The climate crisis is here and calls for dramatic changes in our energy systems. Learn how tax equity flip model can support the development of community-owned solar energy, equity, and social resilience

Benander, Lynn

Cruz, Ernesto

Sandoval, Summer

English

Smith College: Smith ScholarWorks

Community Solar and Energy Financing for a Just TransitionOctober 5, 2019 |Climate Equity and Justice ConferenceOctober 5, 2019 |Climate Equity and Justice ConferenceCore Project TeamBrooklyn’s oldest Latino community-based organization promoting environmental and climate justice focusing on climate resiliency in Sunset Park.Environmental nonprofit running diverse programs to help New Yorkers adopt Clean Energy. Here Comes Solar provides comprehensive technical assistance to homeowners, community groups, and renters. Consumer-owned energy cooperative working to create a movement for a sustainable and just energy future in the Northeast through their regional community energy cooperatives.Community engagement, outreach & co-owner:Technical assistance & subscription support: Co-op operations, billing & co-owner:Agenda❖ Solar 101❖ Co-Op Power & Smith College❖ Tax Equity Flip Model❖ Sunset Park Solar➢ Background➢ Just Transition Model➢ Project Details➢ Important Takeaways Why Solar?Reduce EmissionsHealth BeneﬁtsJust TransitionLocal JobsClimate MitigationElectriﬁcationSource: Clean Energy Group Energy Storage 101 2015 ReportTraditional Solar System Source: Clean Energy Group Energy Storage 101 2015 ReportCommunity SolarCommunity Solar BeneﬁtsExpands access to solarEnergy cost savingsRenewable energy developmentCommunity energy awarenessWorkforce opportunitiesCo-Op Power & Smith CollegeSmith College & Co-op PowerSmith financed a 25kW solar array for 67 West Street, smith oﬀ-campus housing, through Co-op Power.  CP recruiting a local tax equity investor and worked with Latham and Watkins to develop the suite of legal documents required for this re-engineered tax equity financing program.Project collaboration:Smith College partnered with Co-op Power on the first pilot of our Re-engineered Tax Equity Partnership Flip financing model that would return ownership of solar projects to local non-profits, municipalities and cooperatives dedicated to serving the common good, especially low income communities and communities of color left out of the green revolution.Financial Model:Tax Equity Partnership FlipCo-op Power as a PartnerCo-op Power has completed several other projects using this model and is now using this model to finance nearly 2 MW of solar projects in NYC, serving 500 low income families - the 685 kW project in collaboration with UPROSE, installing solar on the Brooklyn Army Terminal and a 1.2 MW project installing solar on NYCHA buildingsBuilding Grassroots-Led and Community Owned Energy Projects:Tax Equity Flip ModelWhat we learned about the law:● It privileges the wealthy and homeowners in solar development.● It makes community- ownership difficult.● And it’s just plain complicated.Why is it so easy for some?Passive investment incomeTax CreditDepreciation Return on Investment+ + +Buy and own......and get power from.Community-Owned Solar We own it!Everyone can capitalize it    Investors get less People get moreChallenges• Subsidies require wealthy investor participation - private equity• Exclude Low and Moderate Income (LMI) and communities of color• Small projects shunned in favor of largest available options• Community initiatives have little access to financing Types of Third Party FinancingInvestors use one of these three types of financing structures:• Pre-Paid PPA (Power Purchase Agreement)• Sale-Leaseback• Partnership FlipCo-op Power & CEC’sSunset Park Solar, LLC LenderTax Equity InvestorsCEC CustomersEPC ContractorProject Dev & Operations ServicesState  IncentivesArray HostCommunity Solar Project FinanceThe Key PlayersCo-op Power & CEC’sSunset Park Solar, LLC  Equity - 59% of project costsLenderTax Equity InvestorsCustomers (Members)EPC ContractorProject Dev & Operations ServicesState IncentivesShare Purchases1% project costs as loanArray Host1234FinancingCommunity Solar Project Finance40% of project costCo-op Power & CEC’sSunset Park Solar, LLC Equity - 59% of project costsLenderTax Equity InvestorsCustomers (Members)EPC ContractorProject ConstructionLegal, FinanceProject Dev & Operations ServicesDevelopment Services fee    State IncentivesShare Purchases1% project equityCommunity PlanningArray HostLand Lease5678 