydro)

Natural Gas

WHAT WE CONSUME

WHAT WE PRODUCE Fossil Fuel


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add power to the grid, meet the energy needs of their own communities, enhance po-

litical and economic ties with neighboring communities, and contribute to the nations

capacity to independently produce clean, sustainable energy for all of our needs.

Without interention, communities of color risk missing a transformatie opportunity

for a meaningful role in Americas changing energy economy. With people of color fast

becoming half of the national population, this is unacceptable.

Right now, renewable sources represent 7% of the worlds supply of energy, but they

are projected to be the fastest-growing source of world electricity generation, supply-

ing 21% of the worlds electricity by 2030.

According to Daid Morris, vice President of the Institute for Local Self Reliance, Now

is the time to be inoled in renewable energy, because it is a seeral-hundred-billion

dollar industry with enormous federal and state incenties, growing 10-40% a year. 6

One critical technological breakthrough is in electricity distribution. Until recently,

electricity has reached American homes and businesses primarily from large central-

ized facilities. But renewable energy technology is changing that paradigm. Today,distributed generation is on the rise. Instead of one centralized electricity generator,

small operators can supply local demand.

Small power producers are making money today from renewable energy by generating

electricity and selling that power through a transmission grid to connected businesses

and households. The technology is at hand for a community-owned or controlled en-

ergy project to do the same. Reenues from community-produced energy can be rein-

ested into the community and build the local, regional, and national economy.

This white paper eplores how an Energy Democracy policy framework can enable com-

munities of color, in particular, to own or control small-scale renewable energy facilities.

Small-scale refers to generation capacity of 3 0 megawatts or less if you go by the FERC

Sall Powr Dsigatd Facilit ditio. Howvr, arl four out of t lctricit

gratig facilitis hav gratio capacitis of v gawatts or lss. What attrs

in determining the scale of community generation is the process. A community renew-

able energy generating facilitys scale should be decided by stakeholders and sharehold-

ers and be informed by rigorous study of the economic, human, and enironmental im-

pacts. Bcaus a coguratios ar possibl for a couit-scal facilit, w do ot

prscrib what capacit or for ths facilitis should ta; that will var with dirig

local conditions. Plus, what makes sense today may soon be outpaced by technological

adances. Fundamentally, howeer, a community renewable energy facility is as much a

process that preseres community control as it is an actual facility creating energy.

Community renewables occupy a place in a community because wind turbines, solar pan-els, and other renewable energy technologies require a physical location. It is a process be-

cause of the comple relationship shared among households, organizations, institutions,

and goernment that is required een before a kilowatt hour of energy is produced.

A community renewable facility as a process must inole the community from the ear-

liest stages. This includes education because many communities, regardless of income,

are not prepared to be energy producers. A coordinated process brings together stake-

holders to enision what is possible and map paths to success.

6 Morris, Daid. Personal

interiew, 12 December 2009.


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What ar so of th possibilitis? A couit-scal facilit ight b a twor of

rooftop solar panels on homes, schools, and other community institutions generating

electricity for members and selling the ecess to the utility company. It could be a part-

nership between communities able to assemble land for a wind farm and those better

positioned to contribute other assets, such as money and engineering epertise.

Whateer the form, communities of color hae a strategic opportunity to embrace therenewable energy reolution. With bold ideas and supportie policies, communities of

color can build capacity to produce local renewable power and contribute to a more

docratic rg coo. Ths ivstts or th opportuit to build walth

in their communities and help America transition away from non-renewable and e-

pensie fossil fuel.

This white paper proides an oeriew of the conditions communities of color face as

th rg art trasfors ad w opportuitis rg. It ors a itroduc-

tion to small-scale production and a distributed-generation framework which can sup-

port equitable participation in renewable energy generation. It includes case studies

of community renewable energy projects. And it concludes with recommendations for

an eplicit community renewable energy policy that supports communities of color asproducers in Americas energy future.

C O M M U N I T I E S O F C O L O R A N D E N E R G Y

If the 34 million American households of color resided in a single state, their house-

hold electricity demand would eceed that of all the residential, commercial, and in-

dustrial users in California, the state with the highest electricity demand in the country.

Households of color demanded as much as 385 billion kilowatt hours of electricity in

2009. Based on the most recent retail price data aailable, this translates to $41 billion

in electricity buying power by households of color. This buying power should climb for

the foreseeable future. The number of households of color in the United States is pro-

jected to increase to 56 million by 2030 and reach an estimated 80 million by 2050.7 This

sipl aalsis illustrats th broad ad growig sigicac of couitis of color

in domestic energy policy and markets. Yet scholarship, policy deelopment, and mar-

ket innoation hae not eplored community renewable generation or participation by

communities of color as part of our energy future.

Trend analysis shows all households are spending more on electricity. The chart on the

net page shows that households in communities of color are deoting a greater share

of the utility bill8 to electricity. Households may eperience price shocks due to changes

they do not control, such as how their electricity is produced (coal ersus natural gas)

and the olatility of market prices.

