A case study published by the U.S. Department of Energy, Integrating Photovoltaic Systems into Low-Income Housing Developments: A Case Study on the Creation of a New Residential Financing Model and Low-Income Resident Job Training Program, examines a recent initiative by the Northeast Denver Housing Center (NDHC), in partnership with the Del Norte Neighborhood Development Corporation, Groundwork Denver, the National Renewable Energy Laboratory (NREL), Bella Energy, and the Governor’s Energy Office of Colorado. The initiative led to the installation of solar photovoltaic (PV) systems on 12 existing buildings in the Whittier Affordable Housing Project in the Whittier neighborhood of northeast Denver. These PV systems (a total of 47.72 kilowatts) provide energy for 30 affordable housing units.
The goal of the solar installations is to “reduce the electric bills of Denver’s most economically distressed families,” and the residents who live in these units earn less than 60% of the area median income.
NDHC used an innovative financing model, which leveraged private equity funding, utility rebates, federal tax credits, and public sector funding, to make these installations possible. The program is set up as a Power Purchase Agreement (PPA). Through the PPA, an investor owns the PV systems for 20 years and sells the power generated by the PV systems to NDHC. NDHC will have the option of purchasing the systems at the beginning of year seven at fair market value. By using a third party finance model, such as a PPA, NDHC is able to take advantage of federal tax credits and the Modified Accelerated Cost recovery System (MACRS) accelerated depreciation. NDHC also leveraged Xcel Energy’s Solar Rewards rebate and production incentive programs.
NHDC also received a grant from the governor’s energy office for $107,500 to finance the PV systems. The PPA investor makes interest and principal payments on the loan to NDHC (the grant was invested into the project as a loan from NDHC to the investor) and these payments go into an escrow account. It is expected that the value of this account will be roughly equivalent to the fair market value of the PV system in seven years when NDHC has the option to buy the system. As a result of this financing model, NDHC is expected to have a net profit of $158,374 over the 25-year life of the project.
In addition to installing PV systems on low-income housing, NDHC also developed a job training program for residents. The job training program was a grassroots effort “to build capacity to design, specify, maintain, and live with PV systems in the local community.” It provided training to build capacity within NDHC staff and Groundwork Denver staff and provided solar installer training for 15 low-income community members (through training courses offered by the Colorado Solar Energy Industries Association and Solar Energy International). The installer training included a workshop and training on grid-tied PV, a PV/NEC codes course, and on the job training.
NDHC also provided tenant outreach and education to explain the community value of PV installations and increase energy conservation efforts in order to increase the benefit of the program to the larger neighborhood, not just residents living in the units with installed PV or participating in the job training program. To learn more or read the full report, click here.
To learn more about going solar in your community, join us for the Solar America Communities Workshop: “Getting Started with Solar in Your Community” in Dallas on October 21 in conjunction with Solar Power International. The workshop is free and will feature case study examples from the Solar America Communities of Austin, Houston, and San Antonio.
Solar America Communities is a U.S. Department of Energy (DOE) program designed to increase the use and integration of solar energy in communities across the United States. ICMA and ICLEI-Local Governments for Sustainability USA were selected by DOE to help local governments throughout the United States implement best practices and accelerate the adoption of solar energy.