New York's Cooperative and Condominium Community

Habitat Magazine Business of Management 2021

HABITAT

ARCHIVE ARTICLE

Steps to Solar Success

In 2012, the board at McGowan Southworth’s 70-unit co-op in Sunset Park, Brooklyn, put a 50-kilowatt array of solar panels on the roof of the building. “We put all of our direct meters onto a master meter,” says Southworth, “and then put our own meters in. That way everybody pays for what they use. From the building standpoint, we paid off our loan in five years. There’s no cost left over. It’s just cash-positive.”

Mary Fisher, longtime president at the massive Georgetown Mews co-op in Kew Gardens Hills, Queens, helped the complex embark on its solar journey more than five years ago. After numerous setbacks, the array is now up and running at the sprawling 60-acre, 32-building, 930-unit complex. In its first year, the system’s total credits from Con Edison totaled an eye-popping $385,000.

Finally, there is Mark Hines and the board at the 431-unit River Terrace, a Mitchell-Lama co-op perched above the Hudson River in Washington Heights. After chasing its solar dream for almost a decade, this board will soon start reaping the rewards. The annual projected savings of the solar portion of the project are $16,000, and a linked cogeneration system, once completed, will save an additional $90,000. “At some point in 2020,” Hines predicts, “we will start to experience the benefits of these investments.”

Three co-ops with three solar projects. Each had the same goal: reducing energy costs. Each experienced setbacks. Each fought through them. And each learned the same lesson about the process. It’s all about asking the right questions – and finding the right answers.

 

What Do We Need to Know?

The first step these three boards took was to become experts on energy. “Boards have been in the dark too long,” Southworth says. “Understand where your energy comes from, and get educated on taxes. Most people default to the assumption their co-ops can’t take tax credits, but in actuality most can. We could have gotten a rehabilitation tax credit because we're low-income and we're in a historic building, but we didn't know about it at the time.”

Fisher at Georgetown Mews offers similar advice: “Make sure the payoff – when Con Ed will reimburse you – is a decent amount. Do due diligence on your installer. If you can buy [the solar panels] outright, it's better to buy them than to lease them. I think that's more lucrative.”

Get ready to learn some new words. “It's crazy with the jargon,” says Hines, “many layers of stuff that would essentially be a barrier to the average board or anybody wanting to know this. That, I think, is the real task here: How to make it more digestible.” To that end, Hines is working to take the lessons River Terrace has learned over the last six years and explain them in plain English to help educate other boards that are considering their own solar journey.

 

Where Should the Savings Flow?

“We made a resolution at a board meeting to put all [our savings] in a separate account for the reserve fund,” Fisher says. “I was stopped by a shareholder because we just did a 4 percent maintenance increase, and this guy said, ‘But didn't you save with solar?’ What the solar will do is offset other expenses. This is the first time we went for a 4 percent maintenance increase, but by the same token, we will be undertaking a major project in the spring. We're doing asbestos removal.”

At River Terrace, the combined solar and cogeneration system, along with smaller energy-efficiency projects, will reduce energy costs long-term. The savings will keep a lid on maintenance increases while helping finance projects like the lobby redesign that’s also nearing completion.

 

Where Can We Turn for Help?

The Sunset Park project was financed with a combination of grants from the New York State Energy Research and Development Authority (NYSERDA), tax credits, and a loan from Amalgamated Bank.

The Georgetown Mews project cost $3 million, which the board defrayed by getting $2 million in rebates and tax credits. “So the co-op put out $1 million,” Fisher says. “We paid for the panels up front, and we will recoup the million dollars that came out of our expenses in four years. Everything else was subsidized through NYSERDA and tax credits.”

 

Should We Go Solar-Plus?

Combining complementary projects can bring even more savings. About four years ago, the board at River Terrace decided to turn the solar project into a joint program with a cogeneration system, also known as combined heat and power. According to Hines, the decisions to install each system were separate, but the benefits grew when the two systems were combined.

“It's the right decision for our building,” he says, “but it creates interdependencies between the two different projects, which leaves the solar system in a state of not being complete.” While the solar panels and wiring are fully installed, integration with the cogeneration system is still a work in progress.

In Sunset Park, submetering plus solar made sense. “With submetering,” says Southworth, “we're saving about $18 a month per unit, so that's roughly $15,000 annually.” The co-op also buys its energy from Con Ed in bulk, and with savings of one to two cents per kilowatt hour, that adds up to an additional $2,600 saved annually.

“From solar, we're producing between 55 megawatt hours to 60 megawatt hours a year, and we're getting an average of 20 cents on that,” Southworth adds, which means that the co-op has averaged $11,000 to $13,000 a year in credits to be applied to its energy bill. The board is using the combined $25,000 to $30,000 a year in savings to do more proactive capital improvements that will save money in the long term.

Over time, the benefits begin to snowball. Since the current solar array covers only about half of the building’s available roof space, the board is thinking bigger. “We're considering putting on a new solar array and doing it all over again because the tax credits cover almost 100 percent of the costs,” Southworth says. “We could double down; we could upgrade to the highest efficiency panels and potentially double our impact.”

 

What Are the Likely Setbacks?

Be prepared for delays. Over the last five years, for example, Georgetown Mews has dealt with setbacks involving Department of Building permits, Con Edison requirements, and an abrupt change in contractors. River Terrace has also experienced maddening delays.

“The cogeneration system is essentially the one that has slowed things up the most,” says Hines, “and it's very close to completion. Then we'll just be in an approval stage with Con Ed as to when it goes on, which can be a month, it can be two months, but it's not going to be eight months.”

 

How Long Will the Journey Take?

Proper planning takes time. Instead of rushing things, boards should strive to get them right the first time. “I was on the board for six years – I just finished my term,” says Hines. “This started six years ago, in terms of the dialog around it. When I got on the board, it became an active topic. It probably took a year in order to get the board and the community to want to proceed with it, to then use our resources toward figuring out how to make it happen. And then I would say it took another year of figuring it out. About two to three years ago, we had chosen a contractor, and it was funded, but we hadn't started actually installing panels. Now, our installation is complete.”

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