Households of color spend at least 30% more for energy than white households do.9

Additional analysis reeals that African Americans spent $1,439 annually ($120 per

month) on their electric bills, and that electricity accounted for nearly 40% of the total

utility bill in 2008. This was equialent to the highest dollar amount and share in a de-

cade. Hispanic or Latino consumers eperience the second highest cost burden. They

spent $1,305 ($109 per month), and electricity accounted for nearly 37% of the total

utility bill. Asian consumers spent $1,229 ($97 per month), and electricity accounted

for 34% of th total utilit bill, up four prctag poits fro 2003, th r st ar data

became aailable.

7 U.S. Census Bureau,

Population Diision;

Projections of the Non-

Hispanic White Alone

Population by Age and Se for

the United States: 2010 to 2050

(NP2008-T14) and Projections

of the Population by Age and

Se for the United States:

2010 to 2050 (NP2008-T12).

Weighted aerage household

size for non-white households

calculated from Current

Population Surey, 2009

Annual Social and Economic

Supplement.

8 Utilities, fuels, and public

serices category of the

Consumer Ependiture surey

may include epenses incurred

for natural gas, electricity,

fuel oil and other fuels,

telephone serices, water,

and other public serices.

9 American Coalition for Clean

Coal Electricity study found

that households earning

less than $50,000 (51% of all

households) spend 24% of

aerage after-ta income on

energy. Households earningbetween $10,000 and $30,000

could spend as much as 26% of

aerage after-ta income on

energy. For African American

families aerage after-ta

income in 2008 was $35,949;

for Latinos, $38,252; and for

white households, $54,125.

The aerage spending on

energy was $6,200 in 2008.


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Households should not hae to choose whether to pay rent, plug in the refrigerator,

or see the doctor. Households of color, who more often face star k economic choices,

need dynamic solutions that reduce the cost of residential electricity and leerage

the potential of community-scale power generation as a pathway out of chronic eco-

nomic stagnation, enironmental degradation, and social isolation.


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S m A L L S C A L e G e n e R A T O R S

This white paper is especially interested in the state of small-scale renewable

generators in electricity markets. Community-scale generation is small-scale and it

is especially important to understand this category from a market, technology, and

policy perspectie.

Our aalsis ds that sall scal grators or radil or cla powr to co -

sumers than traditional generators. 45% (3,970) of all small small scale generators use

renewable energy as a primary or a secondary source. In contrast, only 18% (2,536) of

traditional generators can make such a claim.

Small-scale generators are numerous, but their generation capacity is disproportion-

ately low relatie to their grid access. Nearly 40% of all generators hae capacity of

v gawatts or lss, ad two out of thr of ths ar rall sallwith capacitis

not eceeding two megawatts. Altogether, small-scale generators hae the capacity

to produce a mere 13 gigawatts of electricity compared to 1,109 GW by traditional

generators. Still, at capacities of this size, community-based facilities could becomereliable renewable energy producers, par ticularly to the residential sector. And small

scal grators, as a group, could pla a sigicat rol i icrasd rwabl

energy consumption.

What abls couit rwabl gratio, particularl i couitis of color?

We eamine consumption patterns, the cost of electricity, and who is paying for it. And

we eplain the enormous potential for saings, social equity, and enironmental quality

made possible by a dstributed-generation approach.

Electricity Generators 2007 Snapshot

Source: Form 860/1, Energy Information Administration

* Small-Scale Generators are five megawatts or less in nameplate capacity.

(Nameplate capacity is the maximum rated output of a generator under

specific conditions designated by the manufacturer. Generator nameplate

capacity is usually indicated in units of kilovolt-amperes (kVA) and in

kilowatts (kW) on a nameplate physically attached to the generator.)

39%

61%

18% Use Renewable Energy as Primary

or Secondary Energy Source (2,536)

TRADITIONAL GENERATORS

SMALLSCALEGENERATORS*

45% Use Renewable Energy as Primary

or Secondary Energy Source (3,970)

Two-thirds have capacity of2 megawatts or less (5,870)


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C O N S U M P T I O N & P R I C I N G

Th v-ar avrag of rg cosuptio b custor group shows that hous-

holds, on a per unit basis, use the least power. U.S. households typically consume

11,000 kilowatt hours per household and commercial consumers on aerage used 77

megawatts. Industrial consumers on aerage used 1,349 megawatts of power, and con-

sumers in the transportation sector used 7,358 megawatts.

Nameplate Capacity (2007)


(Megawats)

600,000

800,000

1,000,000

1,200,000

Small-scalegenerators

Traditionalgenerators

13,781 MW

1,109,002 MW

200,000

400,000

For every 80MW of electric

capacity held by

traditional generators,

1MW is held by

small-scale generators

* Small-scale generators are five megawatts or less in nameplate capacity.

(Nameplate capacity is the maximum-rated output of a generator under

specific conditions designated by the manufacturer. Generator nameplate

capacity is usually indicated in units of kilovolt-amperes (kVA) and in

kilowatts (kW) on a nameplate physically attached to the generator.)

