New Hampshire, USA — Municipal renewable energy initiatives are hardly a new concept. In many cases the main goal is a heightened environmental sensitivity, and often installing more renewable energy is just one component of broader policies that might also include eco-friendly transportation or more efficient waste management or a district heating system. In other examples, renewable energy has been identified as an engine for economic rejuvenation.
Urban solar initiatives meshed with economic development goals are taking off in numerous global locations. Last year the World Bank launched an “Eco2 Cities” Initiative to spur urban sustainability. Under the European Commission’s POLIS research program, six European cities have developed guidelines for tapping urban solar potential on buildings. In Sweden, Stockholm’s Hammarby Sjöstad district has implemented an integrated orchestra of renewable energy, energy efficiency, water and waste management and recycling for both electricity and district heating, and the city of Malmö is marching toward a broader goal of 100 percent renewable energy by 2020, building out a “climate-smart” Hyllie city district and embracing solar energy in other locations. Dozens of Spanish municipalities from Barcelona to Madrid have passed municipal solar ordinances in recent years, largely for solar thermal/solar hot water. In Germany, the München Solar Initiative aims to help building owners, businesses and tenants, identify the possibilities of rooftop solar PV, from financing to installation.
What follows is the story of one large metropolitan area’s realization of the power that renewable energy development holds for urban renewal efforts.
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Baltimore’s Plan to Make Money When the Sun Shines
Five years ago, on a plane to San Diego, Franklin Lee was talking with his elderly seat neighbor about the high prices of energy and gas. The smartest thing she ever did, she asserted, was to move 20 years ago from Minneapolis to the warmer climate of Albuquerque, New Mexico, and she was especially proud of her home with its solar power system, which had proven to be an excellent long-term investment. Glancing down at the Southwestern U.S. far below, Lee noticed all the vast empty land with no civilization around and nothing but sunshine above.
Working in the later stages of the Carter administration, this civil rights lawyer had been drawn to the drumbeat of solar energy as the “pathway to energy independence for America. He came to believe that the key to broader adoption of solar energy is financing: how to prevent residential rooftop solar systems from becoming a prohibitively luxurious add-on for most residents? Later he participated in the DOE’s SunShot initiative to develop innovative financing for solar power to make it more affordable for average residents, and he watched organizations around his native Baltimore begin to embrace solar energy, from the Maryland Science Center to longtime local business anchor McCormick Spice Company. His thinking expanded to consider the potential of a large-scale urban solar initiative: residents and businesses could spend much less on electricity, keeping that money within the city limits to support the local economy. Solarizing even half the city’s 600,000-plus residents would generate “a significant income stream,” he realized.
In 2009 Lee joined the greater Baltimore Leadership Program, an annual program in which a few dozen community leaders collectively examine major social and economic problems confronting the city (homelessness, public safety, education, facilities, etc.) and craft visions for addressing those problems. Recalling that inspirational flight over the southwest U.S., Lee considered all the city’s unused land — vacant plots, abandoned manufacturing plants, brownfield sites — and realized what must be done. “Some people [in the leadership program] had visions for expanding a nonprofit, or eliminating homelessness,” he said. “Mine was to remake Baltimore into the city that makes money when the sun shines.”
Economic Challenge Leads to Solar Opportunity
Facing a deepening fiscal challenge, Mayor Stephanie Rawlings-Blake and her staff developed an idea to reverse the city’s slumping economy: attract thousands of families to the city over the next decade, address the issue of urban blight and economic development, identify high-growth markets, and find new projects and procurement processes that especially reflect the city’s demographic profile, which is 65 percent African-American and minorities.
Thus the Mayor’s economic challenges and Franklin Lee’s solar vision are united: solar energy provides a fresh and sustainable economic boost for residents and businesses for whom it matters by offering energy savings and encouraging reinvestment in those communities.
Creating a local solar industry made up of residents from the most economically disadvantaged areas of the community including minority/women-owned businesses “create[s] opportunities for populations that have heretofore been locked out of the mainstream marketplace,” Lee said. “It’s going to generate good-paying jobs, for taxpaying residents, create new streams of revenue for the city, and at the same time improve the quality of life [and] make urban living more affordable.”
As part of the regulatory approval for its recent acquisition of local utility Baltimore Gas & Electric (BG&E), Exelon pledged tens of millions of dollars to the state to assist in energy efficiency efforts. Part of that money will be used by the city of Baltimore to retrofit thousands of homes, Lee said, using trained residents from those communities to do everything from better insulation to new thermostats to energy-efficient windows and doors. That could save 30 percent on residents’ energy bills, maybe from $200/month down to $130/month on average; “for low-income residents that’s a huge, significant savings,” he said.
City officials have calculated that city-controlled property and facilities — schools, transportation buildings, parking garages, unused and brownfield lands, planned community housing — could support up to 50 MW of solar energy installations. Already they have identified an initial ~15 MW of solar energy on municipal-owned property, including a 5-MW expansion at the Back River water treatment plant, which is already home to a smaller solar array and 2 MW of combined heat/power.
Solar energy development also represents a potential new revenue stream for the city. With Maryland’s net metering policy BG&E buys back surplus solar energy at market rates, which are currently around US $0.09 per kWh. New community housing with solar could attract residents; the solar could even be hooked up before the housing is completed to get a head start on revenues. “There’s monetary value in all this surface area,” Lee said. “We waste ever single day we don’t have a solar panel collecting sunlight.”
On the flip side, once installed, solar could also help the city reduce costs. Many municipal facilities need backup power generation, and solar can contribute some portion of that. It won’t displace other power sources, but it can help lower demand charges, Atwood explained. The PJM grid uses the five heaviest load days to set its “capacity tag” fee [aka demand charge] every three years. Over the past six years, Baltimore’s demand charge has increased tenfold to $4 million. By adding solar, which peaks during those heaviest load days (summertime afternoons), the city could significantly lower that demand charge.
Another unique aspect of Baltimore’s plans is how the city wants to pay for it. Other urban solar initiatives across the U.S. “have relied upon PPA models, leases of rooftop space, or PACE financing programs,” Lee asserted, but Baltimore is exploring a different path: municipal revenue bonds in conjunction with public/private partnership models. Leveraging municipal bonds could broadly finance solar PV installations, using debt obligations to repay the loans over 20-30 years at very low interest rates. In the case of new community housing, developers would gradually transfer ownership to the residents, who would take on debt obligations, as well as a slice of the surplus that’s sold back to the utility.
This fall the city of Baltimore and its partners are mapping out goals, methodologies, and metrics, and identifying potential participants. They also need to determine how to calculate whether its initiatives are being successful. Possible criteria include: lower monthly electricity costs, tax revenues for new residents, how quickly the new solar-integrated community housing sells compared with similar properties, how much energy is consumed and how much surplus power generated. “I think we can achieve all of these objectives,” Lee said. “And if we can, there’s no reason why you wouldn’t want to replicate this” in other metropolitan areas.
And that’s another impetus behind the initiative: make Baltimore a positive example, a leader for other economically challenged cities across the nation, inspiring other urban economic redevelopment efforts. And it just might put a smile on the face of a certain old lady from Albuquerque.
Lead image: City with solar via Shutterstock