Challenges, Successes and Current Barriers to Scaling...
Transcript of Challenges, Successes and Current Barriers to Scaling...
1
Building Bridges to Net Zero
Challenges, Successes and Current Barriers to Scaling Solar in Affordable Housing
Offsetting Tenant Electric Loads in Multifamily Buildings
‹#›MULTIFAMILYBUILDINGS2015:BUILDINGBRIDGESTONETZERO
Moderator/Panelists • WayneWaite,Moderator• ChrisNeidl,HereComesSolar
• BenjaminHealey,Connec=cutGreenBank• TomOsdoba,EnterpriseCommuni=es
‹#›MULTIFAMILYBUILDINGS2015:BUILDINGBRIDGESTONETZERO
II . Financial Outlook for Scaling Solar Financing, Underwriting, Securitization and Risk Assessment
Help ensure Connecticut’s energy security and community prosperity by
realizing its environmental and economic opportunities through clean energy
finance and investments.
Support the Governor’s and legislature’s
energy strategy to achieve cleaner, cheaper and more reliable sources of
energy while creating jobs and supporting local economic development
Who is the CT Green Bank?
‹#›MULTIFAMILYBUILDINGS2015:BUILDINGBRIDGESTONETZERO
Energy Challenges in CT
Energy Challenge in Connecticut
High Cost CT has THE highest cost for electricity in the "lower 48"
Old, Energy Inefficient Building Stock CT has some of the oldest and most energy inefficient building stock
Need for "Cleaner / Cheaper" Energy Sources Programs that will diversify our energy mix into renewable/clean power
"More Reliable" Grid 5 major storms in 2 years with widespread outages
‹#›MULTIFAMILYBUILDINGS2015:BUILDINGBRIDGESTONETZERO
We Get to This …
Newington Housing Authority
Housing Authority of the Town of Wethersfield
Middlefield Housing Authority
‹#›MULTIFAMILYBUILDINGS2015:BUILDINGBRIDGESTONETZERO
… Using this Structure
EPCContractor
Mul=familyProperty
CTSL2,LLC
CGB
DebtSyndicate
PPAPayments
Assurant
Debt
TaxEquityEquity+Creditenhancementasrequired+Developerservices
CEFIAHoldings,
LLC
Insurance,maintenance,
“OneCall”Resolu=on
$ $
System
System,Insurance,Lease
CTSolarLeaseprovidesanimportantfinancingtool,bywhich
customersbenefitfromanaffordable,no-money-downinstallaNonandpeaceofmind
Install
‹#›MULTIFAMILYBUILDINGS2015:BUILDINGBRIDGESTONETZERO
Help Us Get Smarter!
BenHealeyDirector,CleanEnergyFinanceConnec=cutGreenBank(860)257-2882|[email protected]
‹#›MULTIFAMILYBUILDINGS2015:BUILDINGBRIDGESTONETZERO
III. Big-picture - Capacity Building and Capitalization • EnterpriseCEOTerriLudwig
• SolarCommitment,May2014:Enterprisewillworkwithlocalpartnerstoinstall16megawafsofsolarenergycapacityonaffordablerentaldevelopmentsandinlow-incomecommuni=esby2020.
