How GGRF Applicants are Preparing for Success in Year 1 and Beyond

The Greenhouse Gas Reduction Fund (GGRF) is one of the largest, most complex, and most poorly understood programs in the Inflation Reduction Act of 2022. Applications were due October 12th 2023, and awards from the U.S. Environmental Protection Agency (EPA) are expected by mid-March 2024. Most applications are composed of complex networks of proposed recipients, sub-recipients, and other partners and stakeholders—including state energy offices, state housing authorities, non-profits, community lenders, and green banks.

Leading applicants and sub-recipients are not just waiting for the call from the EPA, they are taking action now to prepare for success in year 1 and beyond. We have conducted discussions with more than 50 individuals from numerous applicants. Below are the top 10 key actions for hopeful recipients and sub-recipients, including what to expect in year 1, and how to reduce risk while maximizing impact once award dollars start to flow from the EPA.

These actions form two categories: Actions that most applicants are taking right now and emerging actions that applicants are increasingly aware of but unsure how to proceed or are otherwise unable to execute on presently.

Many applicants may be caught in a bind. They understand the need for deep planning and preparation now to meet the timelines and expectations of GGRF. However, they are unsure if or when they will receive funds and how much. As a result, some applicants are holding back from taking steps to reach the level of preparation that they know is necessary. Other applicants are working hard with their own staff and/or limited assistance to prepare for the transformational opportunity they believe is coming soon.

Even the most sophisticated and forward-leaning entities are still working to understand some of the more complex parts of a GGRF award, including federal compliance, stakeholder dynamics, engagement of private capital, and heightened scrutiny. Given the structure of the GGRF programs, many of the likely recipients lack experience administering federal grants (and/or staff capacity) and with the applicable requirements for GGRF, including  the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR Part 200), the Build America Buy America Act, and the Davis-Bacon Act. There is also an increasing focus on portfolio risk management and fraud monitoring, as detractors look for the next headline.

The GGRF also established statutory expectations around measuring the greenhouse gas, air quality, and community impact of programs. However, to date the EPA has been broad in explaining how these measurements should be made even as sophisticated entities are looking to existing DoE programs like HOMES and HEEHR as well as state-level utility energy efficiency programs to identify durable, field-tested approaches.

The complex coalitions of recipients and sub-recipients in many GGRF applications means that prime recipients don’t just need to get their own systems and processes in order, they also need to find a balance between standardizing across sub-recipients and coalition partners and allowing their partners autonomy to succeed on their own. Some prospective GGRF recipients are hoping to use new or existing technology platforms to solve some of these issues, but platforms designed for traditional grant programs, may not be able to accommodate loans or a mix of products. And many reporting requirements have not yet been communicated by EPA.

For newly established recipients, existing recipients applying for their first federal dollars, and experienced entities with resource constraints, these challenges can seem daunting. But there’s hope for prospective GGRF recipients, and clear steps they can take now to prepare for a great year 1:

• Truly understand your program — Applications came together in a rush. Entities can step back and deepen their understanding of how their program will work, where the money will go, and what risks and requirements fall to each entity. The level of detail needed for the application is likely not conducive  to operationalize quickly. More design, more pipeline research and shaping, more process and operational planning, and more community and stakeholder engagement is likely needed.
• Map and prioritize your needs — Sophisticated entities are creating full lists of needs to reach an operational program, and then prioritizing the most critical needs.  Lending money without appropriate governance (e.g., board of directors and investment committee) and internal controls can be quite risky.  Recipients may be able to wait longer to generate a truly robust and diversified pipeline, provided they have a few strong, shovel-ready projects easily accessible to show impact early on.
• Action Plan for First Impacts Post-Award — Entities will not be able to address every need before the award date. But leading entities are making clear roadmaps that reach from today to a fully functioning program (often 18 months in the future) with a focus on what impact and progress they can demonstrate in the first two quarters. The time from March to the November election will go quickly, and entities with clear plans to deliver impact, report progress, and manage risk will be able to execute against them from day 1.

Innovation Approach: States including Solar for All in IRA-Wide Funds Management

One place we are seeing particularly active pre-award planning is within the Solar for All program. Leading state entities are combining the administration of Solar for All with other IRA programs, such as Department of Energy (DoE) programs like Home Owner Managing Energy Savings (HOMES), High-Efficiency Electric Home Rebate (HEEHR) and Weatherization Assistance Program (WAP). This combination will generate cost efficiencies for states and allow states to start now, with confidence that HOMES, HEEHR, and WAP are guaranteed funding.