Everyone knows that energy-retrofitting old buildings often makes economic sense. What a lot of people don’t know is how to do it. While retrofits lead to savings on electric and heating bills, you still need to find upfront capital to pay for all the improvements.
The issue is particularly acute for churches and community centers in low-income areas. They frequently have massively inefficient buildings and outsized energy bills, but no way of paying for upgrades. Banks generally aren’t interested in charities with little dependable income.
That’s why Donnel Baird and his team have put together BlocPower, a social business that gathers together inefficient buildings into more attractive packages. It then finds the money from impact investors who get a decent return, though not a spectacular one.
“Because the buildings are older and the owners don’t have access to capital to maintain them, they spend more on energy per square foot than other similar sized buildings in more affluent areas,” says Baird. “A lot of people look at our business and say, ‘Oh, you should be a charity case.’ But, because our clients spend so much more money on energy, there is actually more savings to be made and more profit to be shared.”
BlocPower looks for projects where it’s possible to save at least 20% on a client’s energy bills by installing solar panels, boilers, doors, windows, and lighting. Those kinds of projects aren’t uncommon. The business saved one church in Brooklyn 30%, or $3,000 a month. Another community center in Staten Island saved 70%. BlocPower subsidizes the work, then owners pay back the money over a five year term. BlocPower then shares the savings–or profit–between the client, the investors and itself.
Baird, who grew up in Bedford–Stuyvesant, Brooklyn, worked for years as a community leader in the area before joining the Obama campaign in 2008. After that, he developed a retrofit program as part of the new administration’s early stimulus. Later, after business school, he won a contract with the Department of Energy to set up the energy-retrofit marketplace.
For the last two years, Baird and his team have run that marketplace manually, finding their own projects and linking up investment capital. Now, it’s launching online with a sort of Kickstarter for inner city retrofits, something like what Mosaic does for solar. Investors will either be able to purchase debt in the projects (which will carry a 3% to 5% return) or equity (which could offer higher returns, though will be more risky). To do that, you’ll have to live in the same state the project is located in.
Aside from helping churches, community centers, and nonprofits, Baird also hopes to employ contractors from the local community. It makes that a condition when companies bid to win the portfolio of buildings. “We put together a block of six to 10 buildings, which could be $3 or $4 million of work. Then we have contractors compete to do the lighting systems or what-have-you. We can force them to hire local, well-trained people as part of working with us,” Baird says.
With backing from the U.S. government, George Soros’s Open Society Foundations and VCs like Andreessen Horowitz, which has invested in Twitter, Airbnb, and many others, BlocPower seems well-placed. Certainly there’s plenty of buildings out there that need retrofitting and, potentially, plenty of energy savings, too.