Andrew BurgerLast updated: March 12, 2018 @ 07:22 PM PST
A variety of US solar energy industry participants and public housing agencies have been working hard to make solar energy more affordable and accessible, particularly to low-income Americans and those living in government-subsidized housing. That has proven to be a particularly difficult and challenging task given the labyrinth of public housing organizations, market structures and governing rules and regulations that span the federal, state and local levels across the 50 US states.
The Denver Housing Authority (DHA) has dedicated itself to finding ways to make emissions-free solar energy available to public housing residents, and to pass on at least some the energy bill savings directly to residents. Its hard work, diligence and investments are beginning to pay off.
DHA interconnected its first community solar garden, a 2 MW photovoltaic (PV) system, to utility Xcel Energy’s distribution grid as part of the utility’s Solar Rewards program late last December. Located on land owned by the City of Aurora and operated by the Solar Technology Acceleration Center (SolarTAC) about 30 miles from the low-income, public housing it serves, the solar energy garden follows on from an innovative, an aggregate 2.5 MWs worth of rooftop solar energy installations DHA and project partners completed in 2015.
Solar Magazine spoke with DHA Portfolio Energy Manager Chris Jedd and Mike Mendelsohn, senior director of project finance and capital markets for the US Solar Energy Industries Association (SEIA), to find out what it took to bring these solar public housing projects to fruition, what makes them unique and what they might portend in terms of broadening access to solar energy if they can be reproduced elsewhere in Colorado and across the US.
A long-term commitment and dedicated effort
DHA has dedicated a substantial amount of time, effort and resources in mapping out and navigating a course that resolved the numerous and varied challenges associated with installing solar energy systems and services to public housing facilities and residents in its own and neighboring public housing agency service territories.
“Quite a bit of planning and development was required. As a whole, it probably took around two years to assemble all the pieces and put the right team together – consultants, financing partners, property owners, engineers, technology suppliers and others,” Jedd told Solar Magazine.
The federal solar energy investment tax credit has played a central, pivotal role in facilitating rapid growth of US solar energy capacity. Companies that consistently run net profits purchase them in order to reduce their tax bills. A quasi-municipal agency that must reinvest any profits back into fulfilling its public obligations, DHA and public housing agencies throughout the US have no need and cannot use of them, Jedd explained. Finding investors willing to purchase the tax equity credits, as well as solar renewable energy credits (SRECS), that solar public housing projects can qualify for featured prominently among DHA’s list of top priorities.
The fact that public housing facilities are typically master-metered and governed by a master utility service agreement was one of several attributes that posed a difficult challenge. This makes it very difficult to monitor, apportion and allocate electricity usage, costs and savings among project participants, as well as residents, Jedd highlighted.
Navigating an obstacle-filled solar project development course
DHA pays most of the utility bills on behalf of residents for master-metered public housing properties in its portfolio, Jedd explained. All the electricity that’s consumed among housing units is aggregated and shows up as a single total quantity on electricity meters. “That makes it hard to pass energy bills savings to residents. The next best thing is to pass them on to the public housing agency,” he said.
The latter option doesn’t reduce residents’ energy costs directly, but it benefits them in other ways, and it helps DHA achieve its guiding, informing mission, however.
Say we can reduce energy bills 20 percent. DHA can then reinvest the money saved in the property services it provides and in building improvements that improve the quality of public housing and makes it more sustainable.
– Jedd explained in an interview.
Furthermore, additional cuts to federal agency budgets are being made, which makes those energy savings all the more valuable. Shrinking budgets also make it that much more difficult for DHA and public housing agencies throughout the US to free up or find new capital to maintain services and facilities, much less invest to improve them.
DHA’s solar project development team has made distributing at least some of the savings or revenues that result directly to public housing residents a strategic goal. At the end of the day, “a small percentage [of energy bill savings] winds up going to residents,” Jedd said.
