The risks and costs of climate change are not equally shared: research shows that low-income people and communities of color disproportionately live in places with poor environmental quality and the resulting adverse health effects.
In most cities, the high cost of housing and historic segregation has led to concentrations of low-income communities around industrial sites, freeways and other polluters that are contaminating the air and compromising the atmosphere through carbon emissions and other toxins. The coronavirus pandemic has also highlighted the higher risk these communities face as exposure to high levels of pollution is often associated higher levels of asthma, lung disease and other ailments that increase the likelihood of severe illness.
Reinvestment Fund has long viewed environmentally responsible investment as core to our mission. By reducing energy waste and promoting the use of renewable energy, we are committed to helping reduce the adverse health and environmental effects that result from conventional, carbon-intensive energy sources. And, by producing savings year after year, energy efficiency improvements are beneficial and profitable investments, and have been shown to increase the market value of a property.
A key component of our clean energy commitment is investing in energy service companies and project developers who serve mid-sized projects that have significantly less access to traditional banking capital. There are two in particular that demonstrate the value of Reinvestment Fund’s services as well as the range of asset categories in which Reinvestment Fund has developed financial structuring expertise.
In 2019, these investments included permanent financing to SolarSense to construct and own/operate a roof-top solar system on a ShopRite in Westville, New Jersey. The switch to solar will create long term certainty in energy pricing for the store and will likely save the store operational expenditures in out years as the price of power rises faster than the escalation of payments under its power purchase agreement.
SolarSense is a developer, owner/operator and manager of middle-market commercial and industrial scale distributed energy assets. Over the past 10 years, SolarSense has successfully completed 78 projects across 70 sites in the United States. SolarSense has successfully completed solar photovoltaic, battery storage, and natural gas fuel cells with municipalities, counties, corporates, hospitals, education and higher education facilities, nonprofits and small businesses. Reinvestment Fund previously worked with SolarSense to finance a number of projects, including a solar array at the Navy Yard in Philadelphia.
As is the case in the solar space, Reinvestment Fund has observed a similar need for capital to finance middle market energy efficiency transactions that are ignored by the larger energy efficiency firms due to scale, and by major lenders due to complexity.
Reinvestment Fund also provided financing to Renew Energy Partners to support lighting and controls projects at three host facilities: Houghton College, a liberal arts college founded in 1883 and located in western New York; Signature Breads, an independent, employee-owned baker and distributor that has been operational for 30 years and located in Massachusetts; and United Health Services Hospitals, a regional non-profit healthcare system serving greater Binghamton in New York State, and the largest health care provider in the southern tier of New York State. Facility-wide upgrades for United Health Services Hospitals include new LED lighting, lighting controls, and building automation systems.
The firm partners with contractors, installers and design-build firms to audit, design, procure, construct and commission retrofits and uses its funds as project equity so that the customer pays no up-front costs. Once the project is completed, and the customer accepts the installation, the project is operational, and the host pays for the installation through payments that are fixed at contract signing over 5 to 20 Year terms – the time horizon over which Renew returns capital to its investors. Renew completed its first project in 2015 and since then has grown its portfolio to thirteen retrofits located across Connecticut, Massachusetts, New York and Pennsylvania.
By working with each of these firms, Reinvestment Fund has supported their growth, providing valuable capital that would otherwise be unavailable to these projects. And crucially, our financing has scaled the development of green infrastructure to reduce carbon emissions on the environment.