Last year the city council of Ithaca, New York, voted to fully decarbonize by 2030, requiring grid decarbonization, electrifying transportation and rolling out heat pumps to the city’s 6,000 aging commercial and residential buildings.
Utility Dive, June 2, 2022: Inside Ithaca’s plan to electrify 6,000 buildings and grow a regional green workforce using private equity funds
A full retrofit of every building could cost $600 million. In order to decarbonize all of the buildings, the city aggregated blocks of buildings to manage project risk, and then securitized the project to attract private capital, according to Utility Dive:
“Investors in Ithaca’s decarbonization plan are a Brooklyn-based climate tech company called BlocPower, and Boston-based private equity firm Alturus. The two have combined to commit about $105 million to make low- and zero-interest loans for heat pumps and other electrification technologies available to residents and businesses….”
Private Equity Stakeholder Project campaign and research director Alyssa Giachino told Utility Dive that there is a need for “creative and aggressive” decarbonization efforts across the entire economy but the use of private equity funds can be risky for communities:
“It’s crucial that the public entities that are stewards of the public interest build in strict guardrails, because private equity does not have any obligations to the public interest,” Giachino said. “They only have obligations to their investors or shareholders. So they have a singular purpose, which is to maximize profits.”
Local officials acknowledged that, “There was some local concern about using private equity to fund energy efficiency and electrification efforts,” according to Utility Drive, which said “Some activists feared local contractors or businesses would lose out, or BlocPower and Alturus would make too much money on the deal.”
Utility Drive described the program as “essentially a way of covering the upfront costs of making building improvements and turning it into ‘electrification as a service,’” where investors will likely see a 3 to 4 percent return.
The plan will require about 400 workers for the pilot and 1,000 for the full program. Utility Dive reported how nearby New York cities of Binghamton, Rochester, Syracuse and Elmira joined Ithaca officials in a discussion around the job opportunities with local officials and workforce development organizations. The cities formed a “Green Jobs Corridor” with 120 organizations across the state, including labor unions, and are working to share transportation, education, childcare and language support opportunities to develop a regional green workforce.