A Brighter Future for Harnessing Solar Power in Cities
by Anirudh Sharma, Clean Energy Finance Manager, Financing Sustainable Cities Initiative
Solar photovoltaics (PV) have long been at the forefront of the renewable energy revolution; the International Energy Agency (IEA) reports that new global solar capacity grew by 50 percent in 2016, equivalent to 31,000 solar panels added every hour.
Solar PV installations can help address the increasing challenges of resilience, energy access and energy reliability in cities, and as a result, municipal governments are introducing policy initiatives to make solar a commercially viable proposition for residents and businesses. Cities are deploying solar PV on their municipal buildings, providing incentives to homeowners for rooftop solar systems, and developing offsite installations that bring renewable energy to their electric grid.
However, challenges to widespread deployment persist and must be addressed before the majority of cities can take advantage of the benefits of solar power. The key challenge for each city is to find a suitable business model that complies with its regulatory framework, has a role for utilities, creates a value stack for all stakeholders, and is financially sustainable.
CLEAN ENERGY FINANCE ACADEMY 2018
As part of the Financing Sustainable Cities Initiative (FSCI), a partnership between WRI Ross Center for Sustainable Cities and C40, funded by the Citi Foundation, C40 hosted its first Clean Energy Finance Academy from March 7-9, 2018 in Vancouver. The Academy brought together nine city representatives and technical experts to discuss innovative financial mechanisms and business models for implementing solar PV projects. The Academy helped launch a series of new peer-to-peer and technical expert collaborations to increase solar PV adoption in C40 Cities.
City delegates from Johannesburg creating their Finance Action Plan.
The Academy hosted senior clean energy, sustainability, climate change and finance officials from Athens, Buenos Aires, Chennai, Johannesburg, Mexico City, Quezon City, Rio de Janeiro, Sydney and Vancouver. The event facilitated discussions between cities, providing a forum to learn from each other’s experiences and solicit advice from technical experts on alternative funding sources, innovative financing mechanisms and business models for solar PV projects.
During the course of the three-day Academy, city officials worked together to develop detailed “Finance Action Plans,” outlining concrete next steps to create a suitable financing environment for solar PV in their cities.
There were a few common steps cities identified as part of the mission to grow their solar capacity:
- Conducting feasibility studies for financial instruments & project structures that can be used.
- Working with their local utilities to set incentives & rates conducive to solar PV deployment.
- Implementing pilot projects on municipally owned buildings, especially schools.
“The Clean Energy Finance Academy opened our eyes to new possibilities to reach our solar PV goals, including approaches that we had not previously thought of. We came to the event primarily to learn more about business models for using ESCOs, but now we realize that there are other business models that could be suitable for us.”
– Pedro Rolim, Social and Sustainable Planning Manager, Rio de Janeiro
UNDERSTANDING VANCOUVER’S CLEAN ENERGY INITIATIVES
On the second day of the Academy, delegates visited the Creekside Community Recreation Centre’s 15 kW solar PV array. The rooftop solar panels mounted on boat sheds were installed in June 2017 through a joint effort between the City of Vancouver, the North Growth Foundation and Clean Energy Canada. It features 60 solar PV modules on six boat sheds and in its 30-year lifetime, the system will feed about 459,000 kWh of clean electricity back into the grid and offset a portion of the energy used at the Creekside Community Recreation Centre.
City delegates in discussion (left) during the visit to the Creekside Community Recreation Centre’s solar PV installations (right).
The delegates spoke to the Facilities Manager and had the opportunity to understand the procurement process, financing mechanism, technical specifications and challenges faced during the installation of the PV system. In addition, the delegates were able to learn about how clean energy and energy efficiency work in tandem to create a highly sustainable municipal building, a common goal for all cities represented at the Academy.
DETERMINING EFFICIENT FINANCING STRATEGIES & VIABLE BUSINESS MODELS
Key solar financing and funding insights emerged as a result of the 2018 Clean Energy Finance Academy:
- Breaking down the cost structure for solar PV and developing strategies to reduce the high installed costs that many cities face was a key challenge. Some cities will struggle with high hardware costs of solar PV, while others grapple with the soft costs (all costs other than hardware) resulting from complex permitting issues, lack of standardization of projects and lengthy approval times.
- Variations in city frameworks bring different challenges for each city in solar PV implementation. The cities discussed their utility ownership structures, third-party financing regulations and procurement processes, and explored how this existing infrastructure impacts their ability to implement and eventually scale up solar PV projects.
- Associated technologies such as energy storage for which costs are also rapidly declining were discussed. Energy storage will allow more solar PV generation sources to become a part of the energy system by resolving the issue of intermittent power when the natural conditions for solar are not ideal. Energy storage could be used to alleviate grid stabilization concerns. There is also potential for further offsetting utility bills in low- and moderate-income communities.
Following the Academy, the FSCI will be commencing its Technical Assistance program for clean energy, which will help cities develop innovative financing mechanisms and business models for implementing their solar PV projects. Under this program, the FSCI will provide a combination of funding, project management, and procurement services to cities with compelling and highly impactful projects. In addition, during the following months, the FSCI will be hosting webinars and conference calls to continue discussions of the challenges and barriers cities face in expanding their solar PV projects.
The Financing Sustainable Cities Initiative (FSCI), funded by the Citi Foundation, is a partnership between WRI Ross Center for Sustainable Cities and C40 Cities Climate Leadership Group that helps cities accelerate and scale-up investments in sustainable urban solutions through the development of innovative business models.