How ‘Energy Communities’ Impact Renewable Energy Development in 2023
The Inflation Reduction Act (IRA) offers renewable energy developers extra federal tax incentives for projects in designated Energy Communities. These incentives affect solar, wind, and energy storage developments. This article will explore how to locate landowners in energy communities, the criteria for qualification, the potential benefits, and the geographical prevalence of the three types of Energy Communities outlined by the IRA, helping developers pinpoint these areas.
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Qualifying Characteristics of Energy Communities in 2025
Brownfield
A Brownfield Community is easily identifiable: it refers to properties with actual or suspected environmental contamination from previous uses, complicating expansion or redevelopment as designated by the US Environmental Protection Agency (EPA). This designation makes these sites eligible for funding aimed at redevelopment and cleanup. Brownfield parcels, often smaller in size, are particularly suitable for community solar developers and Battery Energy Storage Systems (BESS).
While Brownfield sites are distributed across the United States (see Figure 1.0 below), they are most densely found in former industrial and commercial hotspots, comprising only a small percentage of the total land area.
You can access the Brownfield data layer through LandGate’s PowerData tool.
Coal Communities
A Coal Community is defined by a census tract and any adjoining tracts that have experienced the closure of either a coal power plant after December 31, 2009, or a coal mine after December 31, 1999. These tracts can be extensive, especially in rural areas, making them attractive for large-scale solar and wind project developments.
Currently, coal plants and mine shapefiles account for approximately 20% of the overall area of the United States. Below, Figure 2.0 illustrates eligible census tracts in light green.
You can access the Coal Communities data layer through LandGate’s PowerData tool.
Tax and Job Revenue
The third Energy Community, as defined by the Inflation Reduction Act (IRA), is a metropolitan or non-metropolitan statistical area that meets both of the following criteria:
“0.17 percent or greater direct employment or at least 25 percent of local tax revenues related to the extraction, processing, transport, or storage of coal, oil, or natural gas.”
Unemployment is equal to or greater than the previous year’s average.
It is important to note that the statistical areas for fossil fuel employment are vast. For instance, non-metropolitan statistical areas with more than 0.17% fossil fuel employment encompass much of Nebraska, Nevada, Alaska, Montana, and large portions of several other states. Due to this expansive coverage, approximately 82% of the total United States land area could qualify as energy communities without the additional criteria. However, this percentage significantly decreases since these areas must also have an unemployment rate exceeding the average. Nonetheless, eligible territories still account for 39% of the total US area.
Identifying these Energy Communities can be challenging. First, as unemployment rates fluctuate, it is unclear how long a community will remain eligible for the tax credit. Therefore, the Department of Treasury and Energy is expected to propose a logical solution soon. Additionally, the Internal Revenue Service has issued requests for comments regarding further guidance on IRA Energy Communities.
Furthermore, many eligible regions do not align neatly with expected locations of energy communities. They include various gas, coal, and oil-dependent communities in states such as West Virginia, Pennsylvania, Texas, and New Mexico, while excluding regions like Oklahoma, Wyoming, and North Dakota, where fossil fuel production is vital for local economies. Interestingly, areas like Washington, Oregon, and parts of Michigan, with minimal fossil fuel production, may be included.
An energy community can also be defined as one where fossil fuels contribute about 25% of local tax revenue. Nationwide, fossil fuels generate approximately $138 billion in revenue for tribal, federal, local, and state governments. While there are estimates for fossil fuel revenues at the national level, local-level data is often not publicly available. Additionally, many local governments do not disclose tax revenue line items for infrastructure or facilities related to coal, natural gas, and oil.
LandGate possesses extensive data on all land resources, including local-level oil and gas-related tax data for every county in the US. We can conduct bankable evaluations of production to estimate the associated tax revenue necessary for this 25% local tax revenue calculation. A significant portion of the US falls into a gray area that requires these calculations to substantiate IRA eligibility. If you are interested in these tools and how to leverage them for energy communities, please request a meeting with your LandGate client success representative.
Finding Landowners in Energy Communities
While there are numerous strategies to create a profitable development pipeline, the tax benefits of the IRA make identifying projects within energy communities an advantageous choice. Although traditional methods for connecting with landowners can be employed, there are tools available to help you gain a competitive edge and secure the best sites first.
I. Utilize PowerLeads
Employ a filter in PowerLeads to search for leads specifically within Energy Communities. This approach allows landowners to seek you out rather than the other way around. PowerLeads primarily sources leads from three major channels, significantly reducing your general and administrative costs for obtaining Letters of Intent (LOIs) across various land site control campaigns.
LandGate has a robust Real Estate team with experience from top-performing prop tech companies, connecting with Land Agents nationwide. We estimate that we are currently in contact with 60% of land agents in the country, aiming for 90% by the end of the year.
With over six years in the industry, our organic SEO is gaining traction, supplemented by a strong Pay-Per-Click advertising campaign that attracts landowners to our website to discover the approximate value of their land resources.
We employ proprietary optimized traditional advertising methods that generate more leads each month at an exponential rate.
II. Optimize with PowerCRM
Utilize the PowerCRM parcel search tool to enhance your traditional site acquisition campaigns, specifically targeting IRA Energy Communities along with other common criteria used in greenfielding. Implement these strategies to effectively identify sites before your competitors do.
Increase Volume of Viable Sites: By reducing the time required to analyze sites, you can increase the number of sites entering your top of the funnel. Unless you are willing to invest six figures in a custom GIS ecosystem, which takes months to complete and incurs ongoing maintenance costs, use LandGate. No other GIS SaaS tool can query all parcels within your desired size range and buildable acreage criteria efficiently.
Quality Parcel and Phone Number Data: If landowners do not receive your mailer or call, they cannot respond. You get what you pay for. LandGate provides best-in-class parcel data at a fraction of the cost of other providers.
Improve Quality of Mailers: With PowerData and PowerCRM, you can automatically generate a 15-30 page report detailing all relevant land value data for a specific parcel, including its location highlighted on a map. This personalized approach demonstrates to landowners that you value their time and resources.
Utilize A/B Testing: Given that demographics vary by state, you can enhance response rates by testing different mailers, content, and formats. The best way to do this within LandGate is by running multiple campaigns in PowerCRM, allowing you to log response rates easily and identify the most effective strategies to scale.
Implement Autodialing: Rather than spending countless hours speaking with individuals who may not be interested in development, leverage your high-quality contact numbers to automatically leave voicemails, engaging only with those who express interest by calling you back.
Locating these site types has historically posed challenges, but developers can now utilize LandGate’s data layers to swiftly identify sites suitable for renewable development that qualify for Energy Community Investment Tax Credit (ITC) benefits. You can apply your own defined siting criteria, including acreage size and proximity to infrastructure, to search for parcels within all the energy communities described above.
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