The Grinnell Pivot

Even the best laid plans for a building project often pivot. Sometimes it’s when dangerous and unanticipated conditions are found that need to be addressed.

Other times it’s when opportunities arise that weren’t imagined at the outset. Such was the case at the Grinnell, an 82-unit HDFC co-op in Washington Heights. In late 2015, the co-op began working with Bright Power, an energy and water management consulting and construction company, to explore the feasibility of installing solar panels on the roof. The site surveys, analysis of utility loads, and design options were completed and presented to the board for consideration.Then, in mid-2016, the project pivoted.

“There was a regulatory shift,” says Josh Soble, senior account manager at Bright Power. The shift created a new program called community solar. This meant that the conventional way of using solar – physically interconnecting the electricity produced from solar panels to a building’s common-area circuits and reducing those electric bills – was now broadened so that shareholders’ electric meters could also benefit. Simply put, community solar allows electricity produced by a single solar array to be shared among dozens of independent electric accounts. For community solar, as the photovoltaic (PV) system produces electricity, that production is measured by a Con Edison meter and pushed out to its grid. On a monthly basis, Con Edison will allocate credits resulting from that month’s solar electricity production. The credits are applied to each shareholder’s individual electric bill, and the amounts are based on each shareholder’s proportional ownership in the solar PV system – “a solar co-op sort of approach similar to other shared community assets like storage lockers or a bike room,” Soble says.

For the Grinnell, this meant the more electricity produced from its solar system, the larger the benefit to individual shareholders. Each apartment’s electric bill would be cut proportionately by what the building’s solar system could produce. This pivot – and the opportunity it afforded – sent Bright Power back to the drawing board. It had to see how large a system the Grinnell’s roof could accommodate, then calculate the new economics. The Grinnell already had a roof deck that the community didn’t want to disrupt, so the new system had to be designed with that in mind.

Bright Power confirmed that the total amount of electricity that shareholders were using in a year was about 330,000 kilowatt hours. “After several rounds of design review and engineering options,” Soble says, “we arrived at a 115 kW system that would be producing about 140,000 kilowatt hours per year, or about 42 percent of the residential load.”

If the upside of pivots is opportunity, the downside is that they cause delays. In the Grinnell’s case, this pivot added another year to the project. “We were really lucky,” Soble says. “The Grinnell had a green committee to spearhead the project and push it forward. They acted as the communicator and educator, not only with the board but also with the shareholders. They had to go through a whole process of educating shareholders.” The technology was different, the cost for the larger system was greater, the incentives were new, and there were tax credits available to shareholders. All of this needed to be understood, explained, and then agreed upon.

The average cost for a 100-kilowatt project (which is about the size of the Grinnell’s) in New York City ranges from $270,000 to $450,000. There are several factors that determine the final price tag. The part of the design that can affect project cost is the electrical conduit that will run from the roof to the electrical room in the basement, says James Hannah, vice president for client energy services at Bright Power. Some buildings can run this conduit on the outside, while others will need to run it through internal stairwells, which requires drilling through each floor.

Another factor in determining price is the type of racking used to hold the solar panels. Some systems penetrate the roof membrane while others do not. Also, depending on a building’s zoning, there may be fire-code restrictions that will determine the type of racking. Finally, Hannah says, cost is affected by the type of components actually used.

The Grinnell got tax incentives that were passed through to individual shareholders to use on their own tax bills. Between federal and state tax credits and a special “historic property” credit (because the building is located in a landmark district), the credits covered about 65 percent of the project’s cost. What’s unique about community solar is that these tax credits can actually be used by individual apartment owners on their personal tax returns. Ordinarily, co-ops don’t pay corporate taxes and can’t take advantage of these types of tax credits.

Because the Grinnell is an HDFC co-op and doesn’t pay property taxes, it couldn’t use a property tax credit. If it could have, Hannah adds, that would have provided another 20-percent tax credit. “If this was a market-rate co-op,” he says, “you could have gotten as much as 85 percent in the form of tax credits, which is pretty phenomenal.”

After digesting all this information, the Grinnell board decided to move forward with the newly designed community solar project at the end of 2017. It usually takes six to ten months to complete the work, Soble says, and then Con Edison has to turn it on. That happy event occurred in April 2019, at a ribbon-cutting ceremony.

Is community solar for everyone? “Our general rule of thumb is, if you can do at least 30 kilowatts, it’s worth taking a look at,” Hannah says. “That’s roughly 2,500 square feet of roof space. The way the rule is set up for community solar, each shareholder using the credits needs to take at least 1,000 kilowatt hours. So if you’re installing a 30-kilowatt system and you want all the shareholders to participate, you would need no more than 30 units in your building.” For such buildings, community solar may be the way to go. “The economics are better,” Hannah says. “You get more engagement from shareholders, and you’re really taking advantage of a policy that was designed to allow co-ops, in particular, to deploy solar in a way that just generates a lot more value – on shareholders’ electricity bills and generating appraisal points. I think if there’s a co-op out there that’s doing a common-area system, they should really take a close look at whether community solar is the better way to go.”