A Resilient Power Capital Scan: How Foundations Could Use Grants and Investments to Advance Solar and Storage in Low-Income Communities

February 1, 2017

by Lew Milford and Rob Sanders, Clean Energy Group

This report, commissioned by The Kresge Foundation, the Surdna Foundation and The JPB Foundation, identifies market barriers to deploying solar+storage technologies in low-income markets, and proposes more than 50 grant and investment opportunities that socially minded investors can use to target those barriers.

The report identifies five market barriers to integrating solar+storage in low-income communities:

  • The need for an integrated development finance model to overcome finance gaps in underserved markets.
  • Lack of internal capacity of portfolio owners, advocates, and public officials to develop solar+ storage projects.
  • Insufficient energy data collection, policy research, and economic analysis to understand the development of solar storage technology in low-income markets.
  • Insufficient capacity of technical service providers, project developers, and nonprofit intermediaries to reach underserved communities.
  • Inadequate market rules, incentives. and regulatory policies to advance new solar+storage technologies in low-income markets.

The report recommends a broad palette of options for foundations interested in different market efforts. Among the proposed interventions that foundations can undertake are the following:

  • Support New Tax Credit Aggregation Entity. There is a need for the creation of new legal entities to aggregate multiple portfolio owners’ solar and storage tax credits to create a scaled investment opportunity for investors.
  • Provide Credit Enhancement for Performance Risk. There is a need for credit enhancement for investors and building owners to reduce technology and performance risk (e.g., “performance loss reserves” to reimburse monetary losses from unrealized economic benefits).
  • Provide Working Capital.  Fund predevelopment costs and bridge the payment of developers’ fees that are often tied up in multiple projects.
  • Provide Long-term Capital. Provide 10-year term capital to take out construction financing (preferably with a 15-year amortization) and as a capital source for on-bill payment programs.
  • Fund Leadership Awards to Owners. Provide funding (“Leadership Awards”) to portfolio owners through nonprofit intermediaries for offsetting the organizational costs and new predevelopment costs of first-time solar+storage projects (e.g., technical and legal review, doc prep, assembling additional development team members, compliance, etc.).
  • Invest for LMI Expansion. Invest in existing companies active in solar+storage development in the commercial space to expand reach into low-income markets.
  • Fund LMI Advocates. Support advocacy organizations to provide information and training to LMI residents on issues regarding resilient solar+storage benefits with the goal of increasing LMI participation in policy discussions.