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Q&A: CEO Andreas Karelas explains how RE-volv is helping more nonprofits go solar

Environment, Social Investment Practice

Last month, RE-volv closed $3 million in loans from The Kresge Foundation and the Schmidt Family Foundation to build solar projects for nonprofits in underserved communities nationwide. We caught up with its CEO Andreas Karelas to learn more about this work and its plans with this new investment.

What capital barriers impede bringing solar and solar+storage projects to low-income communities of color and nonprofits that serve them? How does RE-volv attempt to overcome them?

Karelas: Generally speaking, many barriers exist to getting capital for solar + storage projects. While many Americans can go to their bank for a car loan or a home mortgage, solar, and especially storage, are still considered unfamiliar, unproven, and thus risky technologies to traditional lenders. (The truth is solar is very much a proven technology that comes with 25-year manufacturer warranties.) This means there are fewer lenders in the space, fewer dollars flowing into the space than are needed, and the cost of capital is higher than it should be. This is significantly hampering the clean energy transition.

For nonprofits, there are additional barriers. Nonprofits don’t have an easy way to demonstrate their credit, like homeowners have FICO scores. Nonprofits also have many decision-makers and require custom solar designs. These factors lead to long sales cycles that are challenging for developers. And up until this year, nonprofits could not take advantage of the Solar Investment Tax Credit, which is a primary driver in most projects. (Thanks to the Inflation Reduction Act, nonprofits can now get the 30% tax credit as a direct payment, which should help tremendously.)

Low-income communities and communities of color face additional challenges. As is well documented, lending practices in the United States have historically been discriminatory based on race, and for low-income communities, it can be challenging to prove creditworthy. A recent study also found massive racial and ethnic disparities in solar adoption. Communities of color have far fewer solar installations in the U.S. than majority white communities.

RE-volv aims to overcome these challenges through our model that focuses on solarizing nonprofits exclusively and prioritizing nonprofits serving BIPOC (Black, Indigenous and people of color) and LMI (low-to-moderate income) communities. As a nonprofit ourselves, we understand the challenges nonprofits face. We also understand nonprofit accounting and have developed an internal credit score tool that allows us to evaluate the financial health of the organization.

In addition, data has shown that solar energy has a ripple effect. When one person installs solar, their neighbor is more likely to go solar, and their neighbor is even more likely. Also known as the “seeding” effect, this phenomenon has proven even more pronounced in BIPOC communities. In other words, addressing the racial disparity of solar distribution has a valuable tool. For every solar installation installed in communities of color, the faster the subsequent rate of solar adoption will be – even quicker than in non-BIPOC communities.

How would you characterize the connection between energy systems and community wealth building?

Karelas: U.S. consumers spend over a trillion dollars a year on energy. If your fuel source is coal, gas or oil, that dollar is leaving your pocket and going to the giant corporations that extract, refine, process and burn those fuels to deliver you power. On the other hand, you could own solar panels on your roof and generate your electricity from the daily sunshine. Rather than a trillion dollars every year leaving our communities, that money could go back into our pockets by people owning local distributed energy generation technology. Not only is this option cheaper, but it’s also creating local installation and maintenance jobs, lowering local air pollution and creating more resilient communities.

Kresge and the Schmidt Family Foundation recently closed on loans totaling $3 million to support RE-volv. What will that capital infusion allow RE-volv to do in the coming years? What do you predict will be the impact of those investments?

Karelas: These program-related investments will be used for the development and construction of nonprofit solar projects around the country. A large focus will be solarizing BIPOC-led houses of worship and nonprofits that serve LMI and BIPOC communities. As these nonprofits save money on their operational expenses through lower electric bills, they can put that money back to use serving their constituents. In this way, the solar projects aren’t just reducing carbon emissions – they’re also supporting underserved communities nationwide.  For example, in the past three years, RE-volv has deployed $10 million of solar projects that will result in $20 million of electric bill savings for these nonprofit organizations.

 RE-Volv’s Theory of Change talks about making renewable energy less abstract. Why is that important and what does that look like in practice?

Karelas: When it comes to climate change, we have to collectively switch from fossil fuels to clean renewable energy as quickly and as equitably as possible, and that’s going to take a society-wide effort.

But what does that mean exactly? What does that look like in practice?

The problem is energy, in general, is a pretty wonky topic. Most people don’t understand the details of their energy bills, let alone where their energy comes from, and only think about energy when the lights don’t turn on. There are also a lot of myths about clean energy — like it’s unreliable or too expensive — that would be dispelled if people saw it in their community and saw their neighbors using and benefiting from it.

The smartphone was introduced to the public in 2007. In just five years, half of all Americans had one. That’s because people saw it, learned what it could do, and went out and bought it. If people don’t know anyone who’s gone solar or don’t see solar in their community, they might think it’s not an option for them. So we must normalize clean energy and let people see the benefits directly in their communities to accelerate adoption.

What do you wish more people understood about this moment when it comes to financing green energy projects in low-income communities?

Karelas: The goal is to get to a point when every bank, credit union, CDFI and commercial lender are able to offer low-cost loans for clean energy, energy storage and energy efficiency projects. To de-risk these projects, especially in low-income communities, there must be a proven track record of success.

So the more seed projects we build in these areas (which accelerate adoption rates), the more data exists demonstrating a better track record. That allows main street lenders to become more comfortable investing in clean energy, and that’s when the energy transition will move very quickly.

How can nonprofits that want to bring solar to their facilities take the first step in that direction?

Karelas: The first step to going solar is figuring out how much energy you use each year. Nonprofits interested in going solar can visit our website and find simple ways to submit electricity bill information. From there, we’ll get started putting a proposal together.