What is a CLEAN contract?

A CLEAN contract is the single-most effective mechanism we have for making sure that massive amounts of clean, local energy are accessible now. Now, they work by making sure that clean energy generators, wind power providers, solar energy generators, biomass power, are paid a price for their electricity that covers the cost of their generation. And we know they work because they're effective worldwide. In the United States, places like Vermont, California, Oregon, and Florida all use CLEAN contracts. In Canada, the province of Ontario. In Europe, the United Kingdom, Denmark, and Germany all use CLEAN contracts, as do many countries in Asia. And, in fact, 45 percent of the wind power deployed worldwide, and a whopping 75 percent of solar photovoltaic power deployed worldwide is the direct result of CLEAN contracts in those countries. Now, research from Deutsche Bank Climate Change Advisors find that these work because they provide the transparency, longevity, and certainty that investors need. And that's because they do a few things. Now, some key elements of a CLEAN contract are that they make a fixed price available to all clean energy generators; that is, it's a price that covers the cost of generation plus a modest rate of return for the investor over a timeframe that matches the length of the investment, say, 15, 20, or 25 years. These contracts are standardized across technologies so that everybody making an investment in the same technology is eligible for the same contract. And finally, the utility that's buying the power actually has to buy the power in a CLEAN contract scenario and they have to allow clean energy generators to connect to their electrical grid.

What are the economic and environmental benefits of CLEAN contracts?

CLEAN stands for Clean Local Energy Accessible Now, and we can delve into each of those issues to really understand the benefits. First, they make sure that we're buying energy and selling energy into the grid that's clean; makes for cleaner air, reduces asthma in our kids, means that we're reducing our harmful greenhouse gas emissions, which will ultimately make it easier for us to avoid catastrophic climate change. It's local power, which means it's not imported from countries that are sometimes harmful to the United States. It's accessible, which means that everybody in a community can participate and enjoy the economic benefits as well as the environmental benefits of clean energy. And they work now, unlike some other clean energy incentive programs that take a long time to get energy built. CLEAN contracts make sure that power comes on-line quickly.

What are some best practices for making sure the policies benefit everyone involved?

At the Center for American Progress, we think that everybody in a community—not just the wealthy or the property owners—should be able to reap the economic and environmental benefits of clean energy, and we think you can do this by appropriately designing CLEAN contracts. For the residents of a community, we think that nonproperty owners should be able to invest in projects, either cooperatively, or for projects that are specifically set aside for nonproperty owners. For ratepayers, we think that the program size could be capped for CLEAN contracts so that any rate impacts would be minimal and predictable. For workers, in some cases it would make sense to require or just incentivize that CLEAN contracts go to projects that use project labor agreements. And finally, for investors, we think that CLEAN contracts should be targeted at investors like pension funds, community development financial institutions, and community banks, to make sure the money stays within the community. You can read more about our recommendations in our recently published paper, "CLEAN Contracts: Making Clean Local Energy Accessible Now."