DC Green Bank aligns local dollars and local businesses to reap the solar boom
DC Green Bank’s early transactions hint at the possibility of a different future.
Jessica Pitts first got to know Fairfax Villages residents in 2019. Scattered across 54 acres on the southeast edge of Washington, DC, the condo and townhouse complex was built in 1941.
As co-founder of Flywheel Development, a local, sustainable real estate development company in DC, Pitts reached out to Fairfax Villages to see if anyone would be interested in a community solar installation. His company would build a solar panel on top of one or more of their buildings, connect it to the power grid, and the energy it produced would save electricity bills for residents below.
Residents wouldn’t have to pay his company anything – Flywheel would actually pay the building for renting its roof – and the company could even arrange local funding to repair leaky and otherwise damaged roofs, which would be a step necessary for solar installations. .
“We like to tell people that the sun shining on your roof is precious,” says Pitts. “The district has made it really valuable. He has created environmental programs that we believe are a model for others across the country by valuing solar energy in a way that allows community members and residents to participate in these programs, and this is not is not typical.
It might have sounded too good to be true at the time, but Flywheel has just completed the second of two community solar installation projects in Fairfax Villages, with another on the way. The two completed community solar projects also mark the first two completed projects funded by DC Green Bank, key first steps toward the District’s goal of overcoming barriers to community solar projects at this scale in the District’s historically disinvested communities.
“I could say every day it gets easier, but I could say it could also be ten times easier,” says Pitts.
The National Renewable Energy Laboratory estimates that in 2018 there were 811 community solar projects in 39 states and Washington, D.C.
With a community solar project, someone builds a solar panel on top of a building, and eligible residents “subscribe” to a share of the electricity generated. This means they get a partial credit on their electricity bill based on the value of the electricity generated and sent into the grid. Community solar energy provides access to the benefits of solar energy for low to moderate income households who cannot afford solar panels for their homes or do not own the roof of their building .
As Next City previously reported, DC has launched a slew of community solar projects through its “Solar for All” initiative, which offers grants to support these projects. Pitts says his company has relied on Solar for All to pay for roof replacements or repairs for its community solar projects. DC Green Bank – publicly funded – stepped in to provide construction loans to Flywheel to build the solar panels.
In addition to the villages in Fairfax, Flywheel has built solar panels on top of a building at the former Walter Reed Medical Campus in northwest DC and a few other smaller buildings around the district. Flywheel has completed 34 community solar projects so far.
After the projects are completed, Flywheel repays DC Green Bank’s construction loans by refinancing them with a longer-term “permanent” loan from a bank. Longer terms spread out the cost of loan repayment, allowing project revenue to cover regular loan repayments.
Like many solar installations, community solar projects can generate revenue by selling “renewable solar energy certificates” or SRECs to power supply companies. The more electricity a solar generator produces, the more SREC it can sell.
Different states across the country have different requirements for electricity providers to purchase certain amounts of SREC from anyone who has built a working solar panel. DC has one of the highest SREC requirements that electricity providers serving its residents must purchase on an annual basis, and the amount increases every year.
But because the main source of revenue for solar installations is still relatively new and highly dependent on the political will of governments to meet SREC purchase requirements, longer-term loans are still difficult for developers to obtain. community solar panels, especially those working on smaller buildings or in historically disinvested communities.
“I think a lot of that is because they don’t understand solar,” Pitts says. “Another challenge is that there is also a preference for large transactions, large solar installations, and the district is full of small buildings. The communities we work with have smaller, fragmented, slightly more complicated roofs. »
But DC Green Bank is determined as part of its mission to attract private lenders to the space. The first permanent loan for Flywheel came from Amalgamated Bank – a union-controlled bank that has some expertise in solar power loans after a 2018 merger with New Resource Bank, which was the first bank to specialize in lending for environmental sustainability. DC Green Bank also provided a loan guarantee to facilitate Amalgamated’s longer term loan.
Earlier this month, DC Green Bank partnered with Virginia Community Capital for another long-term loan for Flywheel, bringing another lender into the community solar space in DC.
DC Green Bank CEO Eli Hopson said they are already in talks with Amalgamated Bank, Virginia Community Capital and other lenders across the city, including the black-owned Industrial Bank, to fund facilities additional community solar as well as stormwater retention projects – which are also part of DC Green Bank’s mandate and connected to DC’s growing market for stormwater retention credits. Similar to those first two projects with Flywheel, the green bank would finance the construction and the other lenders would refinance with a longer-term loan later, freeing up the green bank to finance construction elsewhere. It’s similar to how the New York Green Bank did most of its dealings.
And each loan helps fuel the next – as more lenders show interest in longer-term loans, more feel comfortable making construction loans knowing they can be refinanced later. Eventually, DC Green Bank will not be needed for these types of loans. It could focus on deals that other lenders still consider too risky, or even go out of business.
DC Green Bank Board Chair Brandi Colander said that ultimately the scale of the renewable energy challenge requires much more federal funding, such as that of the Build Back Better legislation currently stalled in the US. Congress.
But in the meantime, she says, DC Green Bank and others like it around the country can help prime the pipeline of developers, workers and lenders so they’re ready to ramp up when or if that funding arrives – and make sure that at least some of those developers are local and focus on communities that are typically left behind or destroyed by large-scale public investments.
“We think the magic of a green bank is that you leverage public and private funds, restructuring funding tools to meet communities and developers where they are,” says Colander. “But you’re shaking up conventional structures to do that.”
UPDATE: We have clarified that Flywheel pays Fairfax Villages for the use of its rooftops.
Oscar is Next City’s senior economics correspondent. He previously served as Next City Editor-in-Chief from 2018-2019 and was a Next City Equitable Cities Fellow from 2015-2016. Since 2011, Oscar has covered community development finance, community banking, impact investing, economic development, housing and more for outlets such as Shelterforce, B Magazine, Impact Alpha and Fast Company.