These methods exclude nearly half of Americans who need access to a suitable rooftop. These methods, however, leave out almost half of all Americans who don’t own a rooftop. This is why SunShot Initiative created the Solar in your community challenge. This challenge encourages the creation of innovative and new financial and business models to serve solar users who do not have rooftops (e.g., renters).
We’ve listed three ways SunShot challenge teams have brought solar to their communities.
Pay it Forward
One team, among the newly selected solar projects, is using a model of financing that allows the electricity savings from one task to be used to pay for the next. This model has set in motion the pay-it-forward model for solar energy. This method, also known as a revolving fund, creates a sustainable funding cycle while increasing the fund through donations. RE-evolve is a San Francisco-based nonprofit that uses this model for installing rooftop solar systems in other nonprofits. RE-evolve rents out the panels and then sells back the power generated. This allows organizations to save money on their electric bills, which can be reinvested in their missions. RE-Volvo hopes that by the end of the performance period for the challenge, it will have helped more than ten nonprofits go solar.
Tax Equity Loans
Sustainable Northwest’s challenge team uses tax equity loans to bring solar energy to rural Oregon. These loans allow an investor to make an equity contribution to a Sustainable Northwest solar energy system and receive the Investment Tax Credit for the project. The ITC is approximately 30% of the cost of installing and constructing a solar power system. The project is attractive by selling the energy back to Sustainable Northwest and receiving the full ITC reimbursement. This allows the team to get the money they need upfront. The team will use technical assistance to identify tax equity partners to use this model for at least three of its twenty community solar projects before 2020.
Reduce Risk
The City of Baltimore has adopted a model of financing that minimizes the risk of community solar installations. Loan Loss Reserve (LLR), funds, reduce investors’ risk by paying in case of default. Baltimore can raise a small amount of money to guarantee a good return on investment. Baltimore can also access $10 more in project funding for every $1 invested in the LLR. Baltimore can achieve its goal of providing solar energy for 1,000 low-income homes with this approach. Learn more about how LLR funding works.
These three projects show how innovative financing mechanisms are crucial in bringing solar energy to communities. Financing plays an essential role in solar deployment. Innovations in this area have the potential to reduce the cost of Solar to consumers and businesses by 30-60%. This will make solar more affordable for Americans. The Department of Energy is looking for more innovative plans to finance solar projects as we near the Solar In Your Community Challenge deadline.