• Enterpriseworkingtodeliverprojectfinancing
• Lotsofinterestfromdevelopmentpartnersinbringingsolartotheirporholios• Substan=alneedsforprojectdevelopmentcapacityamonghousingandcommunity
developmentorganiza=ons• Largedegreeofmarketvaria=ononeconomicsofsolarprojectdevelopment• Decision-makingonbusinessmodel-leaseorown
‹#›MULTIFAMILYBUILDINGS2015:BUILDINGBRIDGESTONETZERO
Big-picture Context: Concerns • Mee=nggoalandlaunchingproductsrequiresPIPELINEoffinanceableprojects
• InvestmenttaxcreditequityrequiresrobustpipelineanddealsofsufficientSCALE
• Affordablehousing/communitydevelopmentpipelinetodayismodestinsizeandnumberofprojects
• Manydevelopmentpartnershavebeguntothinkaboutthis
• Marketrisksexist,butaremanageable• ITCsettodecreaseto10%amer2016• Stateenergypoliciesandregulatoryapproachesaredynamic
‹#›MULTIFAMILYBUILDINGS2015:BUILDINGBRIDGESTONETZERO
Key Parameters • TargetProjects:PVandThermalthatserveandtargetlow-andmoderate-income
(LMI)households,neighborhoods,redevelopment
• TargetMarkets:Stateswithacombina=onoftherightenergyprices,localsolarincen=ves,energypolicies,andinvestorpriori=es
• Scale:Seekingaggregatedproper=esorgroupsofproper=estocreateasolarprojectofatleast1megawafofinstalledcapacity
• InvestorandLenderConsent:Earlystageconsentfromhostsites’financingsources,toinstallandoperatesolarequipmentontargetedproper=es
‹#›MULTIFAMILYBUILDINGS2015:BUILDINGBRIDGESTONETZERO
Strategic Approach to Solar Project Development • Commitmentto16MWby2020aspartofObamaAdministra=ongoalsforrenewableenergy
deployment(HUDgoalis100MW)• Targetmarketsforproac=veprojectdevelopmentwork(AL,CA,CO,FL,GA,IL,IN,KY,MA,MD,
MI,MN,NJ,NY,NC,OH,PA,SC,VA,WI)• Crea=ngaconsistentprocessforbuildingpipeline,andmovingprojectsthroughprocesseffec=vely• Iden=fyasetofpartnersfocusedonpipeline,projectdevelopmentandimplementa=on
Capacity-BuildingTechnicalAssistance
ProjectScoping
ProjectAnalysisConnecttoDesign&InstallVendors
EnergyMarketAssessments
SupportBusinessModelDevelopmentAssistinStructuring
AssistinRegulatoryAcNviNes
IniNalFinancialModelingEquity–ITC
Debt
11
‹#›MULTIFAMILYBUILDINGS2015:BUILDINGBRIDGESTONETZERO
One Potential Deal Structure
‹#›MULTIFAMILYBUILDINGS2015:BUILDINGBRIDGESTONETZERO
Roles • Enterpriseprovidestechnicalassistance,debt,outreach,andcoordina=on
amongthevariouspar=es.
• Localpartnerswillbehosts(roomops,sites).
• Thetaxequitysourcewillprovideequityfinancing.
• AnEPCcontractor(installer)willinstallandcommissionthesystems.
• Adeveloperwillhelptobringprojectstogether,andoperateandmaintainthemlong-term.Localpartneranddeveloperinsomecaseswillbethesame.
‹#›MULTIFAMILYBUILDINGS2015:BUILDINGBRIDGESTONETZERO
TPO Financing and Ownership Structures • TPOfinancingandownershipstructuresareprevalentinsolarinstalla=onmarkets– 70%inCalifornia– 90%inArizona– Over60%inMaryland,Massachusefs
• WhatisroleofTPOapproachesinaffordablehousing?
• Howdotheywork?Whatarethebenefits?
• Whenispurchasingadvantageous?
‹#›MULTIFAMILYBUILDINGS2015:BUILDINGBRIDGESTONETZERO
Solar Agreements
hZps://financere.nrel.gov/finance/content/solar-securiNzaNon-and-solar-access-public-capital-sapc-working-group
NREL-SolarAccesstoPublicCapital– Resourcestobuildmarket– Standardizedagreements
• Lackofunderstandingaboutofaffordablehousingfinancingownership,regulatorystructures
• Whatcanbedonetobe?ereducatehousingindustryaboutsolaragreements?
• Howcanweeducatesolarproviderson“affordablehousing”speak?
16
Building Bridges to Net Zero IV. Community Solar . . . Shared Solar . . . or Community Shared Solar?
