Minneapolis Health Department Splits the Bill with Green Investors — Episode 121 of Local Energy Rules

Patrick, welcome to Local Energy Rules.

So when these buildings, they get a tax incentive for having naturally occurring affordable housing. And when they agree to hold that building to at least 20% of their building to affordable rates for a period of 10 years, we come in on the end and we provide significant energy efficiency incentives up to 90% of a project cost. We’re leveraging 90%, including the utility rebates. You also have some, some pretty aggressive incentives for multifamily buildings. So we get up to a run of 90% efficiency or 90% incentive match to the building owner to put in energy efficiency projects into their building, with the assumption that those costs get passed on to the tenants that are in that building, because that’s how they, that’s typically how energy costs are passed on in a building is that heating and electric costs are passed on to tenants in a building. And so we try to really get at that split incentive through that program.

We have a number of our buildings that are in our green zones in 2020, you know, places like Do Good Diapers. It’s a diaper washing service in North Minneapolis. North Market is a, a local market up in North Minneapolis that they’ve been really working with Pillsbury United and a number of different partners up there to get that project going. And it’s not only a grocery store, but a, uh, community center where people can come and even their parking lot in the summer has a lots of different community concerts and farmer’s markets and activities for folks. So it’s really a community center and we’ve been working with them to get a solar project going on that building, uh, really excited to see that, that moving forward. Working with a number of nonprofits and especially in those, in those green zones, we have a lot of nonprofit partners that are putting up solar projects. So in total, in, uh, 2020 here, we have 250 applications that have come in and then around 300 total projects. And so that’s a significant increase from 2019. And that’s really what we try to do that, you know, even in a down year where we have an increase in projects and that’s really what we try to do with the program every year is, you know, keep, keep scaling and keep getting more projects and then playing that balance between getting CO2 reductions and then also utilizing that money to address inequities in the system.

So we have additional incentives that go into those in North Minneapolis, South Minneapolis, they get higher priorities. So when we send them out to, we have a third party that reviews all of our applications and when we send them out to that, third-party part of their weighting criteria is if those, if those applications are in the green zones, they get higher priority and then they get a higher percentage match. And so going back, you know, after having those intentional investments and then doing intentional outreach, and those are really the two things that we at is our key to getting more projects in environmental justice communities or in BIPOC communities is having those relationships. And then also having that intentional investment in those communities. And so when we did that, we actually found that the projects were twice as likely to happen in those communities versus the rest of the city. And so we got a reversal on, on how the projects came into us.

MIDWAY PITCH

And then with therms, those funds that we use, and I believe I mentioned this, but those funds that we use are predominantly focused in BIPOC communities. Those are the highest priorities. That’s where we have the highest matches. And we call those areas green zones here in Minneapolis. Those are environmental justice communities. In 2021, where we’re looking at, as you’re talking about moving this program forward, we’ve always got to be conscious of the situation that we’re moving into. And so we’re going to be dedicating our 2021 funds on rebuilding and recovery efforts from the pandemic and the unrest due to the killing of George Floyd. A significant number of buildings that were damaged in that process. And then also that the unrest around black healing came from a lot of inequity issues here in, in Minneapolis. And so how do we use, as this is a small program, but how do we, how do we start focusing that money intentionally in those communities? And so, you know, in this time as we’re, re-investing these funds, as we’re redirecting these climate action funds, how do we, how do we use that money to reduce the energy burdens and how do we use that money to help build wealth? You know, as we talk about the different solar projects and energy projects, how do we ensure that the workers who are part of those projects and the BIPOC-owned businesses that do solar installations and do energy efficiency projects can access these funds to benefit their, their communities. And so that’s the intention in 2021. And from those projects that I mentioned, those, so those 2019 projects that I mentioned, those will create about $20 million in lifetime energy savings for homeowners, renters, and businesses. So we’re leveraging lifetime savings and that, you know, makes those, not only saves those communities money, but also makes them more resilient to some of the economic changes when events like 2020 happen. And so those projects that I’m mentioning, those 173 projects that happened in 2019 are those are only solar direct investments in solar installations, energy efficiency projects from projects like combined with smart controls. And that’s utilizing those franchise fees to leverage those projects here in Minneapolis. But we also have other projects going on. We work in partnership with our other city departments, like the sustainability office and Center for Energy and Environment, who’s a local service provider. So they have home energy squad visits, low interest loans. We’re doing intentional evaluations of our low performing energy benchmark buildings, is our large commercial and our large residential buildings here in Minneapolis. And those buildings make up about 50% of our city’s commercial carbon and residential footprint. So those are huge carbon potential savings in, in those buildings. We have gap financing programs, we’re looking at innovative approaches and low-income passive housing.

