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- Harvey Harman
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- Project / Program Description
Low and moderate income households spend a larger portion of their income on energy. To make housing affordable, we must do more than just lower mortgage payments. We also need to take a look at how to lower electricity bills. As the installation cost of solar has dropped precipitously in recent years, many households have taken advantage of this opportunity to dramatically reduce their electricity bills. However, the switch to solar is made easier by income tax credits and access to financing, and these are not universally accessible.
Our goal is to make affordable, clean energy available to everyone. Habitat for Humanity is a leader in helping households earning between 25% and 60% of the area median income develop the opportunity to own a home. This proposal is to expand access to affordable clean energy as well. In North Carolina, we have a strong, vibrant ecosystem of solar installation companies and a highly trained workforce. We believe that by bringing together a novel financing approach, Habitat for Humanity's insight in housing development, and contributions from the solar industry we can bring solar within reach for everyone.
Our proposal is to expand access to low and middle income homeowners by developing a “sharing solar fund”. Habitat for Humanity Chatham County will install solar on new and existing homes by accessing donated equipment, volunteer installation labor, and a contribution from the sharing solar fund. The homeowner does not pay any upfront costs, but instead pays a portion of their electricity savings into the “sharing solar” revolving loan fund. The sharing solar fund is used to “pay it forward” and install solar on more homes. As the fund grows and achieves financial stability, we will rely less on donated equipment. We will develop streamlined installation process that can make the best use of volunteer work crews. We will iteratively improve the financial model and installation approach to spread this approach to the thousands of Habitat for Humanity affiliates across the US.
This proposal is a partnership between Habitat for Humanity Chatham County, a non-profit focused on affordable housing in a rural, North Carolina County, and a non-profit organization with considerable expertise in solar energy: NextClimate. Habitat for Humanity will oversee the sharing solar fund and manage installation projects. NextClimate will advise homeowners on the benefits and costs of solar, work to lower installation costs by streamlining processes, and will leverage contacts in the solar industry to recruit volunteers and solicit equipment donations.
Organizations serving low income households are successful by developing homes and selling them at affordable prices. Building reliable and affordable homes is a design and engineering challenge, and increasing the cost by adding energy-saving improvements is a barrier. Energy-saving improvements increase the cost of a home, but in order to meet affordability requirements, these improvements are rarely reflected in an increase in the price of the home. Affordable housing developers can build energy-saving improvements, but the added cost per home means the total number of homes that can be developed must go down.
This proposal’s innovative solution removes this barrier by (i) decreasing the cost of solar installations and (ii) asking homeowners to share some of the financial benefit with their neighbors in their Habitat for Humanity built community. This proposal decreases the cost of solar using donated equipment, volunteer installation crews, and streamlined processes. Any remaining costs are covered by the “sharing solar fund”, which is continuously recapitalized by monthly contributions from previous participants whose homes have been equipped with solar. Habitat for Humanity Chatham County has already secured initial grant funds and equipment donations to catalyze the “sharing solar fund”. The innovative solution in this proposal will grow the impact of those initial funds to install solar on many more homes and bring energy savings to many more families.
A typical 3 kW solar installation in North Carolina will generate savings of $35 per month that will grow as electricity prices go up. For a household earning minimum wage, these energy savings are equivalent to 10% of income. Over the lifetime of the panels, the homeowner saves more than $10,000 in electricity costs. As part of this project, participants would also be provided with assistance on do-it-yourself projects to improve energy efficiency and further lower electricity costs.
Habitat for Humanity Chatham County has built 126 homes and has started development of a new community to house 60 families. Our project intends to equip with solar all 60 new homes under development and to retrofit existing homes with solar where conditions are suitable. Across the US, Habitat for Humanity is one of the top 10 builders of new homes and in total builds and renovates 100,000 homes per year. We will collaborate with other Habitat for Humanity affiliates to iteratively improve the financial model and installation practices in order to scale this approach nationally.
The chart below shows the impact of the sharing solar fund. Consider starting the solar fund at $100,000. Under market prices, this could purchase solar for 10 Habitat for Humanity homes. However, by marshaling equipment donations and volunteer solar installers, this proposal can considerably decrease the cost of solar installation to between $0.45 /W and $0.75 /W, dramatically increasing the number of solar homes. When these families contribute 30% of their electricity savings to the sharing solar fund, the impact of the initial $100,000 goes from just 10 homes installed to 10 homes per year installed.
Donor fatigue is a challenge, and as the years go on, it will be more difficult to continue to solicit donated equipment. However, two elements of our strategy can help us overcome this challenge. First, each year the number of solar installations in our program increases, further increasing the amount available for future installations. Each year we can afford to pay 15% more for each solar installation and still install the same number of homes. Second, we expect our installation process to become more efficient and solar equipment prices to continue to decline. Within 6 years, we expect to not have to rely on donated solar equipment and will be able to afford market rates.
The sharing solar fund envisioned in the calculations described above is re-capitalized by monthly contributions from Habitat for Humanity homeowners that set aside a portion of their energy savings each month for the fund. Alternatively, the fund could be re-capitalized at the time of the sale of the home. We will explore a number of alternatives to find a strategy that is efficient and can be broadly applied by Habitat for Humanity affiliates in other areas.
Habitat for Humanity Chatham County works to create self-help opportunities for families to own affordable homes, improve their lives, and strengthen their communities. Habitat for Humanity Chatham has built 126 homes in rural North Carolina and has another 60 homes under development. Habitat for Humanity Chatham is responsible for administering the sharing solar fund and managing solar installation projects.
NextClimate is a Carrboro-based 501(c)(3) nonprofit organization specializing in creative approaches to expanding access to clean energy. NextClimate has organized a dozen Solarize campaigns in North Carolina where hundreds of homes have switched to solar. NextClimate has extensive contacts in the local solar industry. NextClimate is responsible for recruiting participants, designing solar for participant’s homes, and recruiting volunteers, donated materials, and grant funds.