A new alliance has formed to make sure New York City's ambitious solar expansion reaches the low-income residents who have so far been left behind.
Siting and developing solar rooftop projects in New York City can be challenging, but low-income populations face unique obstacles in terms of attention from the private sector and access to capital. Announced earlier this month, the Affordable Solar New York partnership pledges to tackle those issues with each member's expertise. Environmental nonprofit Solar One has teamed up with GRID Alternatives New York Tri-State, which has honed a nonprofit installation model that leverages corporate donations, grants and labor training to keep install costs low. They are joined by Co-op Power, which finances clean energy projects for affordable housing.
“Each of the three entities was doing its own work in the space, but we realized by coming to know each other that if we combined forces, we could put forward the combined package, from shaking hands at the first meeting to decommissioning the system after 20 years of operation,” said Peter Mandelstam, executive director of the tri-state GRID office.
The trio has its work cut out for it. The NY-Sun initiative, which is giving out $1 billion to accelerate the solar industry in New York, only saw six solar projects completed in its low- to moderate-income program in Q2 2016. That's hardly a blip compared to the rest of the solar projects installed in the state.
That's not just a missed opportunity, it's an equity problem: The publicly funded program is far more likely to give money to solar customers who are already in a better position to afford it.
This is not because lower-income customers have less to gain from rooftop solar; it likely makes more of a difference in their monthly budget than it would for the Tesla-owning demographic. And it's not necessarily that they won't pay, Mandelstam argues. Specific market failures make it harder for this segment of the population to seal the deal.
That starts with planning a system. For-profit installers typically charge for the study of a rooftop's solar resource. Those reports can cost several thousand dollars, which puts them out of reach for an affordable housing complex operating on a tight monthly budget. GRID does it for free on a no-commitment basis.
As a nonprofit, GRID also solves a problem with incentive structures: A solar company that wants to sell a system has good reason to be optimistic in its estimate of the potential system's performance.
“When we started talking to affordable housing providers, we realized there were these scammers who were promising more than they could deliver,” Mandelstam said.
GRID spends time on community outreach to build the trust that leads to a project (Mandelstam described this as an “educate and advise” role, eschewing the “for-profit term” of “customer acquisition”). Once it has found a customer and tested for the solar resource, Co-op Power steps up to the plate.
Access to capital
Then there's the question of getting a loan. Mainstream financiers don't see low-income tenants as the best place to park their investments, but simple borrower metrics like credit score do not tell the full story here, Mandelstam said.
“These are people who are going to be living here,” he said. “Their default rates on utility payments are miniscule. By telling a story and understanding the underlying support for solar in the community, we can do a lot of projects and support our mission.”
Multi-tenant solar projects also clock in much smaller than the size institutional investors like to deal with. Co-op aggregates across projects to bundle a few hundred kilowatts, and then finds local, mission-driven investors who can benefit from the tax credits and accelerated depreciation the solar projects provide.
The financing depends on successful payback models, and the alliance has developed two major approaches: centralized and distributed.
The former already is underway in a collaboration with Nazareth Housing on the Lower East Side. The project is expected to go up before the spring thaw, pending the completion of permitting and interconnection. Once installed, the project is expected to save 30 percent of the building's overall electricity costs over the system's 25-year lifespan.
The tenants own the building and share the monthly utility costs. When the solar starts operating, it will directly reduce the electricity bill for the building, lessening that burden on each individual unit. Since the collective billing structure was already in place, Co-op could engage financially with Nazareth as a single entity.
“This building is already good at collecting money to maintain itself from its residents,” said Isaac Baker, community solar co-director at Co-op Power. “We’re piggybacking onto that system — that's the only way this can be scalable and off-the-shelf.”
That won't work for every building, though. A different approach would apply better for multi-tenant homes with individual meters and limited central loads, like a walk-up with no elevators or laundry.
“The only way for them to go solar is to distribute it,” Baker said. For these cases, Co-op is developing a community solar model, where a share of the generation on the rooftop gets credited to the individual unit meters. This innovative approach solves the question of joint ownership of a multi-tenant system by sharing the costs and the savings among the members.
Meet the code
A key component of AFNY's technical assistance is figuring out what it takes for a building to meet the city's fire code. Currently, the code requires solar installations on flat roofs to have certain setbacks and clear areas to allow firefighters smooth access to the roof.
That safety precaution, however, limits the amount of roof space dedicated to producing solar energy. That in turn affects the calculus of a potential project's cost-effectiveness.
The partners are exploring a response to this regulatory scenario that uses a canopy to install more panels nine feet above the roof, allowing clearance for the Fire Department while increasing capacity. There are buildings where the switch to a canopy can double the capacity compared to what is allowed on the surface of the roof, Baker said.
This doesn't work everywhere. For one thing, the materials and labor needed for the canopy add to the cost of the project. Certain structures may be too small for it to make sense; in other places, it could violate historical building regulations.
This approach, though, adds another tool to the arsenal when figuring out how to make solar possible for an affordable housing establishment.