In 2016, Curbed New York described a “tidal wave” of wealth washing over the waterfront neighborhood of Sunset Park in Brooklyn. After decades of abandonment, developers had swooped into the community with plans to transform the area into the latest edition of gentrification news. But groups like Uprose, Brooklyn’s oldest Latino community-based organization, stepped in to fight for equitable solutions that would not only keep long-time residents in the community, but bring their voices into the decision-making process.
That commitment attracted Co-op Power, which strives to bring solar power to low-income communities. Shakoor Aljuwani works with the group on its New York City projects. “RFPs came up for the Brooklyn Army Terminal, and that was kind of like karma,” he said. “There was a project and there was a great group,” he said, referring to Uprose.
New York City’s Economic Development Corporation had put out a call for proposals to redevelop the historic Sunset Park shipping terminal, and Solar One and Uprose , a member of the New York City Environmental Justice Alliance, got involved. “They wanted to make sure that anything that was done around the Brooklyn Army Terminal was supportive of that community that’s been fighting and the original members of that community,” Aljuwani said.
And while the terminal’s space offered an ideal location for installing a solar array, paying for these kinds of projects often presents a conundrum. Timothy DenHerder-Thomas of Minnesota-based Cooperative Energy Futures says that financing solar projects in a way that is “tailored toward community benefit and local control” is an open question. “I think that is a really big part of the problem that needs to be addressed for these things to grow and flourish,” he told Next City.
Community solar projects, in which an institution pays for solar panels up front and local residents “buy in” to the project to reduce their energy bills and carbon footprints, are held up as a possible solution to the financing problem. But even then, solar panels are expensive, and outside investors are often needed to make the projects financially viable, which reduces local control. So, community-focused solar developers are getting creative, coming up with new financing models that help communities become self-sufficient, energy-wise, without having to give up ownership.
One such model Co-Op Power is testing holds promise. It’s called a tax-equity flip partnership, and it takes a page from the affordable housing world, where investors (usually banks) purchase tax credits from affordable housing developers. In the solar world, outside investors front the cash for a community solar installation, and in turn they receive tax credits. The tax-equity flip allows the tax-equity investor to achieve their targeted return, then flips their ownership from 95 percent to five percent. The 95 percent interest shifts to the community partner, giving them control of the installation. The agreements generally allow communities to purchase the remaining five percent stake once they have accumulated the wherewithal to do so.
“It’s taken a lot of work for us to come up with a financing model to pay for … these systems in a way that isn’t requiring a minimum credit score. That really makes it accessible with no up-front costs to low-income families,” says DenHerder-Thomas of Cooperative Energy Futures. “I think that is a really big part of the problem that needs to be addressed for these things to grow and flourish.”
Cooperative Energy Futures has eight different community solar projects at different stages of completion across Minnesota that will serve 700 households in urban and rural Minnesota.
Whether community-owned solar power moves from the margins to become more of a central model remains to be seen, DenHerder-Thomas says. He called the prospect a “heavy lift,” while stressing that he and his colleagues are committed to “scaling that up.”
DenHerder-Thomas and his colleagues are not alone, however. Cooperative Energy Futures is part of an informal group of community-focused solar energy developers trying to find creative ways to finance solar installations. The group brings together Cooperative Energy Futures in Minnesota, Co-op Power in Massachusetts and New York and the Local Clean Energy Alliance in Oakland.
“The problem that we have to solve,” says Lynn Benander, who runs Co-op Power, “is how do we raise tax equity investment and loans for community-based solar projects that will facilitate local ownership, where there’s enough financial, economic value that’s left in a project once all the financing and developer folks have gotten through with it to make it worthwhile for local folks to own it?”
So far, the group has created The People’s Solar Fund, raising roughly $10 million in financing. But, Benander cautions, a two-megawatt project costs roughly $6 million. “So, it goes very fast,” she says. “We’re going to have a raise a lot of money, but we can provide good returns.”
The People’s Solar Fund has spoken with another 25-30 solar developers about joining up. “Having control over tax equity, having a say in the terms, you only get at scale,” Lynn said. “So, if there are 100 small funds, that means there are 100 that don’t really have the scale to get the terms that they need to be successful.” For that reason, she said, the group is focusing on bringing in new members and projects so that it can have this negotiating leverage.
On the opposite coast, the Local Clean Energy Alliance in Oakland is part of another network that recently launched the People Power Solar Cooperative, which is financing solar installs through yet another method. Last year, the co-op selected activist Lora Jo Foo’s home as the first to receive a 6kW solar system on its roof — paid for through the co-op’s funds. The co-op’s web site quotes her as saying: “While the work of fighting against the causes of global warming is important, equally important is the fight for renewable energy to replace fossil fuels.”
The People Power site says that more than 70 members will buy shares in People Power. Those owners will then earn returns when Ms. Foo starts saving money on her electricity bill and pays some of the savings back to members. “It’s a simple, but powerful model,” the site says.
Part of the training with community leaders includes learning about different kinds of solar panels and systems, installation, financing and legal work “so that leaders can make informed decisions about every step of the process.” This, Aljuwani says, means that communities develop more than just solar power. “We think, from our experience, we’ll see those organizations get even stronger and develop community leaders that are even more powerful at being able to make sure their communities are empowered and can make decisions about their communities’ health. So, we’re excited about that.”
UPDATE: We’ve clarified this article to state that Uprose, one of the members of the New York City Environmental Justice Alliance, served in a leadership and advocacy role around the Sunset Park shipping terminal redevelopment, not the alliance itself.
Zoe Sullivan is a multimedia journalist and visual artist with experience on the U.S. Gulf Coast, Argentina, Brazil, and Kenya. Her radio work has appeared on outlets such as BBC, Marketplace, Radio France International, Free Speech Radio News and DW. Her writing has appeared on outlets such as The Guardian, Al Jazeera America and The Crisis.