Mention the term “Opportunity Zones,” and what might come to mind are commercial real estate developments in one of the nation’s federally-designated 8,700 opportunity zones. Certainly, real estate and business development are important parts when it comes to O-zone investments. So, it seems, is sustainable development.

According to Graham Richard (former CEO of Advanced Energy Economy and former mayor of Fort Wayne, IN) and Julie Parzen (co-founder, Urban Sustainability Directors Network), federal rules have made it clear that green energy projects, ranging from local power generation, to microgrids, to electric vehicle charging stations and even energy storage — can be eligible for investments in Opportunity Zones.

The two, which recently authored an article in GreenBiz, indicated that the tax benefits “make it easier to include sustainability features, because the projects can deliver higher returns and be structured with simple capital stacks.” The higher returns on Qualified Opportunity Zone Fund (QOZF) investments could mean sponsors of clean energy projects could add features to said projects, or partner with more risky energy customers.

Additionally, the program could allow for more comprehensive and holistic projects, due to lack of investment restrictions. This can mean integrated development plans with clean energy and, taking this further, given that clean economy projects are eligible, “every project can be a clean energy and clean jobs-producing project,” the authors note.

Third, the hold length required by QOZFs lends itself well to clean energy projects as part of a neighborhood’s long-term success. As such, those projects can be combined with initiatives to train local workers, thereby leading to “new, local clean economy businesses,” Richard and Parzen commented.

And finally, as community and impact investors are concerned about the potential of displacement and gentrification through Opportunity Zones, pairing those programs with a purpose, “investments can produce significant benefits for current Opportunity Zone residents. One example the authors used was that of lowering energy costs while providing job training for relatively high-paying jobs in the solar business. Other examples could involve supporting new minority businesses and increasing community resilience through local power production, microgrids and broadband.

Overall, clean energy and resilience projects tend to be attractive to investors, as they’ve been proven to enhance project value.

The authors ended their article by acknowledging that, as it stands, it’s uncertain as to whether the Opportunity Zone program will deliver on its promise of jobs and development for the targeted zone. However, “the program does offer a significant opportunity to accelerate clean energy and sustainability projects in struggling communities across the U.S., and in ways that produce local economic development benefits,” Richard and Parzen said.

Connect Opportunity Zones will be presented for the first time on Oct. 23 in New York. For more information, or to register, click here.

For comments, questions or concerns, please contact Amy Sorter