Financing a Solar Energy System: How One Board Got Paid to Install One

In order for the solar project to be cost-effective, the building would also need to convert its metering system from individual meters to a master meter with submeters, so that the electricity generated by the solar system could be fed through a single meter. With a master meter, the building would also benefit from a lower commercial electricity rate from Con Edison. As well, Sun Garden could reduce billing costs substantially by handling its own billing.

The solar and metering project cost $250,000, financed with a five percent loan from Amalgamated Bank and by raising maintenance fees by $20 a month for the next five years while they the building pays it off. Bret Heilig, founder and chief executive officer of Fiveboro Solar, the company chosen for the project, expects the payback period to be just two to three years.

When Money DOES Fall from Trees

Partly that's because Sun Garden Homes will ultimately pay far less than $250,000 — because the project qualified for a $75,000 grant from the New York State Energy Research and Development Authority (NYSERDA). It will also receive a city property tax abatement of about 20 percent of the cost, a 30 percent federal tax credit, and a 25 percent state tax credit, all applied to the costs remaining after the NYSERDA grant.

"They really end up paying for very little of the overall cost for the system," says Heilig. Co-op board president McGowan Southworth anticipates that in five years, the building will have $100,000 in its reserves to replace the building's aging, energy-hogging boiler — a separate issue from the solar conversion but one of the impetuses for saving money.

Banks Love Low-Energy Buildings

Sun Garden Homes had many attributes that made it a good candidate for Amalgamated Bank. Its maintenance fees were low compared to comparable buildings, and the community was not heavily leveraged. Energy-efficiency improvements provide another benefit as well: they make a building more attractive to potential buyers.

"A building that consumes less energy is more valuable than a building that consumes a lot of energy," says Gardner Semet, executive vice president and director of commercial real estate lending at Amalgamated Bank, who helped Sun Garden secure the loan.

Sun Garden Homes has other energy savings plans in the works. The building plans to:

• insulate the roof and paint it white
• insulate steam and hot water pipes;
• replace light bulbs with LED lights;
• replace old toilets with low-flow models, and
• replace old radiator valves in individual apartments.

Several units are particularly drafty and cold, causing the boiler to work harder. The result is a common one in New York City apartments: Most are sweltering in the winter while a lonely few are icy cold. The co-op plans to directly target the cold units by adding insulation and replacing windows with triple-pane models.

Sun Garden Homes plans to implement many of its energy savings plans itself. Among the building's residents are electricians, contractors and carpenters. Twice a year, the building holds a work party. Shareholders spend the day toiling in the building — changing light bulbs, replacing toilets, and updating fixtures.

Ultimately, Southworth would like to see Sun Garden Homes improve its energy efficiency enough so that the building relies very little on steam heat and can buy a much smaller boiler than it needs to have now, or maybe find a way not to even need a boiler at all.

Concludes Heilig: "He really wants this to become a green building. And he's willing to fight whoever he needs to fight to make that happen." 

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Photo courtesy Bob Rinklin; click to enlarge