‹#›MULTIFAMILYBUILDINGS2015:BUILDINGBRIDGESTONETZERO
Group Purchasing • Mul=plepropertyowners,orproper=es
gaincompe==vepricingandotherbenefitsforindividualsolarinstalla=onsfromoneormoreinstallersthroughpooledpurchasingpower
• RFPprocessdrivenbyhomeowners,civicorganiza=ons,non-profitsorpublicsectoractors
• Omen(thoughnotalways)=me-bound,=er-basedandgeographicallyfocused
• Examples:SolarizeCB6,HereComesSolar
‹#›MULTIFAMILYBUILDINGS2015:BUILDINGBRIDGESTONETZERO
Shared Solar (‘Community Net-Metering’) • Mul=pleratepayersderivemonetarycreditson
‘share’basisfromcentralizedsolarassetsthatdistributepowertothelocalgrid.‘Virtualnetmetering’
• Sponsor:projectini=atedbyprivatedeveloper,u=lity,localgovernment,non-profitsandcivicassocia=ons
• Membership:Shareownershipvs.Subscrip=on
• U=lity:tracksanddistributescredittoshareholders
• Diverseandevolvingmodels:Scale,geography,ownership,financing
‹#›MULTIFAMILYBUILDINGS2015:BUILDINGBRIDGESTONETZERO
Multi-Family Shared Solar • Shared solar for individually metered
ratepayers living in co-ops, condos, rental properties !
• Shared solar asset located at multi-family site!
• !• Sponsor: property owners, shareholders,
private third-party !
‹#›MULTIFAMILYBUILDINGS2015:BUILDINGBRIDGESTONETZERO
‘Community Net Metering’ in NYS • PSCCase15–E–0082(July2015).ProductofReformingtheEnergyVision(REV)
• Mul=pleDGtechnologieseligible
• FacilitymustbelocatedinsameNYISOZoneasmembership
• Behindthemeterofcommercialhostaccount
• Creditsawardedatfullretailrate• 2MWCapacityMaximum
‹#›MULTIFAMILYBUILDINGS2015:BUILDINGBRIDGESTONETZERO
Community Net Metering in New York • Sponsors:ESCO,municipalen=ty,business,non-profit,civicassocia=on.
• Membership:Minimumof10members;memberswithdemand>25KWlimitedto40%ofsystemoutput(exceptmaster-meteredmul=-familybuildings.)
• U=lity:trackscreditsfromsharedrenewablesprojects,assignscredittomembersaccordingtosponsorinstruc=ons
‹#›MULTIFAMILYBUILDINGS2015:BUILDINGBRIDGESTONETZERO
Community Net Metering in New York • Sponsors:ESCO,municipalen=ty,business,non-profit,civicassocia=on.
• Membership:Minimumof10members;memberswithdemand>25KWlimitedto40%ofsystemoutput(exceptmaster-meteredmul=-familybuildings.)
• U=lity:trackscreditsfromsharedrenewablesprojects,assignscredittomembersaccordingtosponsorinstruc=ons
‹#›MULTIFAMILYBUILDINGS2015:BUILDINGBRIDGESTONETZERO
Community Net Metering in New York • 2-PhaseImplementaNon:
– PhaseI(October2015–April2016):DGOpportunityZonesandLow-IncomePar=cipa=on
– Phase2(May2016-):En=reu=lityserviceterritory
• LowIncomeCustomerCollaboraNve:– Collabora=vebetweenDPS,NYSERDAandLow-incomecommunityorganizers
– TaskedtocreatemechanismstoovercomeobstaclestoLMIpar=cipa=on
24
Building Bridges to Net Zero Community Solar Opportunities and Affordable Housing?
Group Purchasing"
Shared Solar" Multi-Family Shared Solar"
‹#›MULTIFAMILYBUILDINGS2015:BUILDINGBRIDGESTONETZERO
Community Solar – NY Outlook
• EconomicsofCommunitySolar• OtherthanPVsystemcosts,whatotherprojects
costsmustbeconsideredforcommunitysolar?• Whatarethechiefcostadvantages?
