Why it Matters
Power outages are becoming more frequent and longer-lasting across the United States, with extreme weather events driving the crisis. When the lights go out, hospitals lose backup systems, emergency services struggle to respond, and communities face cascading failures in water, transportation, and communication.
Federal law is clear: only cost-effective hazard mitigation activities qualify for FEMA money. Yet the agency's methodology for proving cost-effectiveness remains murky, and applicants struggle to navigate the requirements. The result is a $13.6 million portfolio of renewable energy initiatives whose actual resilience value remains uncertain.
The GAO released its report on FEMA hazard mitigation funding for renewable energy on June 23. The 11-page examination was conducted by Janet McKelvey, acting director of the Natural Resources and Environment division at GAO, and included interviews with Department of Energy officials as well as selected stakeholders knowledgeable about the role of renewable energy in hazard mitigation and FEMA funding.
The Scale
According to the report, from 2022 through 2024 FEMA obligated approximately $13.6 million for renewable energy projects through hazard mitigation assistance programs that funded 14 different projects across the country. TThe portfolio consists primarily of small-scale solar generation, including rooftop solar panels, microgrids, and solar generators designed to provide backup power during outages.
FEMA channels renewable energy funding through three separate programs: the Hazard Mitigation Grant Program (HMGP), Pre-Disaster Mitigation Congressionally Directed Spending, and the Building Resilient Infrastructure and Communities (BRIC) program.
The Cost-Effectiveness Question
Federal law and FEMA policy establish a clear requirement: only cost-effective hazard mitigation activities are eligible for funding from FEMA's hazard mitigation assistance programs. Yet proving cost-effectiveness has proven to be a persistent barrier for applicants and a methodological challenge for the agency itself.
FEMA requires applicants to demonstrate cost effectiveness through a benefit-cost analysis (BCA), a quantitative analysis comparing the project's avoided future damage to costs over the project lifetime. The agency provides applicants with a benefit-cost analysis toolkit to assist with conducting these analyses. But GAO previously reported on significant challenges applicants face when performing a benefit-cost analysis, including the amount of resources and data needed, as well as the technical expertise required to complete the work properly.
FEMA has tried to make the process easier for state and local jurisdictions by developing guidance and tools. Yet applicants continue to struggle with the complexity of predicting future damage, assigning monetary values to avoided harm, and constructing defensible analyses over multi-decade project lifespans. When it comes to renewable energy projects, specifically where the hazard mitigation benefit is indirect and depends on assumptions about future outage frequency, duration, and location, the analytical burden becomes even more acute.
The Bottom Line
Extreme weather events have been the principal contributors to an increase in the frequency and duration of power outages in the United States. Power outages affect residential, commercial, industrial, and other customers' ability to use electricity for lighting, heating, cooling, refrigeration, public transportation, and other daily needs. The consequences ripple through society rapidly. Vulnerable populations—elderly residents, people dependent on medical devices, those without alternative heating or cooling—face immediate danger. But without rigorous cost-benefit analysis, federal policymakers have no way to know whether the $13.6 million invested in these 14 projects will actually reduce disaster losses by more than their cost.
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