Electricity Consumption by Sector 20032007


(Megawa hours per unit)

11

77

1,349

7,358

1,000 2,000 3,000 4,000 5,000 6,000 7,000

TRANSPORTATION

INDUSTRIAL

COMMERCIAL

RESIDENTIAL


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Households comprise the largest number of consumers of electricity. Recent sta-

tistics reeal that more than 120 million customers rely on the grid to power their

homes. The commercial sector represents almost 17 million customers, followed

by the industrial and transportation sectors; 750,000 customers and about 1,000

customers, respectiely.

The residential sector is the largest block of electricity consumers (36%) and consumes

the least energy on a per megawatt basis. What does this translate to in terms of the

rtail pric of lctricit ?

Annual Electricity Purchasers by Sector 20032007 (avg)


(Thousands)

120,645

16,916

750

1

20,0 00 4 0,0 00 60,0 00 8 0,0 00 10 0,0 00 120,0 00 140,000

TRANSPORTATION

INDUSTRIAL

COMMERCIAL

RESIDENTIAL

Retail Electricity Price by Sector 20032007Source: Form 860/1, Energy Information Administration

Residential

Commercial

Transportation

Industrial

(Cents per kilowatt hour)

$0.00

$0.02

$0.04

$0.06

$0.08

$0.10

2003 2004 2005 2006 2007


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Households pay more.12 The industrial sector gets lower prices by using substations that

accept cheaper high-oltage power from power producers. Households, not equipped

to take high-oltage, require more epensie, lower-oltage power. As a result, house-

holds pay a premium oer both the commercial and industrial sectors per kilowatt hour.

But it doesnt hae to be that way. Households generating their own power, or who

ar coctd to a couit-owd opratio, will clai th prots that would oth-

erwise go to big utility companies. A conentional co-op electricity producer realizedabout 8.8% i prot i 200 7. To gt a ss of th pottial, iagi all housholds of

color coctd to couit-owd lctricit producrs. Th prots would rach

about $3.6 billion, which could be used to reduce utility bills or be inested in under-

funded infrastructure, support for entrepreneurs, and necessary social programs.

Svral factors iuc pric that do ot var with th aout of rg cosud.

Electricity prices are drien by structural forces, such as the market and regulatory

enironment.

Th gur illustrats how th aout vrda housholds spd o lctricit is a

result of how we generate electricity. This includes, among other factors, the type of

fuel. All this can be changed through policy and entrepreneurship, proiding econom-

ic ad virotal bts. Couplig a w odl of gratig lctricit ad

gratr rg cic ol aplis th afortiod cooic ad viro-

tal bts.

Today, the aailability of green energy far outpaces its accessibility, according to indus-

tr sourcs. Ibis World, a ladig art rsarch r, stiats that half of all lc -

tricity customers (50%) now hae the option to purchase renewable energy. 13 But only

one-half of one percent (0.5%) of households consume renewable energy. 14 The report

speculates that cost, lack of education, and too few incenties may eplain why more

households do not adopt renewable energy. If these reasons are accurate, it is reason-

able to assume that of the half-percent of consumers adopting renewables, communi-

ties of color make up a relatiely small proportion.

Nationwide Average Electric Bill By Component

Source: FERC Staff Report on Cost Ranges for the Development and

Operation of a Day One Regional Transmission Organization Docket

No. PL04-16-000page 25 Figure 5 Average Retail Bill Impact:

Nationwide (% of Total $/kWh) October 2004

($ per kWh)

31% Distribution

8% Transmission

0.3% Regional Transmission

Organization (RTO)

61% Production

12 See Bureau of Labor Statistics

for a detailed discussion of

how Consumer Ependiture

Surey data is used to estimate

electricity ependitures by the

household, commercial, and

industrial sectors.

13

Households can purchaserenewable energy the way

they purchase non-renewable

electricity (from a utility, for

xapl), or as a ost to thir

current energy demand using

rwabl rg crticats,

or REC.

14 Renewable generation

industry report.


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D I S T R I B U T E D G E N E R A T I O N

Todas rg suppl ows i o dirctio, fro ctral powr statios to distribu-

tion facilities and then to consumers.

While a substantial proportion of electricity generators are small power generators,

most of our electricity comes from large and highly centralized energy generation

facilities running primarily on fossil fuels.

Electric Power Generation Today

Power Generator

Transmission

System

Bulk Substation

Distribution SubstationFeeder Lines

Service Transformer

Consumer


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Changes in technology, consumer preferences, and recent regulation are changing

energy distribution. Distributed generation is a dynamic alternatie for energy gen-

eration. Instead of one large centralized system for the production and transmission

of electricity, energy generation occurs near the point of use, and ecess capacity(unused electricity) can be sold back to the grid. Small operations, een indiidual

households, can generate and sell energy. This approach to harnessing and distribut-

ing energy from many small energy sources is fueling new market opportunities and

enhanced competitieness.15

15 European Union, Energy

Research.

Renewable energy capacity and communities of color

Source: EPA, USDA Farm Census (07), FERC, EIA, ESRI, Inc.

Renewable energy capacity and communities of color

Source: EPA, USDA Farm Census (07), FERC, EIA, ESRI, Inc.