• Process/ProForma/DueDiligence– Howwill“off-takers”subscribetoservice?– Howwillthesystemsbefinanced?– WhatdoyouseeasprojectfeasibilityandunderwriGngchallenges?
26
Building Bridges to Net Zero
QUESTIONS
General Discussion Topics: Solar Costs, Metering, Utility Allowances and Sub-metering,
and Promising Solar Program
‹#›MULTIFAMILYBUILDINGS2015:BUILDINGBRIDGESTONETZERO
Solar Costs - ITC • ITCSunset:
– ITCreducedto10%onJanuary1,2017– Expect:RapidincreaseinITCtransac=onsin2016
– Projec=on:8GWreduc=oninsolarcapacityin2017
– Dowehavecapacitytoscalesolarinaffordablehousingmarketsby2017?
– Willaffordablehousingbecrowdedout?
‹#›MULTIFAMILYBUILDINGS2015:BUILDINGBRIDGESTONETZERO
IRS Private Letter Ruling • IRS:Individualtaxpayercanclaimsolartaxcreditsforinves=ngincommunitysolarhfps://www.irs.gov/pub/irs-wd/201536017.pdf
• IstheIRS’PrivateLe?eranopportunitytofacilitatecommunitysolarprogramsinLMIcommuniGes?
‹#›MULTIFAMILYBUILDINGS2015:BUILDINGBRIDGESTONETZERO
Solar Costs - Reductions • CanthecostofsolarinstallaNonsbefurther
reducedtooffsetITCreducNon?• NREL:Somcostsaccountforasignificantpor=on
oftotalinstalledPVsystemprices– 64%Residen7al– 57%Smallcommercial(upto250kW)
• NREL:TPOtransac=onsaddcosts– $0.78/WResiden7alporFolio– $0.67/WtoacommercialporFolio– ButProvide:Otherservices;lowerLCOE,volumediscoun7ng
• NREL:Transac=onCosts:– $0.21/wafto$0.24/wafSource:NRELCostsPerWaf
‹#›MULTIFAMILYBUILDINGS2015:BUILDINGBRIDGESTONETZERO
Metering • NetMeteringChanges:
– NEMisabillingarrangementthatprovidescredittosolarcustomersatfull-retailvaluefortheelectricitytheyaregenera=ng
– 16stateshaveproposedorenactedlegisla=veandregulatorychangestonet-energymeteringpolicies
– NewFees/Lowerratesforsolarcredits– HowwillnetmeteringchangesaffectthevalueproposiGonforon-sitesolar?CommunitySolar?
– WhatstrategiesforLMIshouldbepursued?(E.g.NeighborhoodVirtualNetMetering)
Ar=clefromRMI
‹#›MULTIFAMILYBUILDINGS2015:BUILDINGBRIDGESTONETZERO
Utility Allowances and SubMetering • ScalingPVtoservetenantsmayrequiresarevenuestreamtocoveraddedinvestmentcosts
• Strategies– Sub-metering– U=lityAllowanceadjustments– SolarU=lityAllowances– LIHTCpolicyop=ons– HUDGuidanceChanges– Other
• WhatacNonsareneeded?
