California Supports Solar Roofs for Multifamily Affordable Housing

Climate resilience pays dividends in financial stability and public health. California has passed legislation, AB 693, that will provide up to $1 billion for solar roofs for multifamily affordable housing. A May report by Clean Energy Group, “Closing the California Clean Energy Divide: Reducing Electric Bills in Affordable Multifamily Rental Housing with Solar+Storage,” found these retrofits can zero out some properties’ net electricity bills.

Speakers from Clean Energy Group, Geli, Center for Sustainable Energy, and California Housing Partnership put the report in context during a June 15 webinar titled “Reducing Electric Bills in California Multifamily Affordable Housing with Solar+Storage.”

Santa Monica multifamily housing
This photo depicts multifamily housing in Santa Monica, California.

It is not a luxury to build affordable public housing to high standards of construction, said Sachu Constantine, director of policy at the Center for Sustainable Energy. For example, the first public housing units built in the U.S included kitchens, even though many other homes did not have them.  Affordable housing was built to the latest standards of the time.

“We should be doing the same today,” Constantine said. “We should be making sure these homes are grid assets. That would be a repeat of history.”

Including clean energy would align affordable housing with the emerging standards for climate-resilient construction.

“Resilient affordable housing helps residents shelter in place during storms,” said Seth Mullendore, project manager at Clean Energy Group. Installing solar and storage can help keep food and medications cool, maintain access to water, and make it possible to survive power outages.

“In an era where climate change is taking place all around us, resilience becomes a critical need,” Constantine said. “We don’t just want to leave low-income communities to the vicissitudes of the market.”

Legislation

California’s program for solar roofs in multifamily affordable housing is the largest in the nation, according to the report. The $1 billion of funding the legislation provides will be spent over the next 10 years. Projections say this program can reach around 1/3 of the state’s affordable multifamily properties.

The program is funded by cap-and-trade revenues.

“AB 693 came along at a time when California is weighing a number of comprehensive options for energy efficiency,” said Wayne Waite, policy director at California Housing Partnership. “We need more efforts targeted at low-income households and communities that have not been fully served. This program really changes the conventional way public initiatives are implemented.”

A previous bill, SB 350, increased the state’s renewable-energy portfolio.

“Energy-efficiency programs within the state are being retooled to advance a number of initiatives, including the zero net energy building codes in the state,” Waite said.

“We have very aggressive zero net energy goals,” Constantine said. “Solar by itself on rooftops is not quite as valuable for getting to zero net energy as solar plus storage.”

Affordability

Before this program, “only 4 percent of low-income households within the state had been served by the renewable-energy programs,” Waite said. “There’s quite a green divide.”

Although California has installed many projects combining solar and storage, according to the report, few have served this sector, which includes over 450,000 households. There are 9 million low-income people in California now, Waite said.

“This program employs a tenant-first strategy,” Waite said. “Tenants must receive a direct economic benefit through the utility tariffs that are established. There's also an avenue for tenant participation and contributions to financing these systems through on-bill financing or on-bill repayment.”

Local hiring requirements are also part of the program, according to Waite.

“A number of the eligible properties are in urban areas with limited roof space,” Waite said. This poses technical challenges for installers.

Finance

Energy savings are one of the few items that can reduce an affordable apartment building’s operating budget, according to the report.

“Affordable housing faces a number of financial risks,” Waite said. “It's fairly vulnerable to changes. Getting accurate financial forecasts that don't misstate or inflate savings because of business interests is a really important issue. The legislation calls for third-party guarantees.”

Waite said he recommends aligning program costs for solar power with cost decreases in the larger solar market. “In some of the previous programs, solar costs didn't decrease despite rapid declines in solar costs throughout the United States.”

In California, new utility tariffs are in place, Waite said. Time-of-use prices are being revised to focus on peaks that occur later in the day after solar power drops off.

With the current set of tariffs, combining solar power and storage could nearly eliminate electric bills for some affordable apartments.

Adding storage along with solar power can reduce payback times by over three years in some situations, multiplying the savings by a factor of nearly two.

Analysis

“The heart of this analysis is tenant benefits,” Mullendore said. California still needs to work on developing ways to pass savings from energy storage in affordable housing on to tenants. “They don’t have rate structures where storage can play into it at this time.”

For the report, Geli, a company that produces energy software, analyzed projected utility bills from nine properties in three different utility territories. The utilities were the three major ones in California: Pacific Gas and Electric, San Diego Gas & Electric, and Southern California Edison. 70 percent of the state’s affordable rental housing is in these territories.

“We worked with a couple of housing developers to get interval data for these properties,” Mullendore said. “We used real-world data and real-world utility-rate structures. We looked at tenant loads, electricity loads, and common areas.”

Energy storage can alter demand charges for buildings, Mullendore said. Tenants can't take advantage of time-of-use rates and demand charges unless new legislation is passed to allow them to take advantage of these programs.

“The initial capital cost of a storage system is about $100,000,” Mullendore said. “It’s an 85-percent increase in savings for a 30-percent increase in cost. You can optimize the amount of solar you're consuming and really hit those peak time periods.”

These analyses reveal when a facility’s demand might spike as loads fluctuate. Heat waves also impact the results.

We like to start with a site analysis to really understand the statistics behind building load,” said Zach Ernst, director of analytics at Geli. “We simulate a solar system using PV Watts or whatever the solar developers provide for us.”

Shifting the demand toward the evening resulted in one scenario showing that the electric bill dropped to a net value of zero for a 90-kW PV system with storage.

In a second analysis, energy storage reduced the peak from 100 kW to 65 kW, saving $4,200 per year at a price of $10/kW. At a higher cost of $20/kW, the system saved $8,400 per year.

Adding energy storage really knocks out the rest of the bill,” Mullendore said. For a building that had a $21,200/year bill that was brought down to $9,500/year, the resulting electric bill was only $300/month.  

The calculations took California’s Self-Generation Incentive Program into account. It is currently being reworked, Mullendore said. This is a program he and the coauthors of the report recommend.

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