They get direct savings, about $20-$30 monthly on a typical utility bill. We wish we could do more of it, but we pay the bills for most of our residents, and they see savings, or improvements, in other ways. We’re a nonprofit, so any profits we generate go right back, or in a roundabout way gets invested, into achieving DHA’s mission of providing affordable housing for low-income Americans.
Finding a way to navigate through the various, increasingly complicated, rate structures and billing mechanisms in place among distribution utilities served as another major obstacle DHA and project partners were able to overcome. “We had to identify the right utility bill credits, incentives and mechanisms and make sure that everything – cash flows, etc. – was optimized and would maximize savings for DHA,” Jedd elaborated.
A solar standout among US affordable housing agencies
DHA stands out among US low-income, affordable housing agencies, SEIA’s Mendelsohn said.
They took on the challenge and dedicated resources to come up with a solution that’s economically viable and sustainable in other senses of the term. It became part of their mission to make this happen.
Other US housing authorities that are not as well funded, or that have not instituted a clear, solar energy or sustainability agenda probably could not do the same, but Mendelsohn believes DHA’s solar project development models can be reproduced elsewhere in the US.
“They’ve now completed two solar public housing projects with very different structures,” Mendelsohn highlighted. For the first – a 2.5 MW rooftop solar power project completed in 2015 – DHA worked with Denver-based Oak Leaf Energy Partners, Boulder, Colorado-based Namaste Solar, and Belgium renewable energy investment group Enfinity to create and implement an innovative, project structure. Creation of a third-party power purchase agreement (PPA) that entails aggregating the emission-free electricity produced by 666 individual, rooftop PV systems installed on the rooftops of 387 public housing units owned and managed by DHA serves as a keystone of the project.
Oak Leaf Partners worked closely with DHA to design and raise the capital required. Boulder, Colorado-based Namaste Solar installed some 10,000 solar PV panels over the course of 11 months to bring the system up and running. Enfinity provided $10 million in financing and now owns and operates the system. In addition to selling the solar energy to DHA at a discounted rate, Enfinity makes regular payments to DHA to lease the rooftop space.
“The PPA worked really well in that they [DHA] were able to monetize roof rents. Normally, any decreases in energy expenses flow back to HUD [the federal Dept. of Housing and Urban Development], or they’re seen as a way to increase housing rents for Section 8 public housing property owners,” Mendelsohn explained in an interview. “I can’t say the exact cost allocated to the housing agency or to customers, but there is some split there. I think that’s a great thing and believe this can be replicated so as to take advantage of those cost savings and bring them back to both housing administrators and low-income renters, their clients,” he said.
A solar garden for low-income, public housing residents
DHA’s most recent success is the commissioning of a 2 MW, ground-mounted solar PV system located about 30 miles away from the DHA public housing it serves. A key to making the project technically and financially viable and sustainable was the creation of a virtual net metering agreement via which solar energy production is apportioned across individual public housing units.
DHA was able to make that work because the agency agreed to off-take all the energy the solar garden produces, Mendelsohn explained. “They’re essentially a quasi-government agency with a high credit rating. That makes it easier to develop a viable, attractive community solar project financial structure as DHA acts as a financial back-stop for the project. Then they apportioned it across the different public housing agencies they work with.”
Lacking such dedication, attributes or resources, a low-income, public housing agency would have to underwrite each individual unit that off-takes electrical energy from the solar garden. “That’s a lot more challenging. In the case of DHA’s solar garden, the agency is the sole party buying all the power. That requires a good bit of financial courage to use their balance sheet in that way, but they stepped up and did it,” Mendelsohn said.
SEIA is now moving forward with an initiative based on Mendelsohn’s investigation and DHA and project partners’ willingness to share details of the solar public housing project developments. The aim is to develop a set of standardized project development processes and documentation that could spur development of similar projects across the US. SEIA obtained DHA project documentation, including legal structures and agreements from the Washington, D.C.-based law firm of Ballard, Spahr, Mendelsohn noted.
SEIA has published the resulting solar public housing project documentation on its website. “Hopefully, people can use these documents and apply them,” Mendelsohn said. comment↓
