Encore Renewable Energy CEO Chad Farrell joined Episode 22 of the Factor This! podcast to talk about brownfield and energy community clean energy development and how the Inflation Reduction Act is impacting the bankability of these tricky projects. The episode will be available wherever you get your podcasts on Monday, Oct. 24.
A bright future for brownfield solar development
More than a decade ago, the proverbial lightbulb glowed over Chad Farrell’s head.
Trained as a brownfield remediation engineer, he decided to develop solar projects on otherwise unusable land. His company, Encore Renewable Energy, became a first-mover on brownfield solar development, boosted by federal incentives in the American Recovery Act of 2009.
Fast forward to today, and Farrell sees an even brighter future for brownfield solar project development due to another big chunk of federal help: the Inflation Reduction Act.
“Brownfields to brightfields has always been in our DNA,” Farrell said on the Factor This! podcast.
Even with Encore’s early focus on brownfield solar project development, those projects only make up a fraction of the company’s overall portfolio. That’s because building a clean energy development shop with a sole focus on brownfield projects hasn’t historically penciled out.
But the climate law includes a 10% adder to the investment tax credit or production tax credit for clean energy projects developed on brownfields, which nearly erases the cost cap between a brownfield and greenfield site. Stacked with additional bonus credits for domestic content, and any available state-level incentives, brownfield development just got a lot more attractive.
What’s more, brownfield projects often benefit from faster permitting and interconnection, two big drags on project timelines.
After the surprise unveiling of the Inflation Reduction Act, Farrell scrambled his team to reassess Encore’s project portfolio, honing in on the brownfield opportunity.
Farrell’s excitement extends beyond solar. Grid-scale energy storage projects on brownfields could now be feasible with the all-new standalone storage ITC coupled with the brownfields adder.
“I think there were four or five projects that were pretty buried in our pipeline that became more interesting all of a sudden,” Farrell said.
Brownfield clean energy development has been, and remains, heavily dependent on state-level policies. Encore has spent more than a decade lobbying its home state of Vermont.
Some states, like New Jersey and Massachusetts, have been long supporters of finding purpose for otherwise unusable lands. Farrell said he sees New Hampshire, Pennsylvania, and Virginia as, potentially, exciting new markets.
Because of the added costs, and the dependency on state-level support, Farrell believes brownfield project development will remain an industry niche. Reverse auction mechanisms and a race to the lowest price make greenfield projects easier to build and scale.
“We are still laser-focused on unlocking these environmentally challenged properties for clean energy generation,” Farrell said. “But at the same time, I think we realize there’s got to be some balance in our portfolio.”
Brownfields won’t be Encore’s main focus going forward but remain an important piece of its portfolio.
As a vertically integrated developer, builder, owner, and financier, Encore can help developers with a sole focus on brownfield origination that aren’t as well-financed or experienced.
Farrell said he’ll continue to seek out those partnerships.
And, he said the company is “actively seeking” to work with folks that are originating brownfield sites for clean energy generation that aren’t otherwise a good fit for Encore.
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Author: John Engel