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

‹#›MULTIFAMILYBUILDINGS2015:BUILDINGBRIDGESTONETZERO

Moderator/Panelists •  WayneWaite,Moderator•  ChrisNeidl,HereComesSolar

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


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?


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


We Get to This …

Newington Housing Authority

Housing Authority of the Town of Wethersfield

Middlefield Housing Authority


… 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


Help Us Get Smarter!

BenHealeyDirector,CleanEnergyFinanceConnec=cutGreenBank(860)257-2882|[email protected]


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

•  SolarCommitment,May2014:Enterprisewillworkwithlocalpartnerstoinstall16megawafsofsolarenergycapacityonaffordablerentaldevelopmentsandinlow-incomecommuni=esby2020.

•  Enterpriseworkingtodeliverprojectfinancing

•  Lotsofinterestfromdevelopmentpartnersinbringingsolartotheirporholios•  Substan=alneedsforprojectdevelopmentcapacityamonghousingandcommunity

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


Big-picture Context: Concerns •  Mee=nggoalandlaunchingproductsrequiresPIPELINEoffinanceableprojects

•  InvestmenttaxcreditequityrequiresrobustpipelineanddealsofsufficientSCALE

•  Affordablehousing/communitydevelopmentpipelinetodayismodestinsizeandnumberofprojects

•  Manydevelopmentpartnershavebeguntothinkaboutthis

•  Marketrisksexist,butaremanageable•  ITCsettodecreaseto10%amer2016•  Stateenergypoliciesandregulatoryapproachesaredynamic


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


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


Roles •  Enterpriseprovidestechnicalassistance,debt,outreach,andcoordina=on

amongthevariouspar=es.

•  Localpartnerswillbehosts(roomops,sites).

•  Thetaxequitysourcewillprovideequityfinancing.

•  AnEPCcontractor(installer)willinstallandcommissionthesystems.

•  Adeveloperwillhelptobringprojectstogether,andoperateandmaintainthemlong-term.Localpartneranddeveloperinsomecaseswillbethesame.


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

•  WhatisroleofTPOapproachesinaffordablehousing?

•  Howdotheywork?Whatarethebenefits?

•  Whenispurchasingadvantageous?


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?


Group Purchasing •  Mul=plepropertyowners,orproper=es

gaincompe==vepricingandotherbenefitsforindividualsolarinstalla=onsfromoneormoreinstallersthroughpooledpurchasingpower

•  RFPprocessdrivenbyhomeowners,civicorganiza=ons,non-profitsorpublicsectoractors

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

•  Examples:SolarizeCB6,HereComesSolar


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


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 !


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

•  Mul=pleDGtechnologieseligible

•  FacilitymustbelocatedinsameNYISOZoneasmembership

•  Behindthemeterofcommercialhostaccount

•  Creditsawardedatfullretailrate•  2MWCapacityMaximum


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


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"


Community Solar – NY Outlook

•  EconomicsofCommunitySolar•  OtherthanPVsystemcosts,whatotherprojects

costsmustbeconsideredforcommunitysolar?•  Whatarethechiefcostadvantages?

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

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QUESTIONS

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

and Promising Solar Program


Solar Costs - ITC •  ITCSunset:

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

–  Projec=on:8GWreduc=oninsolarcapacityin2017

–  Dowehavecapacitytoscalesolarinaffordablehousingmarketsby2017?

– Willaffordablehousingbecrowdedout?


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

•  IstheIRS’PrivateLe?eranopportunitytofacilitatecommunitysolarprogramsinLMIcommuniGes?


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


Metering •  NetMeteringChanges:

–  NEMisabillingarrangementthatprovidescredittosolarcustomersatfull-retailvaluefortheelectricitytheyaregenera=ng

–  16stateshaveproposedorenactedlegisla=veandregulatorychangestonet-energymeteringpolicies

–  NewFees/Lowerratesforsolarcredits–  HowwillnetmeteringchangesaffectthevalueproposiGonforon-sitesolar?CommunitySolar?

–  WhatstrategiesforLMIshouldbepursued?(E.g.NeighborhoodVirtualNetMetering)

Ar=clefromRMI


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


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


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


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


Scaling Solar •  Porholio-wideApproaches

– Whatdopor`olioapproacheslooklike?

•  TenantEnrollmentOpportuni=es–  HowcanPHA’sleverageCommunitySolartobenefitVoucherProgramparNcipants?

•  ProgramIntegra=on–  CansolarimprovethevalueproposiNonofenergyefficiencyprogramstosupportdeeperretrofits?

•  HousingProgramLeveraging–  LIHTC–  RAD


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

–  29developersac=velyoncommunitysolarprojects

–  CleanEnergyCollec=veandSunShareaccountfor32%ofcommunitysolarcapacity

–  Arethereenoughprovidersincommunitysolarspacetoscalecommunitysolarinaffordablehousing?

– WhatarecapacitybuildingstrategiesneededforcommunitysolartoreachLMImarkets?


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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Closing Remarks


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?

challenges, successes and current barriers to scaling...

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