Proposed Business Case: Public, Low-Income Model

Housing Authority of Cook County

This parcel of land owned by the Housing Authority of Cook County (HACC) has 3.6 acres of useable land in a predominately low-income section of south suburban Chicago Heights. Of the more than 70,000 households within five miles of this site, 54 percent are at or below 80 percent of Area Median Income (AMI). This offers an opportunity to take advantage of higher incentives for a developer-owned, 100 percent low-income community solar project.

The unique nature of this site was modelled to show that a market-rate community solar project would actually provide less financial value to a developer than a low-income model, because of higher Solar Renewable Energy Credit (SREC) values and subscriber subsidies for the low-income model.  

Community Solar

Community solar is a solar photovoltaic (PV) installation that provides energy, financial benefits, or both, to multiple participants. Participants, also called subscribers, can buy or lease a share of the community solar installation and receive credits on their electricity bill for the power generated by that share. Subscribers can be households, businesses or anyone with an electric bill.

System Design

For this model, a fixed-rack system was compared to single-axis tracking. Slightly higher costs for the fixed-rack system were more than recovered by higher energy output. Site preparation using gravel and water retention was compared to using natural habitat with native species and pollinators. The costs for using environmentally sound practices proved to be less expensive, allowing for additional savings, better water management and good environmental practices.

Business Model

This business model assumes a developer-owned system. Both market rate and low-income subscriber models were analyzed. Both performed well, but the low-income model, with a higher SREC and Adder value, provided a greater return - even when assuming a more difficult customer acquisition. The system owner Internal Rate of Return would be 11.0 percent, with residential subscribers saving more than 50 percent on their electricity rate. The host site earnings are projected to be $9,522 the first year.

Solar Developer/System Owner Metrics

25-Year Costs……………………………………..…..    ($1,966,185)

25-Year Revenues…………………………………..    $2,395,532

25-Year Net Benefits………………………………    $429,347

25-Year Net Present Value (NPV)……………    $101,142

Return On Investment (ROI)…………………..    21.8%

Payback Period………………………………………     3.8 years

Internal Rate of Return (IRR).………………..     11.8%

SREC Value (500 kW-1MW Block)…………..    $50.00/MWh

SREC Adder Value-Subscriber Type…….….    $0

SREC Adder Value-100% Low-Income.…...    $4.05/MWh

Host Site Metrics: Leasing Land and Anchor Subscription

25-Year Costs……………………………………..…..    ($251,084)

25-Year Revenues………………………………..…    $586,238

25-Year Net Benefits……………………………...    $335,153

Upfront Investment/Financing………………     $0

Net Year 1 Savings/Revenue………………….    $9,522

Average Annual Earnings (25 years)………     $13,406

SREC Value (500 kW-1MW Block)…………..    $50.00/MWh

SREC Adder Value-Subscriber Type…….….    $0

SREC Adder Value-100% Low-Income.…...    $4.05/MWh

*All SREC and SREC Adder values are assumptions. See Overview for more details

Documents

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