Solar for All: How to incentivize community solar projects to benefit low-, middle-income customers

Geronimo Energy

Geronimo Energy celebrating another community solar install in Minnesota.

Community solar has taken off within the renewable energy development leagues, melding the interests of residential and commercial or industrial customers, as well as the local utilities. While the inclusion of low- and middle-income (LMI) residential customers are widely enabled by state legislation on community solar, specific carve-outs or percentage requirements for LMI customers are less common. At times, solar developers have focused heavily on anchor commercial or industrial customers and paid little attention to residential participation, much less the LMI segment.

While the LMI customer segment may present something of a credit challenge in developing a project, anchor tenants can readily compensate for the project risk. Indeed, a 2016 study by the Interstate Renewable Energy Council (IREC) found that economically viable community solar programs could include 40 percent LMI customers.

When there is local, state or federal funding for LMI customers, like HUD Block Grants, developers have added inspiration to include the segment, but such funding is not always readily available, or the lengthy paperwork may seem to outweigh the potential benefit of the revenue stream.

To help remedy this practice of under-weighting LMI customers in community solar development, local housing authorities have stepped up to bring their resources — if not regulations — to bear, early in the planning process. Developers also have found that the housing authorities and other social institutions can be valuable partners in locating and enrolling customers in a project well ahead of ground-breaking.

Local Leadership

As of August, 14 states had passed legislation to enable community solar, according to one recent analysis. Among these, Minnesota is ground-zero for community solar evolution in the United States and leads the nation in community solar projects. An estimated 400 MW of community solar is in the pipeline in Minnesota, which is now grappling with how to provide interconnection services for such a groundswell. One early developer of community solar in the state is Edina-based Geronimo Energy.

“For our new 50-MW Nordic portfolio of community solar projects, we approached the St. Paul Public Housing Authority and they got involved in the process, learning how much they could save and pass on to their residents. As a result, they were very helpful in the pre-sales stage,” says Lindsay Smith, the director of marketing and communications for Geronimo, which recently sold a 100-MW community solar portfolio in Minnesota to Berkshire Hathaway.

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Since housing authorities generally subsidize the cost of energy for LMI residents in their programs, lower-cost energy translates into savings. “There is a huge economic advantage for these authorities to subscribe,” Smith says.

Other states also are tuned into the LMI segment too.

  • In Colorado, where there is a five percent LMI carve out, the Denver Housing Authority has been active in the facilitation of a 1.95-MW LMI project next to a landfill in Fort Collins. The project is being developed in collaboration with Oakland-based GRID Alternatives, Boulder-based Namasté Solar and a local electrical cooperative.
  • Maryland’s community solar statute requires that about 30 percent of project generation serves LMI households.
  • In New York, the initial stage of a state community solar program requires a 20 percent LMI customer participation. The state does not wield the stick without a carrot. NY Green Bank offers developers soft loans for the inclusion of LMI customers in solar developments.
  • A more local area initiative is underway at the Imperial Irrigation District (IID) in southern California in which IID is developing a new community solar project of up to 20 MW and working to establish a community storage project of up to 10 MW. The district says, to ensure all customers have access to the benefits of solar power, it is also working to create a separate low-income solar program specific to income-qualified customers.

GRID alternatives at work

Finding Financing

The potential for growth in community solar is enormous. Third-party-led solar — a.k.a. community solar — added about 85 MW in 2016, twice the 2015 total, and is expected to add 1.8 GW by 2021, according to a recent forecast by GTM Research. An even more optimistic forecast by the Rocky Mountain Institute suggests that community-scale solar could amount to 30 GW by 2020.

Perhaps the key limit to community solar growth with an LMI component is financing. One institution seeking to foster new financing approaches is the Rocky Mountain Institute’s Electricity Innovation Lab (e–Lab), which set up teams in June to develop new business models. One team included support from the Vermont Energy Investment Corporation (VEIC).