ConstructionCommunity Solar Project Finance40% of project costNet Metering Credit paymentsCo-op Power & CEC’sSunset Park Solar, LLC Equity - 59% of project costsLenderTax Equity InvestorsCustomers (Members)EPC ContractorLegal, FinanceProject Dev & Operations ServicesOperating  fees State IncentivesState Incentive $Share PurchasesCredit Payments1% project equityCredits for Power Produced by the ArrayCommunity PlanningArray HostPPA PaymentsLand Lease, Electricity911101213OperationsState Incentive valueO&M ServicesO&M PaymentsCommunity Solar Project Finance40% of project costLoan PaymentsNet Metering Credit paymentsCo-op Power & CEC’sSunset Park Solar, LLC Equity - 59% of project costsLenderTax Equity Investors30% Solar Tax Credit; 99% of tax attributes by flip dateCustomers (Members)EPC ContractorLegal, FinanceProject Dev & Operations  Services     Operating fees     1% tax attributes pre-flipState Incentives1% project equityCommunity PlanningArray HostPPA PaymentsLand Lease, Electricity14Owner ReturnsState Incentive $ State Incentive valueO&M ServicesO&M PaymentsCommunity Solar Project Finance40% of project costLoan PaymentsCredits for Power Produced by the ArrayShare PurchasesCredit PaymentsNet Metering Credit paymentsCo-op Power & CEC’sSunset Park Solar, LLC 40% of project costLenderCustomers (Members)EPC ContractorLegal, FinanceOperations Support Services     Operating Fees    100% tax attributesState IncentivesLoan Payments100% project ownerCommunity PlanningArray HostPPA PaymentsLand Lease, Electricity 1617After the FlipState Incentive $ State Incentive valueGives up Equity SharesTax Equity Investors5% of Fair Market ValueLocal OwnershipO&M ServicesO&M PaymentsCommunity Solar Project FinanceCredits for Power Produced by the ArrayShare PurchasesCredit PaymentsSunset Park SolarSunset Park Neighborhood 31% below poverty line50% linguistically isolatedHigh rates of respiratory diseasesSources:  U.S. Census Bureau, 2012-2016 American Community Survey 5-Year Estimates; New York State Department of Health, Statewide Planning and Research Cooperative System, 2012; NYC DOHMH, Bureau of Vital Statistics, 2009-2013 Transportation Energy IndustryLocal Pollution2%What is “Environmental Justice”?Environmental JusticeInequityClimateDemographics InfrastructureLocationPollutionFlooded subway station in New York City after Superstorm Sandy. Source: Unknown. Climate Justice & the climate crisis:Signiﬁcant Maritime and Industrial Areas (SMIA) and Hurricane Storm Surge Zones. Source: NYC-EJA.The Just Transition Model:➢ Circular➢ Cooperation➢ Equity➢ Linear➢ Exploitation➢ DisparitySunset Park Solar: Project Origin● Superstorm Sandy 2012● UPROSE organizing on renewable energy in Sunset Park.● Climate Justice Center & Sunset Park Community Action Plan for Climate Resiliency● RFP released by NYC Economic Development Corp● Innovative project teamSunset Park Solar Project Details● 685 kW solar energy system on the roof of the Brooklyn Army Terminal ○ 80,000 sqft of previously unused rooftop space● 200 homes and small businesses will benefit from 15%-20% savings in monthly energy bills, most from Sunset Park community● Job training and employment opportunities for local residents.Aerial Rendering of Brooklyn Army Terminal (BAT)● NY’s first cooperatively-owned solar developed, owned and operated by the local community through the New York City Community Energy Co-op.● Energy Democracy: Ownership options for UPROSE after the ownership flipThe Sunset Park Solar Ownership ModelOutreachConcepts TrustCommunicationUPROSE OutreachSunset Park Solar TimelineFall 2019 Winter 2019 5-7 Years 16 Years● Finalize legal documents● Sign-up subscribers● Permits & approvals● Complete construction● Fill subscriptions● Commissioned by Con Ed● Ownership ﬂip● Tax equity investor 5%● UPROSE gains ownership● Ownership ﬂip option● Model for communities● Community beneﬁtsImportant TakeawaysUnique project experiencesIterative processJust Transition Model-Big picture!Innovative ownershipNeed diverse supportSolar for us by us!Thank You!Contact InformationSummer Sandoval, UPROSE summer@uprose.orgErnesto Cruz, Co-op Powerernesto@cooppower.coopLynn Benander, Co-op Powerlynn@cooppower.coop

Community Solar and Energy Financing for a Just Transition

https://scholarworks.smith.edu/cgi/viewcontent.cgi?filename=0&article=1007&context=yocc_events&type=additional

Community Solar and Energy Financing for a Just Transition

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