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Under a framework of distributed generation, locally owned and controlled renewable

energy production would be positioned to take adantage of the dynamic changes in

the energy sector. This type of enterprise allows communities to meet local demand,

sell ecess power back to the grid, support a supply chain of clean energy, deelop sus-

taining infrastructure, and create inestment opportunities bringing long-term eco-

nomic iability. The energy interdependence associated with distributed generation

as possibl a host of pottial bts for whol rgios. For xapl, a shortrtravl distac fro supplir to cosur as gratr cic ad savigs. Th

way we generate electricity accounts for as much as 61% of a households electricity

bill. Shorter distances alone would produce an estimated 30% saings.16

Distributed generation requires fewer large centralized plants to proide energy and

reduces the number of epensie high-oltage lines constructed. Fewer and shorter

lines means less electricity lost in transmission and more land freed up for conseration

and other uses.

The right technology is on the horizon or already aailable. According to recently pub-

lished research, when accounting for the total cost of ownership and legislation penal-

izig xcssiv carbo issio, rwabl sourcs ar oft or cost ctiv to

own and control than their fossil fuel burning counterparts.

Distributedgenerationprovidesnewrolesforcommunitiestopreserveand

increasesocialequity,environmentalquality,energyindependence,andwealth.

Distributed generation is a compelling model for Americas energy future. Communi-

ties of color that take adantage of distributed generation to transition from energy

consumers to energy producers will transform their relationships with the larger re-

gional economy, bringing structural changes, saings, wealth, resiliency, and greater

political interdependence between communities of color and their neighbors.


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STRUCTURALHURDLESTOENERGYDEMOCRACY

Whil th pottial is orous for couitis of color to bt fro dirctl pro-

ducing renewable energy, many obstacles stand in the way. The technology to create

electricity or transportation fuel eists. What is lacking are equitable policies, access to

credit, and legal structures that support ownership models that empower communi-

ties, particularly communities of color, to participate in our collectie energy future. To

b ctiv, rfors ad iovatios ust ipact all stags of rg productio.

Todaytheinstitutionalhurdlesaremuchgreaterthanthetechnologicalhurdlesfor

communitiestogenerateanddistributeenergy. Community renewable policy so-

lutions require support from all leels of goernment and recognition of the need for

comprehensie solutions to achiee equitable outcomes. If we are serious about clean,

rliabl, ad aordabl rg w ust thi across th boudaris of aordabl hous-

ing, access to high quality broadband, enironmental protection, land use planning,

securities, and taation policy.

Solutios that addrss spcic coditios ar critical. W hav idtid four factors

that limit the participation of communities of color in the generation of renewable en-

rg: (1) owrship ad cotrol, (2) darth of acial tools, (3 ) iforatio ad duca-

tio, ad (4) trasissio ad distributio. each of ths aras rquirs spcic policis

to allow communities in general, and communities of color in particular, meaningful

access to energy saing and wealth building opportunities.

O W N E R S H I P & C O N T R O L

As Daid Morris, the vice President of the Institute for Local Self-Reliance, says, The

principal obstacles to a community-based system are a lack of capital, management

know-how, and the cost of aggregating inestors and owners. 17 In addition, land use

restrictions, zoning, and regulations could play a direct role in enabling or inhibiting

community-scale energy generation.

Whateer form a community facility takes, it will require a certain amount of property

where solar, wind, and other renewable technologies can be installed. In this respect,

communities of color often are at a disadantage because of low land and homeowner-

ship rates.

Indiiduals and organizations need ways to inest in community renewable energy that

do not require home ownership and that allow both passie inestment, like buying

shares, and actie inestment, like generating power on your roof or being an owner-

employee. For those with limited cash but the capacity to contribute sweat equity (con-

tributios of ti ad or t i xchag for owrship), fw altrativs allow th to

participat i quit origs. Couitis of color d owrship odls that ar

not restricted to those with up-front capital.

No single eisting legal structure proides the perfect match that balances community

cotrol ad owrship with th d for fudig. For istac, ot-for-prots ad co-

operaties hae limited ability to access capital from the federal goernment, institu-

tional inestors, foundations, indiiduals, and alternatie inestors (e.g., enture capital,

hedge funds). Communities need improements to, or creation of, ownership structures

that allow gratr was to add quit fro a divrsit of ivstors with dirt ris prf-

erences. These legal structures should put as much community and eternal capital to

work as possible, while presering community control and stakeholder accountability.

17 Morris, Daid. Personal

interiew, 12 December 2009.


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22

S H A L L O W D E P T H O F F I N A N C I A L T O O L S

The web of renewable-energy ta incenties, dierse technologies, and numerous ser-

ice suppliers is staggeringand growing. Identifying an optimal mi of subsidies and

suppliers to meet the needs of a ariety of inestors is cumbersome. For communities,

the lack of standardized purchasing power agreements and business deelopment tal-

ent limits their ability to compete. Whats more, public incenties are not to scale forcommunity-leel generation projects and are often altogether absent at the state and

local lvls. Th ow of capital tds to srv ctralizd, istitutioal-scal rwabl

energy projects.

