Increasing Yields by Solarizing Low-Income Communities
- Jun 04, 2019
Saving energy through energy-efficiency improvements costs less than generating, transmitting and distributing energy from power plants, all the while providing multiple environmental benefits. Furthermore, investing in energy efficiency, renewable energy and climate protection programs is an essential way to provide a variety of benefits, including creating jobs, improving air quality and living in healthier homes. This is especially true for low-income communities, for which energy costs can contribute substantially to the overall financial burden of housing.
OYA Solar has recently partnered with a New York affordable solar developer, on a mission to equip more than 2,500 regulated affordable housing buildings with rooftop arrays. Manish Nayar, founder & managing partner of the Toronto-based company that specializes in developing community, commercial and utility-scale solar projects in the U.S. and Canada, weighed in on the solar market industry overall, but also shared some of its benefits to the affordable housing sector.
How were things in the energy industry a decade ago compared to present times?
Nayar: When we first launched OYA Solar in 2009, the urban solar market was far from what it is today. Customers and clients didn’t understand how solar programs were structured, the savings generated from clean energy were gray and most didn’t recognize the value proposition. Furthermore, there were no structures in place to match rooftop solar production with demand. With the market still in its infancy, there weren’t many associates in a client’s network who they could point to as a reference and see the success and benefits of solar in action. For the most part, the solar market was consumed by large commercial and utility-scale projects, with power purchase agreements difficult to come by.
Today’s solar market is radically different. Programs like community solar are rapidly expanding the value proposition in urban areas and for multifamily housing. Many states, including New York, Maryland, Minnesota, Wisconsin and the District of Columbia, are setting ambitious sustainability goals, opening the door to expansive solar opportunities.
Even utilities are setting carbon negative targets. This not only signals that the urban solar market will continue to develop, but will also solidify itself as a cost-competitive source for renewable energy. We currently have 850 megawatts and more than 4,000 acres under development, this would not have been the case in the 2009 market.
How does your strong background in the financing industry relate to the solar environment?
Nayar: I have always been interested in renewable energy and after earning degrees in both electrical engineering and finance, solar provided me an avenue to merge the two tracks.
In addition, I saw a significant need to expand the benefits of solar to more diverse communities. Multifamily housing rooftops are primed for solar development, which can provide value to building owners, reduce energy costs for tenants and oftentimes reduce the building’s tax burden. For square footage that would otherwise go unused, these building owners can establish a consistent revenue stream for up to 25 years in exchange for a leased roof, all the while providing their community with affordable clean energy.
Which solar option (on-site solar, virtual net metering or community solar) is most attractive to clients and why?
Nayar: We find that most clients take a first look at solar because they want to make a positive impact on the environment. Ultimately, customers make their purchasing decisions based on the financial savings associated with procuring clean energy via a PPA or through the ownership of a system.
For multifamily housing building owners, the most common approach is to lease their roof for a community solar array and receive steady monthly lease payments for decades. Those same building owners can also generate energy savings by subscribing to that community solar farm. Savings are typically between five and 10 percent.
This contrasts with installing your own on-site solar system, which is typically more expensive. That is why we see more customers choosing virtual net metering (VNM) or community solar PPAs most of the time. These projects are larger in size and have faster development timelines, which typically provide cheaper and more affordable power. In some cases, we have customers who procure energy from VNM systems and still want to put projects on site if they have the room.
Tell us a few details about your most recent partnership with Crauderueff & Associates.
Nayar: There are currently 1.6 million people that live under the poverty line in New York City. Our joint venture with Crauderueff & Associates will result in 200 community plus storage solar projects developed and constructed atop of low- to moderate-income housing over the next three years. The solar gardens will provide LMI subscribers up to 10 percent savings on their costs for electricity and provide families the opportunity to divert energy savings to food, clothing, schoolbooks and rent. This demographic has traditionally paid a disproportionate amount on their utility bills.
The affordable housing community also provides a natural opportunity for targeting LMI households through on-site solar-plus-storage projects. We can help preserve the affordability of the housing units by reducing the cost of common-area electricity, enroll their LMI tenants as subscribers and achieve climate resiliency benefits.
The process typically starts with an evaluation of the building and its electricity load. After the analysis, we will offer an annual lease payment to the landlord and community organization. We will also work with them to sign up the energy—first to the buildings’ tenants and then to other LMI customers within the utilities’ service territory. Once we have signed up the required amount of “subscription”, we begin the detailed engineering and construction of the project.
What does the industry need to increase the rate of solar adoption? How do you see the renewable energy market progress in the next decade?
Nayar: A big part of the solution is to design a community solar policy that enables more LMI households to have access to subscriptions. These subscriptions are short term and can be protected even if the households’ occupants were to move. Enhanced community solar programs will drive the development of more projects by decoupling the need to have bankable corporate PPAs signed before the development of the project begins.
We also see the rapid decline in storage costs driving growth in the solar market. Storage will allow solar energy to be available for longer periods within each day to better match demand. Solar energy produced on-site or near the point of use is a significantly cheaper source of power for consumers and they are already demanding greater access to it.
Is energy storage, a nascent sector of the energy industry, the beginning of the end for peaker plants?
Nayar: We are very bullish on energy storage. This will enable an entirely new level of solar adoption and standalone storage development. Storage today reminds us very much of solar in 2009 and we believe it will follow a similar path over the next decade. Solar-plus-storage will offer a more economical and easily scalable solution to offset the need for peaker plants. The shorter development timelines and low environmental impact will also allow developers and utilities to be more flexible in siting and constructing these projects.