challenges, successes and current barriers to scaling...

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Building Bridges to Net Zero

Challenges, Successes and Current Barriers to Scaling Solar in Affordable Housing

Offsetting Tenant Electric Loads in Multifamily Buildings

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Moderator/Panelists •  WayneWaite,Moderator•  ChrisNeidl,HereComesSolar

•  BenjaminHealey,Connec=cutGreenBank•  TomOsdoba,EnterpriseCommuni=es

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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?

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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

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We Get to This …

Newington Housing Authority

Housing Authority of the Town of Wethersfield

Middlefield Housing Authority

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… 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

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Help Us Get Smarter!

BenHealeyDirector,CleanEnergyFinanceConnec=cutGreenBank(860)257-2882|benjamin.healey@ctgreenbank.com

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III. Big-picture - Capacity Building and Capitalization •  EnterpriseCEOTerriLudwig

•  SolarCommitment,May2014:Enterprisewillworkwithlocalpartnerstoinstall16megawafsofsolarenergycapacityonaffordablerentaldevelopmentsandinlow-incomecommuni=esby2020.

•  Enterpriseworkingtodeliverprojectfinancing

•  Lotsofinterestfromdevelopmentpartnersinbringingsolartotheirporholios•  Substan=alneedsforprojectdevelopmentcapacityamonghousingandcommunity

developmentorganiza=ons•  Largedegreeofmarketvaria=ononeconomicsofsolarprojectdevelopment•  Decision-makingonbusinessmodel-leaseorown

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Big-picture Context: Concerns •  Mee=nggoalandlaunchingproductsrequiresPIPELINEoffinanceableprojects

•  InvestmenttaxcreditequityrequiresrobustpipelineanddealsofsufficientSCALE

•  Affordablehousing/communitydevelopmentpipelinetodayismodestinsizeandnumberofprojects

•  Manydevelopmentpartnershavebeguntothinkaboutthis

•  Marketrisksexist,butaremanageable•  ITCsettodecreaseto10%amer2016•  Stateenergypoliciesandregulatoryapproachesaredynamic

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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

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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

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One Potential Deal Structure

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Roles •  Enterpriseprovidestechnicalassistance,debt,outreach,andcoordina=on

amongthevariouspar=es.

•  Localpartnerswillbehosts(roomops,sites).

•  Thetaxequitysourcewillprovideequityfinancing.

•  AnEPCcontractor(installer)willinstallandcommissionthesystems.

•  Adeveloperwillhelptobringprojectstogether,andoperateandmaintainthemlong-term.Localpartneranddeveloperinsomecaseswillbethesame.

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TPO Financing and Ownership Structures •  TPOfinancingandownershipstructuresareprevalentinsolarinstalla=onmarkets–  70%inCalifornia–  90%inArizona–  Over60%inMaryland,Massachusefs

•  WhatisroleofTPOapproachesinaffordablehousing?

•  Howdotheywork?Whatarethebenefits?

•  Whenispurchasingadvantageous?

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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?

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Building Bridges to Net Zero IV. Community Solar . . . Shared Solar . . . or Community Shared Solar?

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Group Purchasing •  Mul=plepropertyowners,orproper=es

gaincompe==vepricingandotherbenefitsforindividualsolarinstalla=onsfromoneormoreinstallersthroughpooledpurchasingpower

•  RFPprocessdrivenbyhomeowners,civicorganiza=ons,non-profitsorpublicsectoractors

•  Omen(thoughnotalways)=me-bound,=er-basedandgeographicallyfocused

•  Examples:SolarizeCB6,HereComesSolar

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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

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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 !

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‘Community Net Metering’ in NYS •  PSCCase15–E–0082(July2015).ProductofReformingtheEnergyVision(REV)

•  Mul=pleDGtechnologieseligible

•  FacilitymustbelocatedinsameNYISOZoneasmembership

•  Behindthemeterofcommercialhostaccount

•  Creditsawardedatfullretailrate•  2MWCapacityMaximum

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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

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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

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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

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Building Bridges to Net Zero Community Solar Opportunities and Affordable Housing?

Group Purchasing"

Shared Solar" Multi-Family Shared Solar"

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Community Solar – NY Outlook

•  EconomicsofCommunitySolar•  OtherthanPVsystemcosts,whatotherprojects

costsmustbeconsideredforcommunitysolar?•  Whatarethechiefcostadvantages?

•  Process/ProForma/DueDiligence–  Howwill“off-takers”subscribetoservice?–  Howwillthesystemsbefinanced?–  WhatdoyouseeasprojectfeasibilityandunderwriGngchallenges?

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Building Bridges to Net Zero

QUESTIONS

General Discussion Topics: Solar Costs, Metering, Utility Allowances and Sub-metering,

and Promising Solar Program

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Solar Costs - ITC •  ITCSunset:

–  ITCreducedto10%onJanuary1,2017–  Expect:RapidincreaseinITCtransac=onsin2016

–  Projec=on:8GWreduc=oninsolarcapacityin2017

–  Dowehavecapacitytoscalesolarinaffordablehousingmarketsby2017?

– Willaffordablehousingbecrowdedout?

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IRS Private Letter Ruling •  IRS:Individualtaxpayercanclaimsolartaxcreditsforinves=ngincommunitysolarhfps://www.irs.gov/pub/irs-wd/201536017.pdf

•  IstheIRS’PrivateLe?eranopportunitytofacilitatecommunitysolarprogramsinLMIcommuniGes?

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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

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Metering •  NetMeteringChanges:

–  NEMisabillingarrangementthatprovidescredittosolarcustomersatfull-retailvaluefortheelectricitytheyaregenera=ng

–  16stateshaveproposedorenactedlegisla=veandregulatorychangestonet-energymeteringpolicies

–  NewFees/Lowerratesforsolarcredits–  HowwillnetmeteringchangesaffectthevalueproposiGonforon-sitesolar?CommunitySolar?

–  WhatstrategiesforLMIshouldbepursued?(E.g.NeighborhoodVirtualNetMetering)

Ar=clefromRMI

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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

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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

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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

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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

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Scaling Solar •  Porholio-wideApproaches

– Whatdopor`olioapproacheslooklike?

•  TenantEnrollmentOpportuni=es–  HowcanPHA’sleverageCommunitySolartobenefitVoucherProgramparNcipants?

•  ProgramIntegra=on–  CansolarimprovethevalueproposiNonofenergyefficiencyprogramstosupportdeeperretrofits?

•  HousingProgramLeveraging–  LIHTC–  RAD

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Community Solar Capacity •  GTM:U.S.CommunitySolarOutlook2015-2020

–  29developersac=velyoncommunitysolarprojects

–  CleanEnergyCollec=veandSunShareaccountfor32%ofcommunitysolarcapacity

–  Arethereenoughprovidersincommunitysolarspacetoscalecommunitysolarinaffordablehousing?

– WhatarecapacitybuildingstrategiesneededforcommunitysolartoreachLMImarkets?

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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?

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Building Bridges to Net Zero

Closing Remarks

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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?