A more altruistic approach has been taken by Glenwood Springs, Colo.-based Alpine Bank, which bought shares in a Summit County community solar project and donated them to the Family & Intercultural Resource Center (FIRC), an agency that provides services for low-income residents. The organization managed solar credits on participants’ monthly bills.

The bank’s purchase was in part motivated by a low sign-up response from the LMI community, making it difficult to meet the 5 percent LMI carve-out. Alpine Bank worked with Clean Energy Collective to arrive at the donation solution. CEC has a portfolio-plus-pipeline of 175 projects with 33 utility partners across 15 states with over 400 MW of community solar capacity.

SunShot Support

DOE puts taxpayer money where its mouth is. “The enormous opportunity to expand solar electricity access to LMI households is why the SunShot Initiative launched the Solar in Your Community Challenge … building on the [Obama] White House’s Clean Energy Savings for All Initiative,” the agency noted in 2016. The initiative goal was to enable 1 GW of LMI solar by 2020.

This year, the SunShot program took applications in January for $5 million in award money to form a team to design and deploy scalable community-based solar projects or programs up to 5 MW in 18 months that serve at least 20 percent LMI households or 60 percent non-profits, according to its website. Teams began work in May and are scheduled to have their community solar projects completed in October 2018.

The SunShot Initiative is a founding member of the National Community Solar Partnership that works to expand access to community and shared solar throughout the nation, especially in low- and moderate-income households. The partnership is a collaboration with the Department of Housing and Urban Development, the Environmental Protection Agency, the Department of Agriculture, and key representatives from solar companies, non-profit organizations, state and community leaders and financial institutions, the DOE states.

The U.S. Department of Energy has lofty aspirations for the LMI segment in community solar.

“Community solar projects are gaining popularity as they allow the almost half of U.S. households that may not have access to a solar-ready roof to take advantage of the sun’s energy and do it at a lower cost. This can make solar accessible to more LMI communities,” the DOE’s Office of Energy Efficiency & Renewable Energy opined in November 2016. “Between 2010 and 2015, community solar installations grew rapidly, reaching almost 100 MW, and this business model has even greater potential. The U.S. National Renewable Energy Laboratory (NREL) estimates community solar could comprise up to half of the distributed PV market in 2020.”

Charles W. Thurston is a freelance writer covering solar energy from Northern California.

Solarize This: Nexamp adds more community solar in the northeast

Nexamp adds more community solar in the northeast

Nexamp completed a 700-kW community solar project in Fitchburg, Mass., through its Solarize My Bill community solar program. Participating Unitil Corp. customers, many of whom were previously unable to install solar panels on their own property, are now seeing reduced electricity charges through their subscription to the Fitchburg Solar project. In addition, the neighboring Town of Lunenburg will realize substantial energy cost savings through a long-term agreement to purchase discounted energy credits generated by the project. Fitchburg Solar is one of 17 community solar facilities that Nexamp has constructed and expects to achieve operations in the coming months.

“Lunenburg has enjoyed a very beneficial relationship with Nexamp,” said Phyllis Luck, Board of Selectman, Town of Lunenburg. “In addition to the town’s net metering agreement, which is expected to generate over $600,000 in utility cost savings over the next 20 years, Nexamp has extended the partnership to include our town’s residents, who remain keenly interested in community solar. In fact, Nexamp enrolled nearly 40 Lunenburg households in two weeks’ time to their Solarize My Bill community solar program, and these residents should save over $275,000 in electricity costs over the term of their subscriptions with Nexamp.”

 

— Solar Builder magazine

Kenyon Energy, Key Equipment complete 6-MW solar project in Deerfield, Mass.

kenyon energy

Kenyon Energy, LLC in partnership with The Town of Deerfield, Key Equipment Finance, and Lake Street Development Partners, today announced that a 6-MW solar array in Deerfield, Mass., is due to begin commercial operation in November 2017.

The ground mount array comprises 18,720 high-efficiency solar panels and sits on about 23 acres of privately-owned land. In its first year, the array is projected to produce more than 7,200 MWh of electricity.