No matter which source of renewable energy we eamine, initial capital ependitures

for renewable energy technology and distribution tend to be higher than for conen-

tional sources. This high up-front cost is a hurdle to Energy Democracy een for well-

funded communities. Although there are immediate enironmental and economic ben-

ts to harssig rwabl rg at th couit lvl, th rtur o ivstt

is often long and materials and installation epenses high. For instance, to install solar

photooltaic technology, the aerage installed cost for a residential system is $7.6 per

watt

18

or an aerage installed cost of $11,400 for a 1.5 kW system. Some renewableprojects estimate that it could take 17 to 25 years to recoup the initial inestment.19

The lack of tools or coordination to help communities harness their renewable energy

generating capacity has race and class implications. For instance, our primary approach

to subsidizig housholds for usig rwabl gratio or rg cic is tax

credits. According to IRS data, these credits seem to be missing the majority of low-

and moderate-income households. Of the four million 2007 federal ta returns that

claimed a residential energy credit, 3.1 million (78%) were from households making at

least $75,000.20 Low-walth ad low-ico housholds ad ot-for-prots d ad -

ditioal pathwas to rwabl gratio that dirctl ost th costs of acquirig

land, technology, and other capital assets that ta credits do not coer. Policymakers

ust loo bod roof top-to-rooftop approachs ad crat th acial tools cs-

sary to deelop renewable energy at the community scale.

I N F O R M A T I O N A C C E S S & E D U C A T I O N

Before communities can eercise ownership and control of energy production, they

need access to information and education. Penn Loh, the former Eecutie Director

of Alternaties for Community and Enironment, suggests, We understand the alue

in controlling land and political power, but dont hae a good understanding of what it

means to control energy supply. Communities of color, like most communities, need

to learn the relationship shared by community political power and renewable energy in

economic and enironmental terms.

Communities need accessible information and education about the enironment, tech-

nologies, practices, and policies that will help them deelop renewable energy. Fortu-

nately, federal, state, local, and priate entities are making more information aailable

about renewable energy, and its increasing daily. But communities still lack tools to

interpret information from multiple platforms to answer critical questions like How

much renewable capacity could be generated from x number of acant lots and x

ubr of roofs pr ar i ighborhood? This probl is sstic, ad it liits

broader participation. For eample, information on aailable technologies is not always

18 Lawrence Berkeley National

Laboratory; Tracking the

Sun: The Installed Cost of

Photooltaics in the U.S. from

19982007, February 2009.

19 Simon, Stephanie.

ProducersSeeds for Change:

Rural electric co-ops hae

lagged behind other utilities in

shifting to alternatie energy;

Thats starting to change.

Wall Street Journal,

September 8, 2009.

20 Internal Reenue Serice, SOI.


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24

MODELPROGRAMS&POLICIES

V I L L A G e e n e R G y G R A m e e n S H A k T I S C A L A B L e , G R I D L e S S S O L A R e n e R G y I n C L U S I O n B A n G L A D e S H

Grameen Shakti (village Energy), a sister company of the Grameen Bank, has installed

nearly 200,000 solar home systems across Bangladesh and has plans to install one mil-

lion more by 2015.24 Its approach is to build trprurship i low sill/low ico

communities while broadening adoption of renewable energy. Their work has earnedthe organization the Zayed Future Energy Prize of $1.5 million.

Grameen Shakti uses solar energy to power eerything from mobile phones to sewing

machines through a combination of microcredit funding and workforce training. It has

xibl pat optios, which icrass th bradth of houshold participatio ad op -

portunities for female entrepreneurs to learn a green trade while earning higher wages.25

Grameen Shakti proided training to 2,500 women technicians (with a goal of training

100,000), who market and install the solar panels and proide free monthly checkups

wh th collct istallt pats. As part of th srvic, Gra Shati ors

a post-warranty annual maintenance serice.

Beyond solar panels, Grameen Shaktis other program in operation promotes cleaner,

rwabl, ad or cit rg us. It has istalld aroud 6,000 bio-gas plats,

which conert cow and chicken dung into gas for cooking, lighting, and fertilizer. It

plas to xpad th progra i a aciall sustaiabl ar through a siilar crdit

chais as that acig th solar pals. Th bio- gas plats ar of t itgratd

with poultr fars, which rciv th dual bt of disposig of wast bproducts

and meeting local energy demand. Other animal farms are supplementing income by

selling their waste.

U N I T E D P O W E RT H e F I R S T S O L A R F A R m C O O P e R AT I V e B R I G H T O n , C O L O R A D O

Like most electric cooperaties, United Power was not under any goernment pressure

to increase renewable energy generation. In fact, cooperaties hae no direct access

to federal ta credits to be inoled in green energy. Yet this has not deterred co-ops

nationwide from boosting their renewable capacity by 65% last year, according to the

National Rural Electric Cooperatie Association.26

Taig a iovativ approach, Uitd Powr rctl stablishd th rst solar far

cooprativ, which is op to rtrs, oc-par tats, hoowrs with havil

shaded roofseen customers outside the United Power serice area who might want to

inest in green energy and donate the power their panels generate to a local charity.27

For a price of $1,050 per solar panel, an inestor gets a 25-year lease on a photooltaicpanel set up on United Powers land. The co-op takes care of installation, insurance,

and maintenance. Inestors can isit their panels anytime and track their energy output

online. Each month, they get credit on their bill for that amount. Inestors keep their

panels, and credits, een if they moe. (If they moe out of United Powers serice area,

they can donate the credits to a local charity and earn a ta deduction.) A single panel

generates about $3 to $4 a month of electricity; depending on rate increases, it might

take 17 to 25 years to recoup the inestment, but inestors hae the satisfaction of con-

tributing to improing the enironment.28

24 Financial Times Climate

Challenge Innoation

eamples.

