How the Inflation Reduction Act could change the future of one Native American reservation

The Inflation Reduction Act includes more than $720 million for Tribal nations and native communities, as well as makes expanded clean energy tax credits available to tribes for the first time. For this installment in our series “Breaking Ground” — where “Marketplace” host Kai Ryssdal travels across the country to look at how federal dollars might change the economy in complicated, invisible, even contradictory ways — he travels to the Red Lake Indian Reservation in northern Minnesota.

Click the audio player above to hear the full episode.

The Goal

The Red Lake Nation’s reservation covers more than 800,000 acres, and about 5,500 people live there. As of 2022 Census data, the employment rate on the reservation is under 50%, and the poverty rate is over 30%, compared to 14% for the country as a whole.

Darrell G. Seki Sr. has been the chairman of the tribe since 2014. He was born at Red Lake and is a Vietnam War veteran.

“When I was out campaigning, when I was going house to house, people were having trouble with the electric co-op,” Seki told Ryssdal. “The prices are so high, and they get behind on payments, then they get disconnected.”

During his 2022 re-election campaign, Seki said one of his primary goals is energy independence — for Red Lake Nation to generate all of the power it uses and be able to sell remaining energy into the grid.

“That interests me in solar paneling for my reservation,” Seki said. “The vision is it be energy free for Red Lake Nation for all of the people.”

Solar at Red Lake today

Kai Ryssdal started his day on the reservation outside the Red Lake Nation Government Center. It was the first building at Red Lake to have rooftop solar — a project completed by Ralph Jacobson and Bob Blake in 2018. Since then, the two have continued working together towards Seki’s goal of energy independence by expanding solar energy at Red Lake.

Jacobson describes himself as “a veteran of the early solar movement.” Two years ago, he sold his decades-old solar business, and he now works as a business consultant for Solar Bear, Bob Blake’s solar company. Blake is a tribal citizen of the Red Lake Nation and describes Jacobson as a mentor. In addition to owning Solar Bear, Blake is also the executive director of the nonprofit Native Sun Community Power Development.

“The chairman had a real vision for moving towards clean energy,” Jacobson said. “He really wanted the economic development to start during his watch.”

“That was where the opportunity came in for me as a tribal citizen to be able to create my own company, Solar Bear,” Blake said. “I met Ralph, and I said hey, I’d like to be the guy to install this project.”

Blake put together what Jacobson called “the dream team” — a group of about 10 tribal members with experience working in trades like carpentry and plumbing — to install the panels.

“A lot of our cultural teachings are rooted in environmental stewardship and teach us to take care of mother earth,” said Blake. After the solar installation was done at the government center, he remembers one member of his crew telling him how proud he felt of the job.

“If that could bring that type of pride to this one individual, what would that look like across the country in tribal country? Where we have the highest disparity rates among alcoholism, drug addiction, missing and murdered indigenous women,” Blake said. “And that’s when I started thinking to myself, could renewable energy help solve a human health crisis that I believe is taking place in tribal country?”

Blake’s hope is that Solar Bear can be a model for other tribes, and that building solar panels can create both jobs and revenue, improving life across Indian country.

“We thought that casinos were supposed to do this,” Blake said. “But a lot of casinos were teetering on bankruptcy during COVID. But the sun shines every day. Those are pennies dropping in the bucket, and those pennies add up.”

In addition to the solar panels on the Government Center, Blake and Jacobson have also installed another rooftop project on the workforce development center, called Oshkiimaajitahdah.

The IRA

For their next project at Red Lake, Blake and Jacobson are hoping to go much bigger, tapping into federal incentives to build utility-scale solar that could power the entire reservation.

“None of this happens without the IRA,” Blake said. “Period.”

Pilar Thomas, a lawyer at Quarles & Brady who practices in tribal energy and economic development, has been educating tribes about the IRA and other available federal funding. Thomas is a member of the Pascua Yaqui Tribe and also worked at the Department of Energy in the Office of Indian Energy during the Obama administration. For her, one of the most important aspects of the IRA is a change in the tax code that makes clean energy tax credits available to tribes for the first time.

“For-profit renewable energy developers have been relying on tax credits to fund these projects since they were developed in the early aughts,” Thomas said. “Tribes have never been able to do that.”

Tribes are non-taxable entities. No taxes means no tax credits, essentially locking tribes out of these federal incentives to build projects like wind and solar.

Now, with the Inflation Reduction Act, tribes can get a direct payment in lieu of a tax credit — worth whatever the tax credit would be.

In addition to making these credits available to tribes, the IRA also increases available tax credits overall. Before the law, a solar project could earn up to a 30% tax credit. Now, if a project meets certain federal incentives, it can get up to a 70% tax credit.

Thomas used the example of a $10 million solar project built by a tribe.

“That now goes from a $10 million project to a $3 million project, because Uncle Sam will write you a check for $7 million for your 70%,” said Thomas. “That will incentivize a lot of clean energy deployment on tribal lands.”

In addition to the money available through tax credits, the tribe is hoping to tap into a Department of Energy program that received funding from the IRA to help finance the project.

“I’ll just speak frankly, we’re pretty let down and frustrated over all of the processes at the federal level,” said Joe Plumer, legal counsel for the Red Lake Band of Chippewa. “We thought things were going to roll, just really snowball, and they haven’t. We’ve done everything that we could on our end to secure the big dollars from the feds.”

The tribe has gotten some federal funding in the past few years — grants from the IRA and Bipartisan Infrastructure Law. The federal loan for the utility-scale project would be much bigger than those grants and come from the Tribal Energy Loan Guarantee Program.

The loan program was authorized in 2005 but didn’t receive its first appropriation until 2017. Earlier this year, the Department of Energy announced its first ever loan guarantee made under the program, which remains the only project to receive a loan from this program. Plumer, Seki, and others expressed frustration that the federal money is rolling out slowly.

When asked about the timeline, a DOE spokesperson gave “Marketplace” the following statement: “Thanks to the historic investments from President Biden’s Inflation Reduction Act, the Loan Programs Office has dramatically scaled up its outreach and development efforts to expand access to capital in Tribal communities in support of their energy sovereignty. After gathering extensive feedback from Tribes and Tribal leadership, LPO has bolstered its ability provide access to direct loans funds, including by expanding pre-application consultations, reducing the costs of borrowing, and providing specialized assistance to navigate the LPO process.  LPO accepts applications for the Tribal Energy Financing Program on a rolling basis and looks forward to announcing more projects in line with the President’s vision of an inclusive and equitable clean energy future.”

Solar at Red Lake in the future

The utility-scale solar farm Blake and Jacobson are planning would be more than 200 times bigger than the rooftop solar on the Government Center. The proposed project is about 15 megawatts and would feature energy storage and a substation. The entire reservation can run on five to seven megawatts of power, and the plan is for Red Lake Nation to sell the remaining power, creating a new revenue stream for the tribe.

In 2020, the tribe spent $700,000 to purchase more than 200 acres of land located near the reservation for the solar project. At the site, Blake said he sees Red Lake’s future.

“I see the future of Red Lake being a wholesale energy provider to purchasers that are willing to buy the power from Red Lake,” Blake said. “I see Red Lake citizens getting jobs, I see economic development. And I just feel like this hasn’t moved fast enough. I agree with the chairman, this has been slow. But this is a big endeavor and it takes time. But I see so much good things happening for the community of Red Lake.”

Jacobson estimates that it will be three more years until the land is cleared of trees, covered in solar panels, and generating power.