And so I say all this to say, you, you asked about, you know, what’s the ability of this program to scale up. So if you add all those programs together, we have around 5,500 tons of CO2 emission reductions annually. And then with those other programs, I’d say you could conservatively say we have another thousand tons in reductions that we get from those other programs. So that’s an additional 5,000 to 6,000 tons of CO2 that you’re getting annually. And if we look at these at this program and we’ve looked at ways that, you know, how is this, how is this money and how are these programs leveraging change in behavior? And unfortunately for, and you can decide to keep this or not, but unfortunately we’ve done some, uh, some comparisons with, you know, our local well neighbor here who is in the same market, working with a lot of the same utility programs. And so looking at when we started these programs and specifically looking at solar, we’ve seen a 290% increase in the difference between ourselves and St. Paul from the time that we started these intentional investments in solar. So you can really see, and I wish I could share a graph on a podcast. You can see the, as soon as we started these programs, how Minneapolis took off in a different direction in the number of solar installations that are going on in Minneapolis. And really the only difference is these intentional incentives directed towards solar investments. And so that’s one example in one area of how these, how this money is reinvested, and then, you know, that 6,000 tons, that’s all, 6,000 tons CO2 reduction, That’s all working with only a 0.5% increase in the franchise fee that we’re reinvesting. And so let’s hypothetically say that you were to increase that, that franchise fee amount from 0.5% to 3%, when you’re talking about a six fold increase in the reductions that you’re going to get, and let’s say conservatively, that you could get 25,000 tons of CO2 reductions annually.

Well, that’s more than just significant, that’s game-changing for a city the size of Minneapolis. You really start to bend the curve down towards hitting your 80% reduction goals by 2050, if you can maintain that level of reduction. And of course, that’s going to take changing what that program looks like as technology changes as where you can get your CO2 reductions change. But if you’re going by what, we’re, what we’re currently getting in our reductions, in the work that we’re doing here in Minneapolis, a slight increase in this programming and I say slight, because you’d be going from 0.5% to, uh, something like a 3% increase. And this is all hypothetically speaking, but just to give the idea of how this program could be leveraged up. And then we also see that this program is, has so much demand every year that we can grow this program pretty exponentially and, and fairly quickly that we’d be able to we’re we’re out of funding. You know, the, our, our application process starts in, usually in December, we’re going to be working in January this year for the 2021 schedule, but we’re usually out of money by February and March of every year. And we have lots of projects and we have to do intentional outreach to contractors to let folks know that we don’t have any more funding in this program. Another area that will help this, all of this work in energy efficiency and solar, the ability for us to scale up is to be creating the workforce that can do this work. We already have backlogs in our home energy squad visits. We have the amount of contractors and, and evaluators that are available to do this work. So that’s one of the challenges that we’re going to be working with. A lot of our, our local partners here and our utilities to help address what does that, how do we increase that workforce? But when that workforce is there, we’ll be able to move forward with a lot of programs. And there’s a lot of potential out there in, in Minneapolis to get energy reduction, to get CO2 emission reduction.

Another thing I just wanted to add into this is I said, we took a step back every year and take a look at our program and say, you know, like, what are we, what are we missing? What are, what aren’t we doing well? And I think that you, you talked about environmental justice. That’s always an area we have to pay special attention to and be really intentional about. And I think we still have a ways to go to be really good at that. But the other area that I would say is workforce. You know, we went up on the, a lot of the roofs in North Minneapolis and South Minneapolis, and we were really happy that we’re getting projects in those environmental justice communities, but the workers on those routes didn’t represent the community that they were, that they were in, you know, that having these pretty well paying jobs up on those roofs. So that’s one area that we’re working on right now is setting up a solar training program. And we’ve been working with our local electricians union 292 to working with Summit Academy, working with a local entrepreneur here, uh, Jemez Staples in working out of his building and setting up the training. So to ensure that we have people from the community that are, that are taking part in this wealth building, that you look at a job on a roof or solar, a solar project at, you know, if it’s $19 an hour, $25 an hour, that’s twice the area median income of North Minneapolis. And so we can get even a handful of people each year added to those jobs, those well-paying jobs, that’s, that’s going to make a good difference in, in the community. And this will help make this Green Cost Share program more of a wealth building tool as well, not only a climate action tool.