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A Minneapolis community solar garden developer has begun building five projects aimed at reducing electricity costs for low-income consumers.
Cooperative Energy Futures (CEF) is building community solar gardens that will collectively generate a total of 5.6 megawatts of electricity, including one atop a Catholic church in suburban Minneapolis.
To capture low income subscribers CEF has enlisted the assistance of three partners with deep knowledge of that population: Minnesota Minnesota Interfaith Power & Light (MNIPL), Community Power and Northcountry Cooperative Foundation.
Unlike other community solar developers, CEF has focused less on business subscribers and more on residential customers, according to general manager Timothy DenHerder-Thomas.
Moreover, the firm employs a unique model in having “backup subscribers” who agree to cover any defaults by participants. The backup subscribers are institutions such as churches, mosques and cities.
This allows CEF the freedom to include all income levels in solar gardens. “We don’t have a minimum credit score,” DenHerder-Thomas said. “Most developers use 680 or 700 as their minimum but we don’t even check credit scores. That costs a lot of money and we have backup subscribers if they default.”
He does not lose sleep over the prospect of seeing lots of defaults on subscriber agreements. “We’ll see how it goes, but we’re not seeing it as a big risk,” he said. “The finance community has traditionally looked at this as something like a home loan but we see it as much more similar to a utility bill payment.”
Less than 1 percent of low income utility customers default on their bills and he expects CEF to see no difference. Community solar subscribers will receive in the early years a 6 percent discount on electric bills, which is typical for the industry, said DenHerder-Thomas.
Brett Benson, operations director of Minnesota Interfaith Power & Light, said without approaches like CEF’s many people will be left behind in the clean energy revolution “because they don’t have the right credit score or the right income.”
He sees the program as “a great way to change the conversation” and makes people “more hopeful and empowered” than the prevailing narrative that nothing can be done to stop global warming.
“This is visionary,” he added. “You’re not just subscribing to a solar garden, you’re participating in a movement…that’s why we’re different. We’re focused on using this opportunity to create as big a lever as we can to drive deep change.”
Although estimating the number of low income families who could participate is challenging, Benson says it could be several hundred.
Community Power’s Alice Madden said her organization has been focusing on helping sell community solar in Sherburne County, site of the state’s largest coal burning power plant. The county was chosen because one of CEF’s sites is located there, she said.
The organization has door-knocked, attended several community events and begun working with “people who are connected in the community” and are finding “they like the idea of community solar and excited about it,” Madden said.
Reaching the target population
MNIPL has a wide network of people of faith interested in subscribing to community solar, said Benson. It has a team helping inform Minnesotans about community solar and participates in the Just Community Solar Coalition to promote it with many other clean energy organizations.
Selling community solar to low income residents isn’t hard because of the cost savings, said Benson. “Everyone likes saving money — the argument is pretty persuasive for every group,” he said.
Northcountry Cooperative helps the residents of manufactured home parks buy their communities from private owners. So far, it has assisted nine communities in Minnesota and Wisconsin in purchasing their properties and creating cooperative boards to run them.
Kevin Walker, director of business development, said the organization has just begun marketing community solar to three communities within CEF’s service territory.
Several presentations have been held and somewhere between 50 and 70 residents have expressed interest, said Walker, and more are on the way. Most residents are low to moderate income and like the idea of saving money and supporting clean energy, he said.
“This gives our residents a chance to have clean, locally produced energy and based on a model they’re familiar with because they’ve already created a cooperative to purchase their land,” he said. “We’d love to see something like 220 of our roughly 650 households into the community solar program. We’re excited by it.”
Community solar offers predictable savings over the life of a contract, Walker said, especially when considering Xcel’s rates have risen at or above 3 percent annually.
CEF has two fully subscribed gardens which will be constructed this summer and fall. Both follow the backup subscriber model. The city of Edina will be the backup subscriber for a 616-kilowatt community solar garden being constructed on its public works building, DenHerder-Thomas said.
In that case subscriptions were sold mainly to Edina residents. Another 201 kW solar garden in North Minneapolis on the rooftop of a Christian church has a mosque as its backup subscriber, he said.
In both cases, the projects were also supported by the Just Solar Coalition.
Subscribers to any of CEF’s gardens can pay a monthly subscription or a one-time payment that averages electricity costs over 25 years. They must live in the county in or near where the garden they subscribe to is located.
Community solar garden subscriptions all have an escalator rate built into contracts that raise fees 2 percent or more annually. CEF is no different except that its 2 percent per year escalation rate ends after eight years.
“As energy prices rise in the long term you have a quick rapidly rising rate of savings,” he said. “We model at a 3 percent rise in expected utility prices, which is pretty on par with historical prices.”
Over the length of a 25-year contract subscribers will see a 23 percent savings on their electric bills, he said. The 2 percent a year increase is still below many other solar garden contracts, he said, but the “really big difference is we stop escalating after year eight. That creates a lot of security for the subscriber.”
DenHerder-Thomas believes CEF’s approach is unique and he has begun collaborating with groups in other states to create similar models, among them Coop Power in Massachusetts and the Energy Democracy Alliance in New York. Illinois and California are seeing similar efforts.
“No one is doing cooperatively owned low-income solar,” he said. “Minnesota is one of the leading areas for community solar in general and specifically for community solar that is cooperative and low-income accessible.”