25 Payment options are: (1)

customer pays 15% of the total

price down payment, and the

remaining 85% is paid within

36 months with a 6% flat rate

serice charge (2) Customer

pays 25% down payment, and

the remaining 75% is paid

within 24 months with a 4%

flat rate serice charge,

(3) Customer pays 10% down

payment, and the remaining

90% is paid with 42 weekly

checks, with no serice charge.

26 Ecluding hydropower.

27 Simon, Stephanie.

ProducersSeeds for Change:

Rural electric co-ops hae

lagged behind other utilities in

shifting to alternatie energy,

Wall Street Journal, September

8 2009.

28 Ibid.


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25

O N T A R I O G R E E N E N E R G Y C O M M U N I T I E S O n TA R I O , C A n A D A

Green power entrepreneurialismhas arried in Ontario.29 The proince recently ad-

opted the Green Power Act with the aim of reducing the hurdles for communities in

Otario, icludig farrs, co-ops ad o-prot orgaizatios to brig gr rg

projects to life.30 The Act created a platform for community-scale power generationthrough broad and inclusie policies supported by technology to enable us all to be

energy conserers and generators and not just consumers.31 The Act empowers mu-

nicipalities, communities, and households in the proince to meet those objecties

through svral w progras aid at arl stag ad ogoig support. Th acial

ctrpic of ths progras is a Fd-i-Tari (FiT). To stiulat rwabl rg

generation and consumption, FiT requires utilities to purchase electricity from renew-

abl lctricit sst owrs at log-tr, xd rats stablishd b utilitis ad/or

regulatory commissions.32 FiTs pay producers higher than market rates to put their re-

newable energy on the grid, based on factors such as the technology used or how much

of the project is locally owned. This could be as much as eighty cents per kilowatt hour,

or si times what a household would pay to buy the same amount of electricity in the

United States.

33

Th FiT alo is ot what as th Act sigicat for couitis, bcaus grat-

ing renewable energy and selling electricity on the grid is an etensie and epensie

proposition. The Act goes further by addressing the needs of the chronically under-

sered. The Act proides funding for community facility creation, particularly for indig-

enous people of the First Nations, and the Community Energy Partnerships Program,

which provids arl stag acial assistac to partrships of rsidts, charitis,

o-prots, ad co-oprativs, as wll as brs of th First natios.

Couit-basd projcts ar said to carr sigicat iitial ris ad oft hav li-

ited resources. The Community Energy Partnerships Program increases the likelihood

of success by absorbing critical up-front cost through a graduated incentie structure

based on the percentage of local ownership.34 For eample, a project with 50% or more

community ownership would receie an add-on of up to a full one-cent on top of FiT

tari rats. eligibl soft costs udr th progra iclud sit cotrol ad sit surv

studies, resource assessment studies, and enironmental and engineering studies.

The Municipal Renewable Energy Program of the Act proides municipalities with the

acial rsourcs to build ad prsrv vital public ifrastructur, trac aag -

ment, and emergency management costs35 to bring renewable energy projects to life

that cannot be passed along to project deelopers. The legislation authorizes munici-

palities to bring renewable energy to the grid, up to 10MW, without haing to create

another legal entity.

29 Story, Jane. Green Energy

Act empowers communities,

Entrepreneur.com, June 2009.

30 Ontario Ministry of Energy

and Infrastructure.

31 Story, Jane. Green Energy

Act Empowers Communities,

Entrepreneur.com, June 2009.

32 Kubert, Charles and Sinclair,

Mark. Distributed Renewable

Energy Finance and Policy

Toolkit. Clean Energy States

Toolkit. December 2009.

33 Hamilton, Tyler.

Green Power to the People.

Green Energy Act Alliance,

2009.

34 Ontario Ministry of Energy

and Infrastructure.

35 Ibid.


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26

E v E R G R E E N I N I T I AT I v EO W n I n G O U R J O B S C L e V e L A n D , O H I O

A rct rport ass, If gr jobs ar good, ist a gr job ou ow v bttr?36

In Cleeland, Ohio, a new green employment and ownership model is answering this

qustio i th arativ. Startig i 2007, th evrgr Iitiativ has lauchd a

LeeD-crtid corcial-scal laudr that is plo-owd ad proiss to x-pad th bts of th gr coo to couitis of color.

