Integrating Photovoltaic Systems in Low-Income Housing Developments

Integrating solar

Author:  Dean, Jesse | Smith-Drier, Christine | Mekonneen, Gete |Hathrorne, Wendy

Organization:  National Renewable Energy Laboratory | Northeast Denver Housing Center | Groundwork Denver

Report Date: 2011

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Summary: 

This case study details a residential financing model and job-training program that the Northeast Denver Housing Center (NDHC) and a team of partners implemented to install solar on low-income rentals and multi-family homes. NDHC used private equity, federal tax credits, utility rebates, and grant money from the Colorado Governor’s Energy Office to help finance the solar installations. The program also used the installations as a jobs training opportunity for interested residents to learn how to install solar.

Key Take-Aways: 

  • The program leaders used aerial imaging to survey local rental properties to determine which properties had adequate solar resources and suitable roofs.
  • Once the sites were selected, electricity bills for these households were analyzed and the project team created an agreement with the local utility. The team also issued an RFP for the procurement and installation of PV systems for the selected units.
  • NHDC worked with an investment company to do a third-party finance model called a Power Purchase Agreement (PPA) to finance the solar installations. Under this PPA, the investor owns the PV system for 20 years and sells electricity to NDHC at a lower rate than traditional sources.
  • NDHC also received grant money from the Colorado Governor’s energy Office. NDHC loaned grant proceeds to the investment company  to benefit from applicable tax and financial incentives that NDHC would not normally be eligible to receive.
  • After 6 years, NDHC has the opportunity to purchase the PV systems from the investor at the current fair market value. This price is significantly reduced from the original cost due to the full depreciation of the systems and and the tax and utility incentives the investment company would have already received. 
  • While NHDC will operate at a loss for the first 6 years of the project, over the course of the 25-year project, NDHC will receive significant net benefits and reduce greenhouse gas emissions as a result of this project.
  • In this model, NDHC paid for tenant electric bills. Tenants experienced a $25 increase in rent (as determined by HUD) to cover electricity costs and were given a lower utility allowance to pay for natural gas. Tenants were educated on the new energy program and were encouraged to continue conserving energy.
  • The case study also featured a job-training program where groups of low-income residents were trained in solar installation by NDHC and Groundwork Denver staff. 

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