The solar array is the first to be installed in South Deerfield and could be groundwork for future solar energy projects. The Deerfield array marks an important step in the city’s sustainability initiatives, and the agreement sets a fixed property tax rate on the development over a span of 20 years, instead of it fluctuating based on a yearly valuation. The Town of Deerfield is expected to net a total of $1.24 million from this tax.

“We have been proud to work with Lake Street Development Partners, along with Key Equipment Finance, and The Town of Deerfield to complete this renewable installation,” said Ray Gonzalez, President of Kenyon Energy. “These efforts are part of the town’s long-term strategy to cut the environmental footprint and deliver long-term value to the businesses and communities where people live and work.”

Kenyon Energy, one of the nation’s leading solar technology and energy services provider, managed all aspects of the project from the point of arranging the engineering, procurement, and construction (EPC) services, through the construction process and forward to commercial operation of the project. Key Equipment Finance, one of the nation’s largest bank-held equipment finance companies and an affiliate of KeyCorp, provided financing in the form of a sale leaseback supported by a Power Purchase Agreement (PPA). With the closing of financing, Bay4 Energy Services will provide asset management services including operations and maintenance for the life of the system.

16 community solar projects across Massachusetts being financed by Key Equipment Finance

“Key Equipment Finance’s long-term partnership with Kenyon Energy enables them to monetize tax benefits, including investment tax credit and depreciation,” said Doug Beebe, vice president, energy finance, Key Equipment Finance. “Creative financing solutions like this make it possible for Kenyon Energy to own and operate solar projects and sell the power at a discounted rate to cities and towns like Deerfield, to support their sustainability goals.”

— Solar Builder magazine

Vermont’s World Learning School adds 196-kW solar system via Sunwealth financing

Sunwealth

Sunwealth helped finance a solar project for the World Learning School for International Training (SIT) campus in Vermont, which originally wasn’t financially feasible.

“We have always been interested in renewables, but they can be cost prohibitive for organizations like ours,” said Kote Lomidze, Chief Financial Officer at World Learning. “Partnering with Sunwealth has given us access to an energy source that has been out of reach until now.”

Commercial solar development has traditionally been overlooked by banks and other financial institutions in favor of residential and utility-scale projects for two primary reasons: the lack of a credit rating system and the size of the projects.

Sunwealth’s proprietary underwriting process, however, ensures the credit worthiness of its commercial clients. In addition, Sunwealth’s approach minimizes transaction costs and provides investors with an attractive return potential and the opportunity to make a positive impact. The 196.5 kW World Learning project will help the national non-governmental organization achieve $10,000 in energy savings per year.

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“The World Learning project represents what we envisioned when launching Sunwealth,” said Jonathan Abe, Chief Executive Officer at Sunwealth. “It’s incredible to see how World Learning is putting its energy savings to work furthering the organization’s mission.”

Solar Design Associates, Inc. an Ayer, Massachusetts engineering firm, and Dynamic Organics, LLC a renewable energy developer located in Putney, Vermont, designed and constructed the World Learning solar project.

“As a local developer, we understand how every installation affects our community,” said Morgan Casella, Managing Partner at Dynamic Organics. “We’re proud to be part of a project team that helps create a more resilient economy right in our backyard.”

 

— Solar Builder magazine

Braggawatt adds COO to further streamline commercial solar financing platform

Braggawatt

Braggawatt Energy, a financing provider enabling small and medium-sized enterprises’ (SMEs) adoption of cost-saving onsite energy solutions (that we covered in this feature), continues to bolster its ranks with solar industry veterans, adding Nathan (Kii) Miller, P.E. as Chief Operating Officer. With more than 17 years of solar industry experience, Miller will be tasked with streamlining project underwriting and realization processes to scale Braggawatt’s financing provision.

“Kii’s strong industry track-record and commercial expertise, combined with his engineering know-how and innovative approach, will foster operational excellence as our offering scales to meet large market demand,” said Trey Ramsey, Braggawatt CEO and co-founder. “We are excited to have Kii join us in disrupting how distributed energy projects are originated, underwritten, financed and implemented,” added Oleg Popovsky, Braggawatt CCO and co-founder.

