Carrots and Sticks: U.S. States Introduce Policies to Address 'Not in My Backyard' Resistance in Renewable Energy Siting

According to a February 2024 analysis by USA Today, at least 15% of U.S. counties have paused utility-scale renewable energy development due to bans, moratoriums, and overly restrictive zoning and land-use regulations.

In states like Michigan, New York, and Illinois that have set 100% carbon-free electricity goals, lawmakers are responding by centralizing renewable energy permitting at the state level, offering financial incentives for more permissive local ordinances, or both. Although programs like Michigan's 'Renewable Ready Communities Award' are new and have not yet produced observable impacts, early successes of two New York programs have encouraged advocates of community-oriented approaches, including those providing tangible economic benefits to municipalities and electricity users.

'There's no question these programs help developers gain public support,' said Dan Spitzer, co-leader of the clean technology and renewable energy practice at the New York law firm Hodgson Russ.

Such efforts could accelerate onshore wind and solar development, helping state and federal governments achieve clean electricity goals in the near term. But experts worry that if state policies are perceived as unfair by local communities, they could intensify local opposition to utility-scale renewables, trigger lawsuits, and ultimately slow the energy transition. They believe the most effective state policies should incentivize constructive local engagement in siting and permitting processes, guide developers to treat host communities fairly, while limiting opportunities for opponents to delay or kill mutually beneficial projects.

'Ørsted prefers to work directly with local governments, but local units often need or require a common framework to guide development, plus incentives from the state,' said Hayes Framme, Ørsted's head of new markets and growth. The company has a 3-gigawatt onshore wind portfolio and nearly 700 megawatts of utility-scale solar and storage projects under construction.

Michigan's 'carrot and stick' model

Over the past two years, multiple townships and counties in Michigan have imposed moratoriums on utility-scale solar development—and in at least one case, on all large-scale renewable development—citing potential negative impacts on rural landscapes, property values, soil and water quality, and the availability of prime farmland.

Michigan's Renewable Ready Communities Award (RRCA) program follows this model, said Sarah Mills, director of the Community Empowerment Center at the University of Michigan's Graham Sustainability Institute. The program, authorized last year as part of Michigan's landmark clean energy legislation package, will continue for at least two more years after repeal efforts failed to gather enough signatures to appear on the November ballot.

The $30 million pilot program offers $5,000 per megawatt to communities that both allow and actually host utility-scale renewable projects, or $2,500 per megawatt to those that do only one of the two. According to a fact sheet from the Michigan Department of Environment, Great Lakes, and Energy (EGLE), to qualify for the award, communities must approve projects through local siting ordinances.

If a community lacks a local siting ordinance 'deemed favorable enough for development,' developers can use the state-level siting process, but the community benefit payment is lower, at $2,000 per megawatt. Unlike the higher local benefits under the RRCA program, this $2,000-per-megawatt payment comes out of the developer's own pocket. Therefore, EGLE says, while the state process may be less restrictive than local ordinances, it is costly for developers.

'The goal is to encourage developers and communities to resolve issues at the local level rather than going through the state process,' Mills said.

Mills noted that RRCA is unique among state clean energy development programs because it disburses a portion of funds at the start of construction, rather than waiting until projects become operational. RRCA is also notable for its high award amounts and because funds 'can be used for almost any community benefit,' said Ian O'Leary, an EGLE department analyst and co-manager and designer of the program.

Projects eligible for RRCA must have at least 50 megawatts of capacity, so the minimum grant per project is $125,000 at the $2,500-per-megawatt tier or $250,000 at the $5,000-per-megawatt tier. O'Leary said that although some projects span multiple local government units, the program still provides substantial and potentially decisive funding for sparsely populated rural townships.

'Tax revenue from projects often isn't enough to convince local governments to approve them,' said Zona Martin, another co-manager and designer of RRCA.

With EGLE support, the Community Empowerment Center's Renewable Energy Academy helps local governments proactively develop zoning ordinances that align with Michigan's clean energy legislation, Martin said. The RRCA program, the state-level permitting backstop, and the Renewable Energy Academy are designed to work together to 'create a leak-proof renewable energy system in Michigan,' O'Leary said.

The effort received a boost on July 22, when the U.S. Environmental Protection Agency awarded Michigan $129.1 million in grants to help expand RRCA and related emission-reduction programs.

Although lengthy permitting timelines mean projects supported by RRCA and the state-level permitting backstop may not break ground until next year, they have already influenced at least one major renewable developer. Thanks to the new policies, 'Michigan is now one of Ørsted's high-priority states,' Framme said. 'Without it, it's hard to see a viable path for developing projects in Michigan.'

New York's bill credits and 'bribery' controversy

In New York, utility-scale wind proposals have faced opposition in upstate communities for years, with residents concerned about landscapes, farmland impacts, and the misconception that projects would only benefit downstate population centers, said Spitzer of Hodgson Russ. Recently, wealthy coastal residents have opposed onshore infrastructure serving the state's emerging offshore wind industry.

