19. Solar for NYC Mid-Cycle Affordable Housing: Hot Takes

How Community-Based Solar Generates Returns for Communities and Investors

Community banks are discovering how investing in solar can deliver increased ROI – and finding a sector of the clean energy market where they have a distinct advantage over megabank competitors. Solar projects on the rooftops and parking lots of affordable housing developments and nonprofit organizations represent an underserved market that can offer outsized community impact while delivering competitive financial returns to bank investors. Similarly, deals with smaller or less established solar developers, when appropriately underwritten and managed, offer real value that bigger banks haven’t figured out how to capture.

We created Sunwealth to help investors put their money to work in this untapped market. We develop, source, and underwrite quality smaller-scale solar projects with clear community impact and package them in portfolios for tax equity investment.

Read more from “Community Banks and Sunwealth Tax Equity are a Match”

Tax Equity investing with Sunwealth provides banks with a low-risk structure that supports effective year-over-year tax planning while delivering increased ROI. As a Tax Equity investor, the Bank contributes half of the capital stack, while receiving all of the tax benefits associated with a diversified pool of community-based solar.

Sunwealth CFO Omar Blayton recently joined leaders in affordable housing and solar financing as a panelist at Climate Week NYC’s event “Solar for Mid-Cycle Affordable Housing,” and shared how Sunwealth’s model is delivering returns to communities and investors. The panel, co-hosted by the NYC Department of Housing Preservation & Development and the non-profit Solar One, also featured representatives from the New York City Housing Authority (NYCHA), the New York City Energy Efficiency Center (NYCEEC) and the Fifth Avenue Committee (FAC) sharing case studies and examples from recent mid-cycle affordable housing projects. Watch the full recording here.

Here are quick takeaways:

Solar on affordable housing is a great investment.

A better energy future must share the benefits of the booming solar economy with all corners of our communities—and to date, that’s not happening as quickly as it should. Many traditional financiers mistakenly assume that solar projects with nonprofit organizations, houses of worship and affordable housing present a greater risk than more large installations with “investment-grade” offtakers. We must challenge this misperception. Affordable housing solar installations are investable products that generate substantive returns, and there’s never been a better time to finance them.

Sunwealth’s portfolio includes 67 affordable housing rooftop projects on NYCHA buildings across three boroughs, in addition to projects completed in partnership with Fifth Avenue Committee (FAC), a Brooklyn-based nonprofit community development corporation. We are excited to continue sharing the benefits of the solar economy throughout this underserved market.

Strong partnerships are key.

New York can be tough market for solar development. When financing projects on affordable housing developments, it’s important to be cognizant of multiple sources of financial incentive, as they may run counter to one another. Working with the right partner helps ensure optimization and maximization of benefits.

Kedin Kilgore, founder of community-owned energy company Gowanus Grid and Electric and one of Sunwealth’s partners on the FAC projects, spoke on the importance of strong partnerships to tackle the challenges presented by the NYC market. FAC worked with Sunwealth to create a sustainable underwriting model for the project.

Strategic investment can pay dividends for communities as well as investors.

Underwriting and structuring projects on affordable housing requires expertise and discipline – but with the right players at the table, these investments deliver returns to communities as well as investors.  32% of Sunwealth’s portfolio is located in LMI communities, and the company partners with project hosts and local developers and installers to ensure that low- and moderate-income residents and community-based nonprofits share in the benefits. 

Recent projects with the New York City Housing Authority (NYCHA) and Fifth Avenue Committee (FAC) provide examples:

New York City Housing Authority (NYCHA): As part of its Sustainability Agenda commitment to host 25 megawatts of solar power by 2025, NYCHA entered into several lease agreements with Sunwealth, allowing the company to solar gardens on the rooftops of NYCHA buildings in Queens, Brooklyn and Manhattan. Together, these installations will be part of the largest community solar project in the country. The agreements provide NYCHA with annual lease payments, contributing to the housing authority’s bottom line.  The electricity generated from these systems will provide a discounted electricity rate for approximately 470 New York City households.  A portion of this power will be reserved for low- and moderate-income New Yorkers, including NYCHA residents who pay their own electric bills. The installation of the projects included a workforce development program that resulted in 40% of NYCHA resident trainees obtaining full-time solar installer positions.

Fifth Avenue Committee (FAC): FAC partnered with Sunwealth to make its buildings greener while reducing the energy burden of its tenants. The company worked with local developers and installers to develop 106kW of solar across six buildings in Brooklyn, New York. Sunwealth’s power purchase agreement (PPA) provides guaranteed savings to FAC in the form of a fixed discount, and FAC passes the savings on to its tenants. FAC estimates these projects will provide each tenant with estimated savings of $240 per year. The FAC project development team additionally organized a successful job training program around the installation of the projects, giving its tenants exposure to career development in the clean energy sector.

Community-based solar – on the rooftops and parking lots of affordable housing developments, nonprofit organizations, houses of worship and businesses – has the potential to deliver clean energy access, jobs and savings to communities, while delivering strong, stable financial returns to investors. Strategic investment with strong, experienced partners focused on this market allows investors to unlock this potential, investing in a clean energy future that benefits multiple bottom lines.