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Braggawatt’s free-to-use online platform is enabling solar projects through its loan and PPA financing options. Over the past three months, more than 60 solar installation companies across more than 10 states have joined the platform and have created proposals for more than 100 SME clients, offering to unlock $130 million in energy cost-savings.

To enhance support for Braggawatt’s platform users, new features have recently been added based on user feedback and platform analytics. These features include interactive chatbots, an FAQ section, step-by-step platform guidance and phone support.

As the team and user base grows, Braggawatt will continue to connect solar providers with fast, transparent financing solutions to best serve the SME market.

— Solar Builder magazine

Details on lifetime guarantee for solar system performance now available through Omnidian

solar system performance guarantee

Omnidian, a nationwide provider of comprehensive protection plans for investments in residential solar systems, is launching a third-party performance guarantee for the lifetime of a PV system. The performance guarantee is available for owners of individual home solar systems through Omnidian channel partners, such as lenders and installers. It is also available for financial institutions, such as funds and third-party owners, that manage large portfolios of residential solar assets.

“Residential PV systems are often backed by narrowly tailored warranties that cover defective equipment,” said Mark Liffmann, Omnidian’s CEO and founder. “But at the end of the day, owners of residential solar – whether it is an asset manager overseeing thousands of systems or an individual homeowner trying to save on electric bills – want the assurance that their investment will perform as promised. By shielding the owners of residential solar systems from the performance risk, Omnidian is providing the solution that gives owners true peace of mind.”

The firm’s service offering addresses one of the major pain points in the growth of residential solar. The residential solar market in the U.S. has grown substantially over the last decade. But competition and high customer acquisition costs have resulted in consolidation and exits by many large installation firms. This has often left distressed residential solar assets without active management for monitoring system health and ensuring optimal performance. Further, home owners have not broadly had the option for performance guarantees when they purchase a system with loan proceeds or cash.

“Transferring performance risk will allow solar businesses to free up vital capital for growing their business and give customers the assurance that their investment will perform as promised without having to personally monitor their solar system,” Liffmann added.

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How does it work?

Omnidian’s performance guarantee includes 24/7 continuous monitoring, proactive service alerts and 100-percent covered hardware and software through a nationwide network of field service professionals, as well as 100-percent guarantee of promised energy or plan owners will be reimbursed for energy loss.

Omnidian’s proprietary technology integrates with all major third-party monitoring platforms and quickly identifies underperforming assets requiring field service dispatch. The firm partners with a nationwide network of pre-certified field technicians. Omnidian’s 100-percent performance guarantee transfers solar energy production risk away from the asset owner. This risk transfer secures the solar energy investment, enhancing asset security and liberating capital.

 

Venture capital firms also see the market opportunity and value in the Omnidian team’s industry experience and unique service offering. The company recently closed an oversubscribed $5.1 million series seed round led by Congruent Ventures, an early-stage venture firm that backs companies in the sustainability ecosystem. Other participants include City Light Capital, Blue Bear Capital, Energy Foundry, Ekistic Ventures, and Avista Development, a wholly-owned, non-regulated subsidiary of Avista Corp.

“Performance guarantees for residential solar energy present a major opportunity to create value for asset owners and help drive the next wave of growth in the residential solar market,” said Abe Yokell, co-founder and managing partner of Congruent Ventures. “We see Omnidian as best positioned to seize this opportunity due to the extensive industry experience of the executive team as well as the state-of-the-art technology they’ve developed in a short period of time.”

The team at Omnidian has managed nearly half of the residential solar systems installed in the U.S. This industry background has allowed rapid expansion of their business objective to protect and accelerate capital investments in the residential solar sector. Today, Omnidian supports Fortune 1000 clients and other third-party owners of leased solar portfolios. The firm is currently managing tens of thousands of systems, having doubled its assets under management in September alone.

— Solar Builder magazine