Share Facebook Twitter LinkedIn Email In California, millions of people have gone without power due to preventative utility shutoffs – a problematic response to wildfires savaging the state. Other devastating outages are now commonplace throughout the US, following the ever-increasing number of severe storms and other disasters. In California and elsewhere, few critical community facilities have the backup power needed to provide essential services during power outage emergencies. The lack of reliable power has direct health consequences for vulnerable communities. Based on a recent survey of 61 California health facilities conducted by Direct Relief (an international emergency medical relief organization), 97 percent (59 health facilities) store refrigerated medications on site, though only 44 percent (27 health facilities) have a backup energy source available. And following Hurricanes Maria and Irma, thousands of people in Puerto Rico were without power for months on end. Many people who relied on electric-powered medical equipment and refrigerated medicines to survive died in the storm’s aftermath. These catastrophic outages are a harbinger of our climate-changing future. They show a growing national problem that requires solutions to protect vulnerable people―including those living in affordable housing, senior centers, and medical facilities—who cannot access essential services during power outages. Resilient power systems that pair solar panels with onsite batteries—or solar+storage systems—can meet this need. Recognizing the devastating impact of power outages on historically underserved communities, The Kresge Foundation and Clean Energy Group began a collaborative process involving many stakeholders to discuss the need for a comprehensive financing strategy to bring solar+storage systems to affordable housing and critical community facilities in low- and moderate-income (LMI) neighborhoods. The goal was to create a comprehensive, integrated financing initiative that would provide critical resources that have been lacking in the field of community energy resilience and environmental justice. The result is the January 2020 launch of a $3 million Financing Resilient Power initiative that combines a loan guarantee with capacity-building grants and technical-assistance awards to help with project assessments and to encourage the deployment of resilient power solutions in under-resourced communities. New York City Energy Efficiency Corporation (NYCEEC) is the lender selected to participate in the loan guarantee initiative. Clean Energy Group will manage the effort. With this work, we believe other foundations now have an innovative finance model to adapt or replicate. Let’s walk through it. A new approach to financing community energy resilience The Financing Resilient Power initiative seeks to reduce the financial risks for lenders and developers of affordable housing and community facilities who want to install solar and battery storage systems at those properties. Traditional loan guarantees provide repayment to a lender if the project can’t make its debt service payments, and the borrower’s guaranteed loan falls into default and is liquidated. The guarantor then pays up to the agreed percentage of borrower’s outstanding project loan balance per the terms of the loan guarantee agreement. Financing Resilient Power uses a loan guarantee that is unique in several ways: It provides the participating lender with a 50 percent payment guarantee for loans made to solar+storage projects. If the project can’t cover its portion of the borrower’s debt service, then Kresge will pay up to 50 percent of the project debt service to keep the borrower’s loan payments current, substantially reducing the risk of a payment default to the lender’s investor, who provided capital for the loan. The term of the guarantee is 14 years, which includes a two-year origination period. There is no minimum or maximum guaranteed loan amount. The guarantee is available for construction and permanent financing for solar+storage projects for multifamily affordable housing, elderly and other supportive housing, unsubsidized workforce rental housing, commercial and mixed-use projects, and community facilities. Financing is initially available to projects in the Northeast U.S., with the intention of expanding nationally over time. Capacity grants and technical assistance awards The Financing Resilient Power initiative recognizes that credit enhancement alone will be insufficient to change behavior in this nascent market. The initiative includes two important grant elements that should improve the ability of nonprofit lenders and project developers to reach this new underserved clean energy market. First, Kresge awarded NYCEEC a capacity-building grant to help NYCEEC grow its in-house capacity to finance solar+storage projects and strengthen project pipelines and loan demand. Second, the initiative will offer technical-assistance grants to help community and nonprofit groups ascertain project feasibility and ensure that proposed projects are likely to deliver on the expected energy, economic, and resiliency benefits. These pre-development awards also recognize a major obstacle to project development in LMI communities – there is a need to add to the expertise of local groups to investigate project risks and opportunities, so they can make informed decisions about ownership and other issues for projects in their communities. These grants will mitigate project and performance risk and increase the chances that local communities will receive all the financial and resiliency benefits of these projects. Open to other foundations We hope this important and groundbreaking work led by Kresge will inspire other philanthropies interested in clean energy and equity. More foundations could join in this effort by bringing new grant support to the capacity-building and technical-assistance programs. They also could consider program-related investments to expand the existing loan guarantee beyond the current $3 million level. The U.S. Department of Energy has recently funded the Clean Energy States Alliance (Clean Energy Group’s sister organization) to work to replicate and expand successful models that could bring solar and solar+storage financing to scale for underserved communities. A portion of this funding is earmarked to expand and adapt the Financing Resilient Power model to mobilize additional foundation program-related investments and grants for financing resilient power in these communities. We look forward to working with foundations interested in exploring this opportunity further. Learn more about Financing Resilient Power via this recent webinar. Lew Milford is president and founder of Clean Energy Group, and Rob Sanders is the organization’s senior finance director.