BlocPower, a clean technology start-up, is greening buildings in New York City and beyond. About 40 percent of U.S. carbon dioxide emissions come from buildings. And when buildings use oil or natural gas as a heating fuel, they also produce smoke that can cause or worsen asthma and other health problems.
In New York City alone, more than 10,000 multifamily buildings still use boilers run on fuel oil or natural gas, and buildings that primarily serve low-income tenants are least positioned to pay for the expensive upgrades that would eliminate these emissions.
Enter BlocPower, a Black-owned, cleantech startup that works with these buildings to turn them green, swapping oil or gas for heat pumps. The startup helps buildings transition away from fossil-fuel-powered boilers and toward electric heat pumps, without paying large sums of money upfront. BlocPower — and its investors — are repaid from the savings on buildings’ utility bills. In New York City, BlocPower has made it work for over 1,000 buildings, with 24 ongoing projects in other U.S. cities.
“Two of the barriers that we break down are customer acquisition costs and the lack of capital by building owners,” explains Keith Kinch, General Manager and co-Founder at BlocPower. Building owners complete a survey on the BlocPower website and get an analysis of their building’s energy savings potential. But many building owners don’t have capital to finance these projects on their own, so BlocPower provides a no money down lease option. Building owners get a new heating or cooling system and save up to 70 percent on their energy bills. Kinch explains the importance of overcoming those two barriers with the company’s unofficial motto: “We are turning buildings into Teslas!”
Once the heat pumps are installed, BlocPower uses the leasing revenue to cover all maintenance and repairs for 15 years. A proprietary software determines which buildings would benefit most from such a retrofit, and after installation, monitors, analyzes, and manages the heat pumps on every project to ensure optimal performance. BlocPower’s revenues come from the installation profits, financing fees, and the enterprise contracts.
Heat pump technology — which is essentially an air conditioner (or a reverse air conditioner when used to heat a space) is not without its criticisms, depending on the existing energy source of a geographic location. Since heat pumps use electricity, if a home’s electricity source comes from a coal-burning power plant, critics say that a heat pump simply moves emissions from one place to another. BlocPower still believes that heat pumps are important because they provide heat in the winter, cool air in the summer, and they run on electricity.
The scale of what BlocPower has done would not be possible without the NY Green Bank, a state-sponsored entity dedicated to helping finance investments in clean energy, which loaned the company $5 million. “They provide capital that traditional banks do not provide. They’ve done tremendous work in allowing us to complete projects,” says Kinch.
It also helps that the company managed to partner with Goldman Sachs, which loaned them $50 million. It is hard to believe there was a time when BlocPower was not on Wall Street’s radar, but those days are a mere memory now. When asked what changed, Kinch describes the simple way they got the attention of major investors.
“We had to prove that we’re a viable company and have a record of accomplishments. We have both now,” Kinch declares. “When we talk about the work it’s not what we might do. We’ve done this work and we plan to do more. From Wall Street’s end, I think there’s more of an interest in investing in clean energy projects, because it’s a market that will grow.”
In a November 2020 interview, BlocPower founder and CEO Donnel Baird said that he sees a new asset class developing around national clean energy technology projects for investment banks and pension funds, independent of the fluctuations of the stock market. He believes that with the reduction in costs of artificial intelligence, cloud computing, solar energy, and smart heating technologies, this new asset class will become a long-term investment strategy, similar to a bond. (BlocPower did not make Baird available for an interview with Next City.)
BlocPower has done projects for nonprofit organizations, churches, and small commercial properties, but residential is where Kinch says the company looks at the most. “Owners of multi-family buildings in dense urban areas have the most to lose, because they’ve been underserved for years and don’t have the capital.”
For Kinch, the more money they receive, the more they can take their community level solution national. “It (the VC money) gave us more capital to finance projects across New York state. It allows us to expand the company by hiring the right people and build out our software tools so we can expand to other states like Pennsylvania and California.”
This article is part of Financing Our Green Future, a mini-series examining the behind-the-scenes roles green banks play in making a more sustainable world. This series is generously supported by the Solutions Journalism Network.