A Massachusetts program announced Thursday that it has secured $10 million to invest in up to 3 megawatts of solar projects on affordable housing buildings.
The Solar Technical Assistance Retrofits program, or STAR, will offer financial and technical assistance to community development agencies interested in installing rooftop solar as a way to lower energy costs.
“We believe that affordable housing should have full access to clean energy just like everyone else — it’s an equity issue,” said Emily Jones, senior program officer at the Local Initiatives Support Corp. in Boston, one of the agencies developing the program.
Solar panels offer environmental and financial benefits to housing agencies, including freeing up money to invest elsewhere or pass savings on to residents. Community development groups also generally serve neighborhoods that stand to feel a disproportionate impact from climate change.
However, over the past decade or so, the tight budgets of these nonprofits have meant few new affordable developments have included solar panels. Many, perhaps most, have instead opted for solar-ready construction, with roofs and electrical systems designed to support a hypothetical future solar system.
But once a development is built, new challenges to going solar appear. The buildings are generally operated with very small margins, leaving the agencies with little money to invest in solar installations.
Furthermore, affordable housing agencies generally own multiple buildings, each with its own advantages and obstacles for solar panels. Researching the often complex and technical options and seeking out financing partners can be too much for agency staff that is already stretched thin. Even the seemingly minor detail of freeing up staff to gather the information and complete the paperwork a solar developer needs can become a major stumbling block.
The STAR program, which launched in January, is designed to address this complex set of obstacles in a way other programs have not. Participating organizations receive grants to help them launch the process, in-depth analyses of their solar options from a local solar developer, and access to financing to help them install solar panels, often with no upfront cost.
The program selected 15 initial participants from among the agencies that applied.
“We’re very optimistic about the level of interest and uptake,” said Isaac Baker, co-chief executive of program partner Resonant Energy, a solar company with a focus on building projects in underserved communities.
To deal with agencies’ limited bandwidth, the campaign collected more than $40,000 in donations, which was distributed as grants to participating organizations with the goal of allowing them to devote staff time to gather all the data — roof ages, utility bills, square footages — needed to do a full solar feasibility study of their portfolios.
Once all this data is collected, Resonant will complete a comprehensive analysis of the portfolio, outlining how much solar capacity could be installed on which buildings and flagging possible problems, like roofs that are too old or inadequate electrical systems.
“We factor in all that data we gather from them, and we create custom solar designs for each of the buildings,” Baker said.
It is then up to each participating agency to determine whether to contract with Resonant to install some or all of the recommended panels (though Baker emphasizes that they are under no obligation to do so).
“In a case such as ours, they will be able to analyze for you very well the options that are in front of you and allow you to make an informed decision,” said Steve Teasdale, executive director of the Main South Community Development Corp. in the central Massachusetts city of Worcester. “Prior to this program, it was really a quagmire figuring out how do you go about it.”
Teasdale’s organization has worked with Resonant Energy on solar installations for new projects and is now participating in the STAR program to figure out how best to retrofit some of its 18 existing buildings.
Most participating developers will be looking at a power purchase agreement with no upfront cost. That’s where the $10 million in financing announced this week comes in. The committed investors will pay for the construction of the solar systems and own the completed installations. The housing agencies will then buy power from them at a discounted rate.
“We’re pleased to support this kind of market development work,” said Jonathan Abe, chief executive of Sunwealth, a clean energy investment firm that is among the funders of the program. “It’s going to end up creating some very high-quality, investable solar projects that will benefit the community.”
At the scale STAR hopes to reach, these investments should save participants a total of $250,000 annually, program partners estimate. The impact on greenhouse gas emissions would be equivalent to taking 500 cars off the road, they said.
There could be barriers to reaching this potential, however. To move forward with a solar installation, the participant needs to obtain consent from every investor or lender on the property. To address this need, Resonant has built tracking systems and dedicates staffing to tracking down all relevant parties and securing their approval, but the process remains challenging, Baker said.
Another potential roadblock is roofs that are greater than 10 years old. These roofs are older than the typical cut-off age for solar panels but still years away from needing replacement, which could make some STAR participants hesitant to move forward. Resonant is looking into options for refurbishing these roofs to extend their warranty at 33% to 50% of the cost of a full replacement, Baker said.
Thus far, one participant has received its full feasibility report from Resonant and has signed a letter of intent to move ahead to the construction phase. The Neighborhood Developers, a community development corporation that serves the cities of Chelsea, Revere, and Everett, has agreed to put panels on 12 of the 18 buildings in its portfolio.
“This program gives us a chance to get our feet in the door on a large volume of solar panels,” said Mario Goetz, who manages the Neighborhood Developers’ portfolio as vice president of asset management for Opportunity Communities, a nonprofit that supports local community developers. “They made it really easy for us.”
In most cases, the solar projects that emerge from STAR will serve the common areas of the housing developments — laundry rooms, hallways, and elevators, for example. Because affordable housing agencies are mission-driven organizations, the savings they realize through this arrangement will generally be reinvested in the properties themselves in the form of improved community spaces, upgraded windows, or other amenities, Jones said.
However, many of the projects will also be structured to allow the housing agencies to share benefits more directly with residents, Baker explained. In these cases, if the solar panels produce more power than is used by the common areas, the excess will be turned into credits that can then be shared with residents, offsetting their utility bills as well.
“We’re going to be able to give away thousands of dollars in free electricity to residents,” Baker said.
Even as the program gets off the ground, the partners are already looking to the future. A new grant has already been secured to provide initial grants for another 15 participants, specifically focused on serving a set of midsize cities that face stubborn economic challenges, Jones said.
Sill, she notes, solar is just part of the puzzle. To truly achieve cost savings and environmental impact, the next step will be replacing fossil fuel burning systems in older affordable housing properties and retrofitting the buildings for high levels of energy efficiency.
“We really need to focus simultaneously on weatherization, on deep energy retrofits,” she said. “Solar is the icing on the cake.”