Th Glvill ighborhood is a xapl of th cts of chroic discoctio

from the economic functions of the region: a poerty rate eceeding 30%, thousands of

homes stripped and abandoned, dwindling population base, and rising foreclosures

before the recession. In order for the Initiatie to be successful it had to leerage its

major assets: people and proimity to the local high-growth economic cluster.

Glennille is located close to Uniersity Circle, a cluster of institutions generating an

estimated $3 billion of annual demand for its goods and serices. These institutions are

long-lied and dierse, ranging from goernment to healthcare to philanthropy. Lead-

ers of Uniersity Circle institutions who wanted to impact ciic life in Cleeland formedth Gratr Uivrsit Circl iitiativ (GUC) ad agrd to a thr-to-v-ar wi-

dow to stimulate $1.5 billion in institutional deelopments. 37

O ivstt was i th evrgr Iitiativ. Th partrs brought i acial r -

sources and relationships and committed to Eergreens ision of building the capacity

of residents through workforce training and employee ownership. Together, the GUC

and oer 290 additional stakeholders were responsible for the launch of the LEED-cer-

tid evrgr Cooprativ Laudr, locatd o east 105th Strt, orth of St. Clair

Aenue, in 2009. The Cleeland Foundation inested $3 million in a reoling loan fund,

and the City of Cleeland proided an additional $2 to $3 million of funding.

All quit i th cooprativ is owd b th cooprativs ft plos. Thir q-

uity contribution is built using a cumulatie structureas employees work, their share

of the business grows. After the si month probation period, owner-employees earn

$10.50 per hour, 50 cents of which is applied to the purchase of equity. After three years

employees would earn $3,000 in equity; after seen years their equity stake epands

to $65,000. Eergreen Laundry owners wages are higher than local wages and include

halth car bts.

The Eergreen Initiatie is building new clusters of cooperaties based on this model.

Ohio Cooperatie Solar is positioned to apply this model to the installation of solar en-

ergy panels on the roofs of GUC partners and across the city. OCS will lease rooftops,

install solar panel arrays, and sell the electricity back to owners of the rooftops. To e-

pand this model een further, the Initiatie has created a cooperatie inestment fund

to inest in other cooperaties. The Eergreen Laundry has committed to return 10% ofits pr-tax prots to th fud, providig additioal rtur opportuitis for its owrs.

36 Alperoitz, Gar; Howard,

Ted; Dubb, Stee. Cleelands

Worker-Owned Boom.

Yes, June 5, 2009.

37

The group is comprisedof The Cleeland Clinic,

The veterans Affairs Medical

Center, Uniersity Circle, Inc.,

Neighborhood Progress, Inc.,

the George Gund Foundation,

The Kent H. Smith Charitable

Trust, Charter One Bank,

the Greater Regional Transit

Authority, and the City of

Cleeland.


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E N E R G Y I M P R O v E M E N T D I S T R I C T S S TA m F O R D , C O n n e C T I C U T

As communities become increasingly responsible for shaping their futures, the respon-

sibilities shared between municipal agencies and communities are going to change.

Stamfords Energy Improement Districts sere as both a model and an opportunity for

communities to consider the direct relationship between land use and renewable en-rg, spciall i urba aras. Siilar rg district or ts hav rctl bco law

in vermont, enabling the creation of Clean Energy Assessment Districts. 38 Admittedly,

Stamfords EID ordinance grew out of a desire to be less eposed to grid failures that

would disrupt th local baig coo, ho to ultiatioal rs such as UBS.

Howeer, the need to reduce costs, increase reliability, and proide capital to pay for

the construction and deelopment of small-scale, locally sited power grids is applicable

to all communities.39

The Stamford ordinance follows a state law allowing municipalities to set up EIDs and

giing them the authority to issue bonds to pay for the establishment of an indepen-

dent electrical grid with its own power plants.40 The Stamford ordinance, in particular,

proides property owners the means to create alternatie energy systems includingdistributie generation, combined heat and power, and renewable energy systems and

to do so in partnership with other properties. 41

Although the focus of the Stamford EIDs is on reliability, it proides a concrete basis for

a frawor that supports quit, broad ad xibl participatio, dcisio-aig,

accountability, and ownership including communities of color.

A community EID could pay back municipal bonds (like the Stamford EID) through pur-

chasing agreements with customers. A community EID proides the opportunity to re-

isit local planning actiities using a sustainability frame. By taking a participatory ap-

proach to planning, EID legislation and zoning could lead to energy plans deeloped

through a procss to bt th built ad social virot, too. Such a par ticipator

EID must consider:

Clar articulatio of how dirt groups ca volutaril opt i or out of a eID,

Visibilit ad sitig stadards that liit th gativ ipact of futur

deelopments on eisting generation capacity,

Rducig th public halth ris or virotal ris of lad or buildigs rsultig

from electricity generation or distribution.

Ictivs that a stat or local dollars availabl for rquird pr-costructio

deelopment epenses associated with community-scale generating facilities

within an EID,

moitorig structurs ad rportig rquirts that icorporat social

quit bchars alog with covtioal cic ad gratio

benchmarks,

Lgislatio that stablishs a iiu aout of ictivs that ust b

distributed to under-resourced communities and a cap on the amount of

rsourcs owig to xistig highr-opportuit aras.

