A wave of new grants and incentives are supporting infrastructure improvements for local governments throughout the U.S. that have ambitions to become more sustainable. In this atmosphere, there is a growing trend of stacking multiple funding sources together to finance larger, more comprehensive sustainability projects.

Stacking funding sources gives community leaders the opportunity to make more robust, long-term investments that stimulate economic growth, modernize public capital and promote community equity and resilience. For leaders who are unaware of the possibilities that this approach represents, here are real examples of cities strategically stacking funding sources to fund sustainable infrastructure.

Capturing energy efficiency grants to enable sustainable infrastructure goals

The strategy: Unprecedented levels of federal grants and incentives for energy efficiency projects are currently available to municipal governments. By strategically pursuing the gamut of applicable funding sources, city leaders can fund major efficiency improvements that dramatically lower overall operating costs. That saved money in the operations budget, which is typically one of the largest annual costs, can then be reallocated to priorities like sustainability.

In that same vein, federal tax credits are helping solar power come into its own as a viable way for cities to lower energy costs. ITC direct payments are helping communities finance onsite solar projects that were previously out of reach due to high initial costs. The IRA also nearly tripled the allowable tax credit available through the 179D Commercial Buildings Energy-Efficiency program.

(Photo source: DenisTangneyJr)

The story: The City of Salina, KS utilized multiple energy efficiency grants and incentives to support their city-wide sustainable infrastructure initiative. Alongside traditional funding sources, the city leveraged Historical Tax Credits (HTCs) from the State of Kansas, as well as federal Energy Efficiency and Conservation Block Grant (EECBG) funds and renewable energy ITCs.

These outside funding sources enabled Salina’s leadership to complete a broad slate of energy efficiency improvements, including advanced lighting and building envelope solutions, HVAC system replacements and building automation. These projects are improving the quality of life for Salina’s residents, while paving the way financially for future sustainable infrastructure projects.

Notably, the city was able to reinvest energy savings into a major renewable energy project: the installation of 74.5kWs of solar capacity at the local aquatic park, Kenwood Cove. The park is one of the largest electrical users in the city's portfolio, but the addition of solar power allowed Salina to reduce power drawn from the grid by 21%.

Leveraging ESPCs as an impact multiplier for sustainability grant funding

The strategy: Energy Savings Performance Contracts (ESPCs) are already a tried and true financing mechanism, heavily supported by the U.S. Department of Energy (DOE), for energy efficiency and sustainability projects. They are also well suited to be an impact multiplier for cities with grant funds to spend. Research has shown that leveraging public funding in tandem with an ESPC multiplies project size by 1.3 to 2.1 times the amount of the public funding. In other words, it is more advantageous to stack grant funding with an ESPC, as compared to using that grant money alone.

The story: Piscataway Township, located in New Jersey, recently announced their Piscataway Goes Green initiative, which will see the Township implement a bold slate of sustainability improvements. These include the installation of 2.9 MW of solar arrays complemented by the deployment of 28 EV charging stations—the largest deployment of its kind by a New Jersey municipality—and an advanced microgrid. With these improvements, the Township’s Public Safety building and Town Hall will have the emergency capability to operate off the grid for approximately 5 days.

Financially, the Township will make an investment of $24.9 million to complete this initiative. $19.2 million will be financed through an ESPC with Schneider Electric, in tandem with a $13 million package of complementary incentives, grants and federal ITCs. Piscataway Township will also achieve a 53% reduction in carbon emissions, representing a major achievement in fusing economic savvy with sustainability advancements.

Funding sustainable improvements for the long term

City leaders should be looking closely at how they can use every available source of funding to achieve their sustainability goals and prepare for the future. A partner like Schneider Electric can help you select the right financial model based on your unique needs.

Schneider Electric has helped cities nationwide reduce energy and operational costs and capture hundreds of millions of dollars in funding. From design to funding to construction, we support our clients along their entire sustainability journey. To learn more about what’s possible, visit our Government Perspectives page.