Thinking About Solar Panels?
On May 31, 2017 the U.S. Department of Housing and Urban Development (HUD) hosted a webinar on Solar Project Development for Public Housing Authorities (PHAs). The webinar presented approaches for implementation based on various readiness levels. Presenters included Crystal Bergemann, Energy Team Lead, Office of Economic Development; Benjamin Foster, ICF expert; Richard Santangelo, Apollo Engineering Solutions, subcontractor to IFC; and Robert Havlicket, Executive Director, Housing Authority of the County of Santa Barbara. Each presenter outlined a framework for effective planning for a solar photovoltaic (PV) project. Comprehensive steps such as financing, site locations, incentives, and best practices were shared to encourage PHAs to use solar panels.
The webinar focused on solar panels for PHAs, with a framework for financial planning which affordable housing and multiple family programs can utilize. One approach that was presented was HUD’s Renew300 initiative, which started in 2013 as a mechanism to increase the use of on-site community solar panels at federally assisted housing to save energy and money for the community. Solar development can save money for organizations, contribute to the local economy, and positively impact the community.
Solar panels can provide many benefits to PHAs. PHAs can invest in solar panels to reduce energy costs and provide revenue opportunities through leasing agreements. PHAs can collaborate with a third party to determine the solar potential when developing projects to provide revenue and leases. Solar panels could achieve clean environmental goals and utilize targeted incentive programs to reduce the cost of energy. For large-scale projects, a PHA would create jobs and training opportunities for residents and community members. Twenty-two percent of operating expenses in PHAs are attributed to utility costs; solar panels could reduce those expenses and even generate profits.
There are three options for solar panels. The most common solar panel is the onsite single-meter solar, also called net metering, where the solar project onsite directly reduces the building energy load. The following two panel options mentioned are not widely available in all utility territories across the country. This second option is onsite shared solar energy, which is a single array of panels that is spread across multiple meters at one or more PHA’s buildings. The third option is offsite shared solar energy, which is a single array that is not located at a PHA facility, but can be supported to offset individual energy load on multiple meters.
Once the decision is made to undertake a solar project, research must be completed to determine the best technical materials, contract options, and to compare it to a successful PHA project of similar size. The focus on technical application is crucial as it will utilize solar panels that are a twenty to twenty-five-year asset. Long-term maintenance and application must be considered as well as all stakeholders in the decision making and approval process. Stakeholders include security, government officials, electric utility companies, HUD, solar developers, as well as legal and procurement representatives to ensure the process is legally sound.
The webinar provided best practices before beginning the implementation process, including potential barriers. If there is not enough upfront capital or there is a lack of staff time and experience, it can be difficult to start a project, and one must consider contract structures to reduce PHA funding. There are several HUD, state, and local training and resources available. All aspects of the solar panel implementation must be considered, including, for example, whether a roof needs to be replaced or not.
A PHA must first ask, “is it in best interest of my housing authority?” Most Energy Performance Contacts (EPC) are long-term lease purchasing agreements and provide significant benefits as they maximize the energy efficiency opportunities by aggregating all of the savings in a project. The risk could be 12 to 20 years and financing could have a 3-to-5-year blackout period when the loan cannot be paid, but may be negotiated. As required by Section 30, a company may put a lien on a piece of property or the equipment and ensure HUD gets involved with agreement.
One of the more popular financing options is a Power Purchase Agreement (PPA) where the third party operates and maintains the loan contract. In exchange, the PHA will receive discounted electricity during the contract and the PPA lifetime under EPC is at least 20 years. Low-Income Housing Tax Credits (LIHTCs) make up the largest single funding resource to develop affordable housing to raise private capital. However, due to pending tax reform, many investors are not investing in solar power as it is considered risky.
When calculating the value of PV watts use the web application to measure the value of electricity, compare taking out a loan versus purchasing a system through a PPA. In the Cleveland example, the PPA had a positive net present value due to the third party receiving a tax credit. They now have less operating expenses, a revenue generator in a lease agreement, and no upfront capital cost. California has one of the highest utility costs, which makes solar power a financial viable option.
In 2014, HUD made it financially beneficial to pursue rate and consumption reduction activities as part of an EPC. Prior to the notice, that was not the case, as the incentives were structured differently. Now PHAs will receive the full benefits of the savings.
Location matters when implementing solar panels because of utility policies, regulations, and incentives provided by each state. Currently, the following states in order are using solar panels as a renewable resource: Massachusetts, Rhode Island, Oregon, New York, and then Maryland.
Contractors and legal issues particular to the area should create a website to track activity through site visits. If your state does not have high rates, you will need to take more initiative in financing your solar project. Look at interconnection, Net Metering, performance payments, and property tax exemption regulations in the area to make sure regulations are updated. Ensure research has been completed, as there have been few situations where solar panels cannot connect to the utility grid because contracts were illegal for the utility territory.
There are several economically beneficial reasons to get a solar panel. Before deciding, get informed, research, and learn from other PHAs to determine what technical materials are available. One way to accomplish this is through a cost benefit analysis, which includes checking to ensure there is effective legislation in your state that makes this financially feasible. Review financing and EPC options to maximize benefits. Before deciding, confirm panels are in compliance with HUD, state, and local regulations.
Access the webinar online at: https://youtu.be/rkaRnssr3uU.