301 Moved Permanently

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The Denver sun shines brightly on all equally.

Recognizing this simple truth, Andrea Davis of the Denver Housing Authority’s (DHA) Real Estate Development Group had a thought: It might be possible to meet two of the authority’s primary goals - expanding its portfolio of renewable energy sources and decreasing its energy costs - simultaneously.

“It seemed that we could use the roof space on our existing buildings to generate solar power,” Davis says. “We had free roofs, and we had free sunshine, but we had no experience in solar power systems and virtually no capital to install and maintain them.”

The DHA is a quasi-­municipal corporation with a portfolio of over 12,000 units and housing choice vouchers, providing affordable housing to over 26,000 very low-, low- and middle-income individuals from more than 11,000 families. The DHA has transformed public housing in Denver to create a vibrant, revitalized, sustainable, transit-­oriented and mixed-income community of choice.

“Our vision has been to reflect the goal that every individual or family we serve should have quality and affordable housing in communities offering empowerment, economic opportunity and a vibrant living environment,” Davis says.

To make her idea work, Davis knew she would have to look outside the authority itself. Although the DHA has strong internal resources for energy management, building operation and administrative oversight, the skills needed to scope, purchase, install, operate, maintain and financially structure solar power systems across the DHA’s geographically dispersed buildings clearly could not all be obtained in-house. Even more daunting to Davis were the upfront costs of such a massive project. The authority simply could not expend the necessary capital.

 

Plotting a course

Undeterred by the uncharted nature of the project, Davis began to explore opportunities for a comprehensive solar power purchase agreement (PPA), given that these require little to no upfront costs and can be implemented on existing buildings.

For the DHA, the goals of the project were to purchase energy production from a renewable source, create green jobs, establish long-term financial sustainability, and create opportunity for long-term ownership and operation of energy-efficient systems. Also, as part of the U.S. Department of Energy’s Better Buildings Challenge, the DHA set a goal to achieve a 20% reduction in its energy use intensity within 10 years. This goal was to be achieved, in part, through this renewable energy PPA and also through other energy conservation initiatives and resident engagement programs.

In early 2012, the DHA began in earnest to seek a viable PPA partnership by issuing a request for proposals (RFP). The authority invited responses from qualified entities to provide cost-effective solar photovoltaic generating systems at multiple sites. Respondents were required to provide all design, construction, operation, application and financing services necessary to the successful installation and operation of the desired PV systems.

According to Chris Jedd, the DHA’s portfolio energy manager, the solar project needed to be installed across a wide range of existing multifamily properties and single-family homes peppered throughout the city. In comparison to projects implemented entirely in one location or during the construction of new buildings, this could have led to complications with siting, installation, maintenance and monitoring the panels once they were installed.

The DHA received a total of three responses to its RFP. After careful review and a thorough selection process, the DHA selected Denver-based Oak Leaf Energy Partners for its solar PPA project, which called for the installation of 666 solar electric systems on 387 DHA resident buildings, totaling 2.5 MW of capacity. Using over 10,000 240 W panels, these arrays collectively could reduce CO2 emissions by 3,400 tons per year.

This proposal stood out to Davis and Jedd because it provided the DHA with revenue from leasing its roof space for the solar panels. On top of being able to purchase the electricity generated by the panels at a slight per-kilowatt-hour discount, this proposal enabled the DHA to receive payments for leasing the roof space that the solar panels occupy.

Because of the environmental benefits, revenue generation opportunity and discounted long-term energy pricing included in the PPA, the DHA signed the contract in June 2012. Installation of the panels quickly followed.

 

Making a difference

Although Jedd did act as the project manager, the PPA project was a major cross-functional initiative that began with Davis in the real estate department and involved the finance and maintenance departments, among others.

“This was a major undertaking for us,” Jedd says. “Not only did the entire authority need to be on board, but all of our partners had to work in lockstep to make this project successful for us and our residents.”

Oak Leaf Energy Partners serves as the project’s developer. In that role, it provides site planning, interconnection analysis, tax and finance structuring, and finance negotiating services. The project was designed to be a minimum of 2.5 MW so as to ensure financial viability. Based on Google Earth imagery, over 4,000 potential sites were identified. This pool was narrowed down by eliminating properties with less favorable roofs.

Enfinity, the project’s Belgium-based financier, owns and operates the PV arrays, selling the electricity it generates from the solar electric systems to the DHA at a discount. Enfinity invested approximately $10 million in the solar project, resulting in minimal upfront costs for the DHA. Under this 20-year contract, the DHA receives payment for leasing the roof space and has the option to purchase the panels at a significant discount in six years.

For the engineering and installation of the solar electric systems, the DHA turned to Namaste Solar, based in Boulder, Colo. Over a period of 11 months, nine crews installed the more than 10,000 solar panels included in the project. The typical installation period for any one building lasted just two days.

Now installed, the systems are anticipated to collectively generate an average of 3.4 GWh of electricity per year, which equates to an annual reduction of about 3,400 tons of CO2. Outside of reduced carbon emissions, the project resulted in several other benefits, including the generation of more than 40 green jobs in the Denver area for workers hired to install the panels. Also, the PPA supports commitments to federal sustainability guidelines, including the installation of clean renewable energy.

“For the DHA, this has been a clear success,” Jedd says. “Because we’re receiving long-term and predictable revenue from leasing our rooftops and are able to buy this renewable energy at a reduced rate, we are able to dedicate revenue to other improvements. Equally important is our tenant engagement program. We’re communicating with our residents about the solar project, giving them even more pride in their homes.”

 

Looking ahead

Still challenging for Jedd is the monitoring of production and the collection of data. Monitoring and collecting data on a single, large solar system in real time is fairly straightforward. But, the DHA’s multiple separate systems on multiple separate rooftops have made it difficult to determine the output and ensure productivity of the panels in real time or close to real time. For now, the DHA is able to receive data on the system’s production only on a monthly basis, but Jedd’s goal is to make the integrated monitoring of its 666 systems more timely.

In the U.S., there are 3,300 housing authorities and an untold number of other organizations with rooftops ready for solar power. Through PPAs, organizations can overcome the financial barriers often associated with these renewable energy projects.

Although the DHA’s PPA calls for a slight per-kilowatt-hour discount on electricity prices, other solar installations could be structured such that the traditional utility buys the electricity directly. This way, the only financial exchange between the owner/operator of the solar panels and the building owner is the roof lease. This alternative model eliminates the concerns of a volatile energy market and the need for organizations to sign long-term energy contracts.

If all 3,300 housing authorities in the U.S. were able to establish solar installations similar to this DHA project, the rooftops of public housing authorities could produce enough solar energy to power over 1 million homes and reduce carbon emissions by 11 million tons.

That’s compelling - particularly because sunshine is free.

 

Victoria Mills is the managing partner for the Environmental Defense Fund’s (EDF) corporate partnerships. Mills also manages the EDF Climate Corps, which has provided assistance to the DHA on other sustainability activities.