Similar to Michigan's RRCA program, New York's 'Host Community Benefit Program' incentivizes local governments to support renewable development. Spitzer said a second, potentially more influential New York program requires developers to detail in project applications the community benefits they plan to provide to host communities, which helps convince skeptics of the value of local power generation.

According to a Hodgson Russ summary, the 'Host Community Benefit Program' requires project owners to pay their host utility $500 per megawatt annually for solar projects, or $1,000 per megawatt for wind projects larger than 25 megawatts, for the first 10 years of operation. These payments fund bill credits for electricity users in host communities.

Since many host communities have hundreds or thousands of residential customers, 'it's fair to say the bill credit benefit can be diluted,' Spitzer said.

Under the second program, developers have donated to local park and library systems or funded upgrades to public buildings, Spitzer said. The 35-megawatt Steel Winds facility in Lackawanna, New York, on a former steel mill site, funded 'a new community center, a business center... and a 110-acre greenway and bike path,' according to a 2020 handbook from the New York State Energy Research and Development Authority.

All of this—plus the fact that revenue from large renewable facilities may be 'almost entirely exempt from town taxes'—'falls within the broader definition of host community benefits,' Spitzer said.

But it doesn't always work. Under New York's state-level permitting process, host communities can agree to waive local siting and permitting rules as part of their community benefit agreements, potentially speeding up pre-construction reviews and locking in developer-paid benefits. In communities with deep opposition to renewable development, residents may resent the loss of local control, 'view any benefit offer as a bribe,' and hire lawyers to oppose projects, Spitzer said.

'Frankly, a lot of the resistance developers face is outright NIMBYism,' he said. 'States like New York with greater local autonomy achieve clean energy goals more slowly because host communities find ways not to cooperate.'

Corn Belt contrast: Illinois vs. Indiana

In 2021, Illinois became the first Midwestern state to commit to 100% carbon-free electricity generation. But there was a catch: the mandate did not include significant siting or permitting reforms, leaving its 2050 deadline at the mercy of rural local governments with political stances far removed from the Democratic-controlled state legislature.

An Illinois law passed last year reset the dynamics in favor of developers, establishing state-level standards for utility-scale wind and solar projects that preempt stricter local ordinances and require local governments to approve proposals that meet state standards.

The new law is a 'release valve' that provides state policy guidelines and can ease the pressure local decision-makers may feel when considering wind and solar projects, said Chris Kunkel, senior director of government affairs at Apex Clean Energy. The law creates a 'stable, predictable permitting environment that helps Apex decide where to invest our limited time and resources,' he said.

The new law also opened up Illinois counties rich in wind resources but previously effectively undevelopable due to restrictive ordinances. Apex never stopped exploring in the state, but after the 2023 law passed, the company 'doubled down,' Kunkel said. 'We feel very good about Illinois, to say the least.'

But utility-scale renewables remain controversial in some rural parts of Illinois. Piatt County officials rejected Apex's 300-megawatt Prosperity Wind project application in March 2023, voiding a $10 million revenue-sharing agreement with Apex. Before approving the resubmitted application in October, several county board members said the new law forced them to vote for the project despite personal opposition. One member said rejecting the project would mean 'gambling with 8% to 10% of our annual budget.'

The state's decision to strip local authority 'has created a lot of resentment,' and it remains unclear whether the Illinois law has spurred new renewable development, said Brian Ross, vice president of renewable energy at the Great Plains Institute. Illinois' development queue is roughly the same size as neighboring Indiana's, even though Indiana's incentives for permissive local permitting are far more modest—and so far unfunded, Ross said.

Under a new state law, the Indiana Commercial Solar and Wind Ready Community Development Center provides general information on renewable development and offers a certification program for communities that implement wind- and solar-friendly ordinances. According to the center's website, certified communities are eligible for incentive payments from the Indiana Office of Energy Development (OED) for operating projects, at a rate of $1 per megawatt-hour for 10 years.

But the program 'is entirely voluntary, does not bypass any local permitting processes, and does not force local government units to do anything they don't want to do,' said Greg Cook, OED communications manager.

Despite the lack of funding, Indiana's program may help explain renewable siting, permitting, and development to rural communities, said Tamara Ogle, a regional community development educator at Purdue Extension. Negotiations between communities and developers can drag on for years, creating space for misinformation to spread and intensifying local opposition to proposed projects, Ogle said. Even without OED funding in the near term, certified communities may be better positioned to negotiate with developers over financial compensation, local jobs and procurement, and other benefits, she said.

These conversations can benefit both sides, Framme said. 'Every one of our projects ends the community engagement process different from how it started,' he said. 'We work to adjust project parameters based on concerns about landscape, construction timelines, traffic, soil conditions, and other issues.'

Whether local renewables are seen as a prelude to deep decarbonization or primarily as an economic development engine, local, regional, and state governments should apply some creativity to developing new community benefit models, said Spitzer of Hodgson Russ. These models could include projects supporting agrivoltaics so that 'solar facilities can remain farms,' creating utilities with positive clean energy goals, or developing 'energy zones' that could leverage tax-exempt bonds, Spitzer said.

'You can create water districts—why not energy districts?' he said.