Using ARPA Funds to Modernize Municipal Energy Infrastructure

As trusted stewards of public funds, municipalities have the responsibility to use resources like ARPA funding judiciously. With the added benefits available through the Inflation Reduction Act, a holistic approach to energy modernization is now more accessible than ever and can help your community maximize the available funding.

Why Energy Modernization Matters to Municipalities

Budget Stability: Outdated energy systems often come with high operational and maintenance costs. Modernizing the energy infrastructure can significantly reduce these costs, leading to long-term savings and increased budget stability.

Resilience to Weather Events: With the increasing severity and frequency of extreme weather events, municipalities need an energy infrastructure that can withstand and quickly recover from disruptions.

Progress towards Net Zero Goals: Transitioning to cleaner and more efficient energy sources will not only help reduce carbon emissions but also move municipalities closer to their net-zero targets.

Leveraging ARPA Funds for Energy Modernization

Direct Investment in Infrastructure: Municipalities can utilize ARPA funds to directly invest in infrastructure upgrades such as microgrids, solar panels, energy storage systems, and energy-efficient appliances and fixtures.

Integration of Smart Technologies: Advanced metering infrastructure, like smart water meters, can enable cities and towns to monitor and manage their water consumption effectively, leading to cost savings and improved system reliability.

Training and Workforce Development: The transition to modern energy systems requires skilled labor. Investing in training and capacity building ensures that municipalities have the workforce needed to maintain and operate the new systems.

Maximizing Project Potential with Incentives and Tax Credits

Utility Incentives: Utilities often offer rebates and discounts for projects that enhance energy efficiency or integrate renewable energy that can further reduce the cost of energy projects.

Tax Credits via Direct Pay: Previously, non-taxable entities could not benefit from federal tax credits, such as the Investment Tax Credit (ITC) or Production Tax Credit (PTC). However, with new provisions under the Inflation Reduction Act of 2022, municipalities can now receive direct payments equivalent to these credits, further lowering the net cost of energy projects.

Implementing a Layered Approach

Flexible Contracting Methods: There are many options besides the traditional design-bid-build process to implement a project. Performance-based approaches can alleviate insufficient staffing, budget instability, and energy savings risk. 

Apply ARPA Funds: While some contracting methods do not require an upfront investment, municipalities can still utilize ARPA funds as the primary source of funding for their energy infrastructure project.

Layer on Utility Incentives: When partnering with an energy services company like Centrica Business Solutions, our team will collaborate with utilities to help your community benefit from available incentives.

Maximize Tax Credits via Elective Pay: Once the project is implemented, you can apply for federal tax credits in the form of a direct payment to further reduce the costs of your modernization project.

Steps to Kickstart your Energy Pathway

1. Engagement: Meet with operations, finance, and other stakeholders of your community to gain departmental insights and support.
2. Planning: Identify deferred maintenance and discuss the short- and long-term goals for your community.
3. Assessment: Conduct a preliminary assessment of the existing energy infrastructure to uncover areas of improvement and roughly calculate potential energy and operational savings.
4. Implementation: Through a competitive procurement process, select an energy services company that provides the best value to perform an Investment Grade Audit and implement a solution that meets the unique needs identified for your community.
5. Measurement and Verification: Continuously monitor the performance of the implemented projects and adjust as necessary. Performance-based projects have an energy savings guarantee provided by the energy services company.
6. Operations and Maintenance: If needed, optional ongoing operations and maintenance can be provided by the energy services company.

In conclusion, the combined benefits of ARPA and the Inflation Reduction Act can provide municipalities with an unprecedented opportunity to revamp their energy infrastructure. Through thoughtful planning and strategic investments, cities and towns can implement future-enabled infrastructure projects that improve resiliency, sustainability, and financial stability for their communities.