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Gasser develops model for nonprofit solar

PART OF SUSTAINABLE NAPA, UNIQUE PROJECT LEVERAGES AGENCY AND PRIVATE FUNDS

NAPA – The city of Napa will have the nation’s first investor-funded solar installation for a nonprofit organization.

The Gasser Foundation and Borrego Solar are collaborating with the National Development Council on a unique financing model that could extend the benefits of solar to nonprofits across the country.

“It’s a ground-breaking project in a lot of ways, for us, for Gasser and for the NDC,” said David Potovsky, Borrego’s senior energy consultant for the commercial projects group. Bringing the entities together was consultant Gopal Shanker of Recolté Energy in Calistoga.

“We started talking about installing solar on our building a year ago,” said Gasser Vice President Henry Gundling, “but the challenge was financing. There was nothing available to groups like ours.”

Nonprofits aren’t eligible for federal tax incentives and, although California has a special rebate program for them, it didn’t begin to cover the $1.6 million that the Gasser system cost.

It was Mr. Shanker’s idea to bring in the NDC, a nonprofit formed 40 years ago to increase the flow of capital to rural and underserved urban areas nationwide.

Working with private investors and partner banks, the NDC has developed a model to finance low-income housing. The NDC welcomed the opportunity to apply its experience to a solar project for a nonprofit organization.

“It’s a pioneering project for us,” said NDC Director Michael Johnson. “As a nonprofit ourselves, we hope this model will go a long way toward providing solar for groups that can’t afford to self-fund it.”

The Gasser installation is not an exact example for the NDC model because Gasser wanted to provide nearly 100 percent of the energy consumed by its 13-tenant, 25,000-square-foot building. Both a rooftop and carport installation were needed, bringing costs up significantly.

The Gasser Foundation had to raise $250,000, far more than the average installation would require. The NDC model calls for 5 percent to 10 percent of the total cost to be provided by the nonprofit.

After the group fills that relatively small gap in funding, the NDC brings in equity investors to fund 45 percent to 50 percent of the project, taking in return all tax credits and rebates.

“Then we leverage in some debt,” said Mr. Johnson. “We structure the loan piece to correspond with the nonprofit’s current utility bill, and that amount goes to the lending institution instead of PG&E. We also structure in installments on the eventual cost of the nonprofit’s purchasing the system after five years.”

The nonprofit now has a locked-in utility rate, and at the end of five years the system becomes its own, with no further outlay.

“Raising equity in today’s market is challenging, but we have several partners like Wells Fargo and Citibank that invest as part of a social mission,” he said.

The 122 Kw Gasser installation, at 433 Soscol Ave. in Napa, is scheduled to be finished before the end of the year. In addition to its unusual funding model, it’s one of the first multitenant buildings with a single meter. All the leases were rewritten to include utility charges.

Another challenge surmounted was a roof parapet that blocked the sun, according to Mr. Potovski. Borrego brought in Healthy Buildings USA in Napa to design and fabricate a steel substructure to raise the panels.

Borrego Solar, the NDC and the Gasser Foundation are excited about extending the funding model to other nonprofits, municipalities, fire and water districts and schools.

“As part of our Sustainable Napa project, we’re bringing together as many cities and schools as we can to consider solar using the NDC,” said Mr. Gundling.

“With recent regulatory changes and this kind of innovative funding, there’s no reason why any group that owns or leases a building can’t equip it with solar.”