Industry Insights
Housing and the Grid
By Kaitlyn Snyder
4 min read
Moving Towards Symbiosis
Last month, I had the privilege of attending the Innovative Housing Showcase, which was co-hosted by the Department of Housing and Urban Development and the National Association of Home Builders. The three-day event featured everything from hemp-based materials and mass timber to furnished modular duplexes available for the general public to walk through, all on the National Mall.
The showcase was paired with two days of programming on Facilitating Secure, Resilient & Equitable Clean Energy Availability via Microgrids in Local Housing and Communities, as well as an off-site Construction Summit. Recordings from both events are available on HUD’s YouTube channel and I encourage readers to check them out.
What stood out the most to me was the role housing will play in the next generation of our electrical grid. Rapidly rising demand for electricity, born from extreme heat and our societal shift towards electricity in everything from cooktops to cars, is going to place even more strain on an already struggling electrical grid.
Downstream solutions are aimed at energy efficiency and load reduction during the busiest parts of the day. The new and expanded resources from the Inflation Reduction Act make rebates and credits, like the Investment Tax Credit (ITC) for solar and the 45L credit for new energy-efficient homes, more attractive. In many cases, developers are already meeting the requirements, and in other cases a nominal investment could yield huge savings. For more on the credits and rebates, see the policy brief from the National Housing Trust, https://bit.ly/3qXLLSH.
But if we’re going to truly solve the problem, we must look upstream at making the grid stronger and more resilient to better handle our current and projected demand. Housing is more than just a consumer of electricity; it can also serve as a producer via solar panels, and on-site battery storage can play a critical role in bridging power during peak demand hours, dark skies and power outages. The electricity stored in the batteries can be used during peak demand hours, when it would otherwise be the most expensive, thereby producing electricity bill savings. It could also be sold back to the grid or generate a new revenue stream via electric vehicle charging stations. The property would also likely attract a different investor base, including investors who pay a premium for Environmental, Social, Governance (ESG) initiatives.
So how does one pay for the batteries? Beyond the solar panels and installation, the ITC can be used to finance the storage portion, so long as the batteries are predominately charged by onsite solar. Power Purchase Agreements allow developers to install a solar system with little to no upfront expenses. The developer owns the power generated by the system and sells that electricity back to the customer at an agreed upon rate. This rate is typically lower than the rate charged by the utility – resulting in savings for the customer and a monthly payment made to the developer.
Several states, including Massachusetts, Rhode Island, Connecticut and New Hampshire, have adopted battery storage programs aimed at supporting the energy needs of the regional electric grid instead of limiting the benefits to individual facilities. The demand response revenue programs compensate battery systems for reducing systemwide peak demand. A major benefit of this approach is that it creates a revenue stream for battery storage projects that is in no way dependent on a customer’s utility rate structure or how and when the customer uses electricity.
The future of the electrical grid will likely involve micro- and nano grids with solar panels generating electricity for themselves, those nearby, and feeding back to the larger grid. Affordable housing stands to benefit by potentially making deals more financially feasible from the outset via ITC proceeds, and in the long-term via reduced electricity bills and hedges against future energy rate increases. By passing along these benefits to our residents, we’re ensuring that no one gets left behind as we move towards a new energy future.
