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Linking S with E in the renewable energy sector

Response to the moment or a true shift?

Groundswell Monastery of Our Lady of Mt. Carmel in Washington, D.C.

Groundswell was part of the installation of a 151 kilowatt solar project at the Monastery of Our Lady of Mt. Carmel in Washington, D.C., completed in March. The financing partner was Sunlight General Capital and the construction company was Ipsun Solar.

Microsoft and Chanel recently inked pioneering agreements with renewable energy companies that prioritize opportunities and investments in low-income communities and communities of color.  

Microsoft’s plan includes a pledge to develop 500 megawatts of solar projects in disadvantaged communities and grant an additional $50 million to community-led job training and other environmental justice programs, in partnership with Sol Systems. Meanwhile, Chanel has committed $35 million towards solar energy projects for low-income multifamily households in California, in partnership with Sunrun. The investment will bring solar energy to 30,000 residents, saving families $600 on average on their annual energy bills. Local job training in solar panel installation and maintenance is also part of the deal.

Representatives from both companies were on hand at VERGE 20 to talk about their investments. While the two organizations may be at different places on their clean energy journeys — with Chanel just out of the starting gate and Microsoft at the front of the pack — both are on the cutting edge of linking E with S, or the environmental with the social in the parlance of ESG.

"Climate change is as much a social issue as an environmental one. We really need to address both simultaneously," said Susanne LeBlanc, head of special projects, global sustainability for Chanel, during the panel, "Social Responsibility in Renewable Energy Partnerships."

Such corporate interest in addressing racial equity in renewable energy buying is an emerging trend driving social responsibility in the clean energy sector. The industry has much work to do to address the system racism that pervades it — whether in hiring and workforce development or in providing communities of color better access to clean, affordable energy and mobility options.  

This year, everyone is scrambling to find meaningful and quick solutions within the existing market.

But it’s waking up. "This year, everyone is scrambling to find meaningful and quick solutions within the existing market," said Lily Donge, program director of corporate innovation for communities at Groundswell, a nonprofit community solar developer. 

"It’s heartbreaking, but it’s the historical trend that Black lives have to be sacrificed to really get the conversation going," noted Alex Cureton, California state lead for clean energy and equity at the Natural Resources Defense Council.

The conversation is indeed active, and here are some ways the industry is responding:

1. Collaborating on equity and inclusion in the workforce

Last month, a group of 12 CEOs from leading renewable energy companies and trade associations launched the Renewables Forward diversity and inclusion initiative.

The group aims "to address racial equity issues across an entire industry in a way that allows us to have a greater impact than any one of us individually would be able to have," said Scott Jacobs, CEO of Generate Capital, one of the signatories.

The CEOs pledged to take concrete steps, including assessing and benchmarking their progress to increase diversity across the industry, developing and sharing best practices for diversifying their companies, creating a more diverse pipeline of candidates to work in the clean energy sector and investing in under-resourced and communities of color.

The group is partnering with the Urban Alliance to reach high school students and also plans to work with historically Black colleges and universities, Yuri Horwitz, co-founder and CEO of Sol Systems, told GreenBiz. "We’re really trying to do our best to reach down into the pipeline, to attract young talent, specifically women, minority, Black leaders who can come into our industry and help grow and diversify it," he said.

Donge thinks that can best be accomplished if the renewable energy sector partners with other industries, such as technology. "I don’t think we should do this in isolation," she said.

But the No. 1 issue will be ensuring that the industry continues to follow through on what they say they want to do, 24 to 36 months out, added Horwitz. "In our world, everyone has a very short attention span," he noted.

2. Corporate buyers and institutional investors are key drivers for change

Since announcing the deal with Microsoft in August, Horwitz said he’s seen a steady flow of interest from companies wanting to do something similar.

"There’s an awakening within the corporate mindset," he noted. Companies are wanting to do something to link racial equity to their clean energy purchases, but they don’t know how. "We in the industry have a responsibility to help them do that. We’re sitting on the engine of economic change and healing for our country." 

Groundswell is seeing similar strong interest in environmental-justice-focused investments from corporate buyers, since launching a partnership with the Renewable Energy Buyers Alliance (REBA) in late September, according to Donge. That partnership helps companies connect with disadvantaged communities on the ground, as well as craft request for proposal (RFP) language that includes community benefit and/or racial equity components.

Institutional investors are also driving the clean energy sector to craft deals with community benefits. "Many of the institutional investors we’re speaking to are trying to figure out how to invest in infrastructure with positive long-term cash flows but also correlating that investment with community investment alongside of it," Horwitz said.