• PHAcompleteddetailconsump7onanalysistosetschedule• 3,276kWh/yearperyr.• 273kWh/monthperyr.• Solarvalua7on$0.091/kWh• $25.00/month• Documenta7onofPVinstalla7onandproduc7on
‹#›MULTIFAMILYBUILDINGS2015:BUILDINGBRIDGESTONETZERO
Promising MF Programs/Policies/Practices • CommercialPACE(Connec=cut,California…)
– HUD-StatePartnerships:CaliforniaPilotwith223(f)
• ScaledAffordableMul=familySolarProgram– Connec=cut(Mul=familySolar:Non-Profits,HousingAuthori=es,PrivateOwners)– HawaiiGEMS(GreenEnergyMarketSecuri=za=on)– California:AB693–Mul7familyAffordableHousingSolarRoofsProgram– Other…
• SolarRenewableEnergyCer=ficates(NewJersey)• SolarFinancing
– SolarInvestmentFunds– YieldCOs
‹#›MULTIFAMILYBUILDINGS2015:BUILDINGBRIDGESTONETZERO
Innovative Practices • CreditEnhancement
– PublicBenefitCharges– Generalobliga=on/CashCollateralsupport
• Securi=za=on– On-BillFinancing/Repayment
• MorrisModel– GeneralObliga=onGuarantee+“DoubleBarreled”BondFinancing+TaxCredits+Incen=ves+ProjectCashFlow
– Structuresassolarlease
• Metering– Connec=cutmeteringlegisla=on
‹#›MULTIFAMILYBUILDINGS2015:BUILDINGBRIDGESTONETZERO
Other Notes
• Mul=familySolarGuidance– NewYorkCityMul=familySolarGuide,March2015h\p://www.cuny.edu/about/resources/sustainability/solar-america/installer-resources/Mul7family_Resources_Final_Final.pdf
• SolarPlusBaferStorage– CleanEnergyGroup,ResilienceforFree:HowSolar+StorageCouldProtectMul7familyAffordableHousingFromPowerOutagesatLi\leofNoNetCost,October2015h\p://www.cleanegroup.org/ceg-resources/resource/resilience-for-free-how-solar-storage-could-protect-mul7family-affordable-housing-from-power-outages-at-li\le-or-no-net-cost#.Vi0M7dAVRF8
‹#›MULTIFAMILYBUILDINGS2015:BUILDINGBRIDGESTONETZERO
Scaling Solar • Porholio-wideApproaches
– Whatdopor`olioapproacheslooklike?
• TenantEnrollmentOpportuni=es– HowcanPHA’sleverageCommunitySolartobenefitVoucherProgramparNcipants?
• ProgramIntegra=on– CansolarimprovethevalueproposiNonofenergyefficiencyprogramstosupportdeeperretrofits?
• HousingProgramLeveraging– LIHTC– RAD
‹#›MULTIFAMILYBUILDINGS2015:BUILDINGBRIDGESTONETZERO
Community Solar Capacity • GTM:U.S.CommunitySolarOutlook2015-2020
– 29developersac=velyoncommunitysolarprojects
– CleanEnergyCollec=veandSunShareaccountfor32%ofcommunitysolarcapacity
– Arethereenoughprovidersincommunitysolarspacetoscalecommunitysolarinaffordablehousing?
– WhatarecapacitybuildingstrategiesneededforcommunitysolartoreachLMImarkets?
‹#›MULTIFAMILYBUILDINGS2015:BUILDINGBRIDGESTONETZERO
Tenant Strategies To Bridge Green Divide • Solarhasby-passedlowerincomehouseholds/
communi=es– Lessthan5%ofhouseholdswithincomesunder$40,000havesolar
– 40%ofUShouseholdshaveincomeslessthan$40,000• Electricitycostsmakeupamuchlargershareofalow-
incomehouseholds’budget• RENEW300:
– Objec=ve:IncreaseaccesstosolarenergyforallAmericans,
• Whatstrategies/policyareneededtoscalesolartoprovidetenant’swithaccesstosolar?
• ensurethathouseholdsinaffordablehousingreceiveadirecteconomicbenefitfromsolar?
38
Building Bridges to Net Zero
Closing Remarks
‹#›MULTIFAMILYBUILDINGS2015:BUILDINGBRIDGESTONETZERO
Community Solar Models • 12stateshavepolicies/programs
encouragingsharedsolar• NREL–SharedModels
h\p://www.nrel.gov/docs/fy15os7/63892.pdf• Varia=ons:
– Capacity-basedprogramsown,lease,orsubscribetopor=onofthesystemandreceiveelectricityormonetarycreditsinpropor=ontotheirinterest
– Energy-basedprogramsofferpar=cipantstheopportunitytopurchasetheoutputofanarrayviakilowaf-hourblocksofgenera=on.
• Whatcommunitysolarmodelismostusefulforaffordablehousing?Residents?