38 vermont Natural Resources

Council.

39Bond Buyer, July 23, 2007.

40New Haven Register,

January 4, 2008.

41 City of Stamford, CT.


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28

RECOMMENDA

TIONS

F O R T H E F E D E R A L G O v E R N M E N T

ma couit rwabl rg polic a fdral priorit. Dcisio ars

at all leels will respond to federal measures and incenties that signal the

national importance of community renewable energy policy. These measures

and incenties should be eplicitly connected to national renewable energy

goals. Agencies including the Federal Energy Regulatory Commission (FERC)and the Enironmental Protection Agency (EPA) must direct public resources to

appropriate projects which, in turn, will draw priate inestment.

As suggstd b th natioal Rwabl erg Laborator (nReL),

the Federal Energy Regulatory Commission (FERC) should conduct an

adiistrativ iquir ad rulaig procss (icludig fact-dig) to crat

clar guidlis for stats to st pr ics for Fd-i-Taris. As part of this procss,

FERC should consider how to ensure equitable access to the grid for small-scale

facilitis. Th currt rst-co-rst-srvd polic stis couit

participation by placing small-scale generators in direct competition with

industrial-scale generators.

Cogrss should ad th Public Utilit Rgulator Polic Act (PURPA) ad

the Federal Power Act (FPA) as recommended by NREL in such a way that

reduces the constraints imposed by current federal law42 on the creation of

Fd-i-Taris. This rcodd lgislativ procss should iclud provisios

to monitor energy generation and consumption down to the neighborhood leel.

muicipal, stat, ad fdral agcis such as th evirotal Protctio

Agency (EPA), Energy Information Administration (EIA), Federal Energy

Regulatory Commission (FERC), Department of Housing and Urban Deelopment

(HUD), Department of Energy (DOE), Bureau of Land Management (BLM),

and other related agencies and programs should coordinate data releases that

can be integrated easily and used to ealuate renewable generation capacity

by communities.

Itragc partrships ust coordiat grats, loas, ad loa guarats

to support technical and policy innoations that proide under-resourced

communities with capacity to attract equitable and sustainable priate

sector renewable energy inestment. These partnerships should use funds

to bring community-scale technology to commercialization faster.

They should result in policies that support institutionalizing sustainable

energy planning at the neighborhood leel.

Th natioal Tlcouicatios Iforatio Adiistratio (nTIA) ad

the Rural Utilities Serice (RUS) should create a Capacity Building Fund to

help under-resourced communities compete for federal broadband funding.This fund would help communities deelop the fundraising, grant writing,

acial aagt, lgal, accoutig, ad othr capacitis cssar to

access and leerage federal dollars.

Cogrss ad th Itral Rvu Srvic (IRS) should provid ducatio

and greater ta-status certainty for organizations seeking to inest mission

and program related funds in community renewable generation projects.

42 Renewable Energy Prices

in State-Leel Feed-in-Tariffs:

Federal Law Constraints and

Possible Solutions. National

Renewable Energy Laboratory.

January 2010.


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29

FOR STATE, LOCAL & REGION AL GOvERNMENTS

Dvlop zoig ordiacs ad lgislatio ablig th us of erg

Improement Districts.

Provid ictivs to couitis that utiliz a participator plaig procss

for equitable and reliable community energy generation.

Coduct studis to assss ad pla for th cost of coctig couit-scal

powr productio to th grid sst. Fidigs should b traspart, vriabl,

and free to all.

Facilitat stat-lvl Fd-i-Tarri (FiT) progras, with a clar pathwa for

community-scale renewable energy prrojects.

Dvlop policis, siilar to th Gr Powr Act i Otario, that prioritiz

udrsrvd couitis ad support th gagt of rsidts, o-prot

organizations, and co-operaties in small-scale energy generation projects.

Ths iclud orig graduatd ictivs, i additio to stadard FiT rats,

based on the percentage of local ownership, and proiding capital to support

early stage risks and soft costs such as site sureys, enironmental and

engineering studies, and resource assessment.

F O R C O M M U N I T Y B U I L D I N GO R G A N I Z A T I O N S & S O C I A L E N T R E P R E N E U R S

Support th dvlopt of lgal structurs that allow worrs to ow or as

they work and allow multiple types of inestors.

Couit -scal producrs ca participat i a FiT toda, t stats hav b

sluggish to deelop them. Adocacy is needed to engage FERC and state utility

commissions in deeloping FiTs that facilitate small-scale energy generation.


30/30

The Center for Social Inclusion works to unite public policy research and grassroots adocacy to transform structural inequality

and eclusion into fairness and inclusion for all. We work with community groups and national organizations to deelop policy

idas, fostr ctiv ladrship, ad dvlop couicatios tools for a opportuit-rich world i which w all will thriv.

The Center for Social Inclusion

65 Broadway, Suite 1800 New York, NY 10006(212) 248-2785

www.centerforsocialinclusion.org

2010 Center for Social Inclusion. Creatie: Tronig Group.

Documents

Energy Democracy: Community Scale Green Energy Solutions