The Kresge Foundation, Clean Energy Group (CEG) and New York City Energy Efficiency Corporation (NYCEEC) announced a $3.3 million commitment — through a Kresge loan guarantee and connected grants — to accelerate the market development of solar + storage technologies in historically underserved communities.
The Foundation’s investment represents the first time a U.S. foundation has committed to use both its grant-making and endowment resources in a comprehensive strategy to bring these new clean energy technologies to affordable housing and critical community facilities in low- and moderate-income neighborhoods. NYCEEC is the lender selected to participate in the loan guarantee initiative. CEG will manage the effort.
Low-wealth communities rarely have access to cutting-edge technologies that reduce the impacts of climate-related emergencies, even though statistically they are the most vulnerable. Solar + storage technologies ensure these populations don’t lose power during blackouts, keeping homes cooled, oxygen tanks running and food accessible. This investment will allow more urban communities to access funding for these projects.
The multiyear financing program consists of three innovative elements:
A $3 million loan guarantee to reduce credit risk for solar + storage projects in low- and moderate-income areas. Structured as a 50% payment guarantee to help ensure borrowers’ loan payments remain current, this innovative credit enhancement is designed to substantially reduce the risk of a payment default to lenders and their investors who provided capital for solar+storage loans. The guarantee is booked as a reserve on the foundation’s endowment until such time as a demand for payment is made under a specific guaranteed loan transaction, which then takes the form of a program-related investment.
$170,000 in a capacity-building grant to accelerate the participating lender’s ability to finance solar + storage projects, build project pipelines and actively engage in information sharing.
$120,000 in technical-assistance grants to enable eligible project owners and developers to assess the technical and financial feasibility of new solar + storage projects.
This financing program is designed to make the market development of new solar+storage technologies more equitable.
Solar+storage can provide clean, affordable, and resilient power — benefits that are most important to underserved populations, but which, due to up-front cost barriers, are largely out of reach.
“This innovative program is a comprehensive finance model that combines a first-of-its-kind loan guarantee with grants that build capacity and assess project feasibility ― a new strategy that will build demand and speed deployment of resilient energy in those communities that need it most,” said Robert Sanders, CEG’s senior finance director, who helped develop the program with Kresge.
“Other foundations can join this effort, as the program is structured to scale up with other investors,” added Lewis Milford, president of CEG.
“The Kresge Foundation is persuaded that program-related investments — including below-market loans and loan guarantees — can prove out the viability of delivering clean, resilient power to historically underserved communities,” said Lois DeBacker, managing director of Kresge’s Environment Program. “That’s why we are pleased to announce this pairing of a loan guarantee with traditional grants to speed the adoption of solar + storage technologies in communities with the greatest need.”
“We’re honored to be the first lender in this pioneering program to bring solar+storage to underserved communities. Financial innovation like this loan guarantee is a cornerstone of fulfilling our vision for energy efficiency and clean energy financing to achieve scale and be accessible to all. Philanthropic partners like Kresge help us to focus on high-impact areas like LMI communities, solar+storage, net zero energy buildings and scalable financial products to ensure a just transition to a clean economy,” said Jessica Luk, director of development, NYCEEC.