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Concentration of CO2 in the Atmosphere

Financing For Solar Plus Storage

Report CoverBy Todd Olinsky-Paul

The Capital Scan report by Lewis Milford and Robert Sanders details how to make renewable energy technologies like solar photovoltaics (PVs) and battery storage more accessible to low-income communities. It includes an extensive set of recommendations for investment strategies that foundations can use to benefit disadvantaged communities needing solar-plus-storage solutions for resilient power (RP).

According to report co-author Lew Milford, “More than 50 recommendations in the report create a philanthropic roadmap to moving past hurdles and integrating solar plus storage (SPS) projects throughout low- and middle-income (LMI) communities.”

The report was commissioned by The Kresge Foundation, the Surdna Foundation and The JPB Foundation. It concludes that RP is rapidly becoming more affordable as costs are declining for both PVs and batteries and both are becoming more efficient. So far, RP technology has served mostly high-end commercial markets. But with reduced costs, it can help make electricity costs affordable in low-income communities, even as it reduces harmful emissions and strengthens resilience in the face of electric-grid disruptions.

The report identifies five market barriers to integrating RP in low-income communities:

  • The need for an integrated development finance model for under-served markets.
  • Lack of internal capacity of stakeholders to develop RP projects.
  • Insufficient energy data collection, policy research, and economic analysis to understand the development of SPS technology in low-income markets.
  • Insufficient capacity of technical service providers, project developers, and nonprofit intermediaries to reach under-served communities.
  • Inadequate market rules, incentives, and regulatory policies to advance new SPS technologies in low-income markets.

The report identifies more than 50 grant and investment opportunities that socially-minded investors can use to target those barriers. These are based on in-depth interviews with over 30 industry, non-governmental organization, and foundation leaders. With solar capacity outpacing the installation of fossil fuel generation, and the costs of battery storage expected to fall by half during the next four years, SPS represents a great opportunity for LMI communities. Interventions and incentives are needed.

Among the proposed interventions that foundations can undertake are:

  • Support New Tax Credit Aggregation Entities. There is a need for the creation of new legal entities to aggregate multiple portfolio ownerssolar and storage tax credits to create a scaled investment opportunity for investors.
  • Provide Credit Enhancement for Performance Risk. There is a need for credit enhancement for investors and building owners to reduce technology and performance risk (e.g., “performance loss reserves” to reimburse monetary losses from unrealized economic benefits).
  • Provide Working Capital. Fund predevelopment costs and bridge the payment of developersfees that are often tied up in multiple projects.
  • Provide Long-term Capital. Provide 10-year term capital to take out construction financing (preferably with a 15-year amortization) and as a capital source for on-bill payment programs.
  • Fund Leadership Awards to Owners. Provide funding (“leadership awards”) to portfolio owners through nonprofit intermediaries for offsetting the organizational costs and new predevelopment costs of first-time SPS projects (e.g., technical and legal review, doc prep, assembling additional development team members, compliance, etc.).
  • Invest for LMI Expansion. Invest in existing companies active in SPS development in the commercial space to expand reach into low-income markets.
  • Fund LMI Advocates. Support advocacy organizations to provide information and training to LMI residents on issues regarding resilient SPS benefits with the goal of increasing LMI participation in policy discussions.

“This is a critical time for philanthropy to support community energy resilience in ways that harness market forces while acknowledging the market’s limitations,” said Clean Energy Group Senior Finance Director and report co-author Robert Sanders. “Risk-reducing capital investments and market-enabling grants form a powerful stimulus thats essential for growing SPS in low-income communities.”

Read full report at http://bit.ly/Comm-solar-storage. Learn more about the Clean Energy Group at www.cleanegroup.org and www.resilient-power.org.

Todd Olinsky-Paul serves as project director for both Clean Energy Group and Clean Energy States Alliance (CESA). As a Project Director for Clean Energy Group, Todd works on the Resilient Power Project (www.resilient-power.org), which supports deployment of clean distributed technologies such as solar+storage at critical facilities to enable the provision of essential services during grid outages. Todd also serves as a CESA Project Director for the Energy Storage and Technology Advancement Partnership (ESTAP), a federal-state funding and information sharing project that aims to accelerate the deployment of electrical energy storage technologies in the U.S. (http://bit.ly/CESA-ESTAP).

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