Jacobs said he’s seen a similar surge of interest in ESG, from pension funds and sovereign wealth funds. "It feels different this year." 

A 55-kilowatt solar project was energized at St. Luke Baptist Church in Washington, D.C.

In February 2020, a 55-kilowatt solar project was energized at St. Luke Baptist Church in Washington, D.C. Photo courtesy of Groundswell

3. Emerging efforts to help clean energy buyers craft deals with a social equity component

The Groundswell-REBA partnership is but one example of efforts emerging to help renewable energy buyers link community investment with their clean energy purchases.

Groundswell also joined with a group of environmental NGOs and Salesforce to publish "More than a Megawatt: Embedding Social & Environmental Impact in the Renewable Energy Procurement Process," a how-to guide for companies that links sustainable development goals to clean energy purchasing.

Sol Systems is creating a fund for investors that combines community impact with infrastructure. It has many elements of the Microsoft initiative embedded in it, Horwitz said.

And Dana Clare Redden, founder of Solar Stewards, a third-party, distributed energy developer, has created what she calls a social renewable energy credit (REC). Social RECs embed the costs of adding community benefits to a renewable energy project, such as job training, strengthening a local schools’ STEM curriculum or simply developing the project in a state that may not have the policy incentives in place to make the deal pencil out.

Like traditional RECs, Social RECS add to project revenue, and they work with all existing registries such as M-RETS and governing bodies including Green-e and the International REC Standard, Redden told VERGE 20 participants. They’re a "tool for voluntary markets that don’t have that state robust policy to help them, be it through a rebate or feed-in tariff scheme."

Redden calculates the costs of the community benefits for each project to determine the value of the social REC. "That extra revenue from a renewable energy credits … really helps to get the project done," she said.

But such efforts to incorporate social value into renewable energy purchase agreements are still fledgling. Black scholars at the Urban Energy Justice Lab and other institutions have been studying how to measure racial equity for decades, but their research is just starting to inform the market.

As Brian Janous, general manager of energy and sustainability at Microsoft, told VERGE 20 participants, clean energy is traditionally purchased based on maximizing kilowatt-hours per dollar or by the amount of carbon reduced, not by the amount of social benefit. "My dream is I would have a model, that data where I could turn the dial to say the way I want to deploy my capital is to measure the human impact that goes beyond 'Did I just get another megawatt of renewable energy on the grid?'"

4. Black-led energy enterprises that lead with impact

Earlier this fall more than a dozen Black solar entrepreneurs came together to forge Black Owners in Solar Services (BOSS) with a mission to "combine and leverage our collective power to lead the clean energy sector on our terms for all communities." One of the group’s founders is Solar Stewards’ Redden.

Redden grew up in a Rust Belt town with a legacy of fossil fuel pollution and redlining policies that left Black residents with a gaping wealth gap and energy poverty. After working as a solar developer for 10 years, she founded Solar Stewards to help communities of color better access clean energy. Her company connects renewable energy buyers with impact capital to develop rooftop solar on universities, places of worship, affordable housing, senior housing and nonprofits.

Essentially, Redden has figured out a way to bundle individual rooftop solar projects, which are typically too small to interest buyers, into a portfolio that can be marketed.

My dream is I would have a model, that data where I could turn the dial to say the way I want to deploy my capital is to measure the human impact that goes beyond 'Did I just get another megawatt of renewable energy on the grid?'

SaLisa Berrien, CEO of COI Energy, a digital platform that brings together utilities and businesses to detect and eliminate energy waste in buildings, similarly founded her business with impact in mind.

"I was the recipient of energy poverty growing up. I knew what that felt like, not feeling like I could live with dignity and confidence," Berrien told VERGE 20 participants. "When I built this company, I was on a mission to make sure that people didn’t have to go through what I did."

Every company on the COI platform contributes 1 percent of the revenue it generates from energy savings to underserved communities, so that they can have access to clean energy solutions.  

Redden and Berrien are part of a growing cadre of Black leaders on the forefront of clean energy, many of whom started their businesses with an eye toward helping the communities that they came from.

"Those type of efforts are needed. When we start to see, ‘Oh, I can own my own company, I can make money and I can help people,’ it’s a reimagining of what we believe to be true and what we believe to be possible," said Cureton.

As to whether these trends will take off, Redden said, "I love the fact that it’s hot right now, but I don’t want to call it a trend because that would suggest that it’s momentary. I want it to be a shift in consciousness."

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