Through a strategic learning sprint, Alberta Ecotrust explored mechanisms and approaches to scale non-utility solar in urban Alberta and to define our organization's unique role in improving these approaches. This sprint aimed to generate actionable insights to address barriers to accelerating the uptake of solar in the built environment, particularly for community organizations and multi-family buildings. 

The expansion of non-utility scale solar energy in urban Alberta presents a massive opportunity for economic growth and emissions reduction. However, moving past the current "plateau phase" of adoption requires confronting a complex landscape of interest holders and challenges.

The ecosystem of interest holders

Scaling urban solar demands engagement with a diverse array of interest holders, many of whom simultaneously pose adoption challenges and hold the keys to progress. These interest holders include:

1. Solar installers and the private sector: The solar industry is vital for implementation, but installations on complex projects like multi-unit residential buildings (MURBs) can be challenging due to complex governance structures, approvals processes and tenant issues. Regional barriers exist, such as a lack of installers in smaller communities. Furthermore, predatory practices by some companies can hurt the industry’s reputation.

2. Community organizations and co-ops: Community generation groups and co-ops are high-value interest holders for solar support, but they face significant difficulty accessing financing. This happens because they require funding for project development and bridge financing. A critical hurdle for co-ops is navigating Alberta Securities Commission regulations to raise capital safely and legally. There is a lack of capacity available for project planning and financial modelling (pro forma development) within these organizations, suggesting a need for focused training or collaboration to pool resources.

3. Regulatory bodies and authorities: Inconsistency and a lack of clear guidance pose significant hurdles across jurisdictions. Key regulatory interest holders include:

• Wire service providers (WSPs): These entities (such as Fortis Alberta, ENMAX Power and ATCO Electric) are geographically based and have varying application documents, leading to delays and inconsistent guidance in permitting and development.

• Local authorities having jurisdiction (AHJs): Often responsible for safety inspections, smaller municipalities often lack the necessary resources to provide specific guidance for solar permits.

4. Government (Municipal, Provincial and Federal): Government entities shape the policy environment, which poses both barriers and opportunities. While provincial governments are responsible for many regulations often viewed as barriers, municipalities are seen as a strategic focus for advocacy due to existing relationships, offering potential avenues for proposing solutions such as tax breaks or funding programs based on expert recommendations.

Significant barriers and challenges to adoption

The sprint identified interconnected challenges spanning financial, regulatory, technical and market domains that prevent the widespread adoption of urban solar:

Financial and economic barriers

The foremost deterrent is the high upfront cost of solar installations, particularly for multi-family buildings and community organizations.

1. Low returns on investment: Projects often feature low rates of return, making them unattractive for investment. Long payback periods further complicate the business case.
2. Uncertainty and insufficient savings: Uncertainty in electricity prices complicates financial planning. Furthermore, energy savings alone are often insufficient to justify a strong business case.
3. Need for a value stack: To overcome these low returns, projects must leverage a "value stack" that includes non-energy benefits such as the Federal Investment Tax Credit (ITC), accelerated depreciation, and avoided costs. For instance, financial models for Building Integrated Photovoltaics (BIPV) frequently underestimate the true value by failing to account for avoided costs, such as cladding.
4. Economic uncertainty: General economic uncertainty deters people from committing money to solar investments, even when generous incentives are available.

Policy and regulatory barriers

1. Restrictive programs: Grant and incentive programs can be hindered by overly restrictive timelines and technical requirements.
2. Regulatory adaptation: Current microgeneration and energy metering regulations require adaptation to enable broader solar adoption for rented properties and multi-family buildings.
3. Permitting delays: Developers face delays due to inconsistent and unclear permitting and development guidance from WSPs and AHJs. Streamlining regulatory processes, including reducing inspection delays, is needed.

Technical and infrastructural barriers

Integrating solar into the existing urban environment presents significant physical challenges, especially during retrofits:

1. Outdated infrastructure: MURBs often have outdated systems, complicating solar retrofits.
2. Design limitations: Issues such as inadequate roof structures or unfavourable orientations restrict solar integration capacity.
3. Coordination issues: Detailed design drawings are often a bottleneck, and there is frequently a lack of early consultation in the design process, leading to missed opportunities and inadequate electrical upgrades needed for solar integration. Coordination of major infrastructure upgrades, like transformer replacements, is essential but challenging.

Path forward: Focusing on solutions

The core challenges in solar adoption can be overcome through derisking, education and connecting people with resources. Efforts should prioritize solutions that:

1. Build the business case: Develop clear tools and case studies that demonstrate the full financial "value stack" for businesses and commercial entities, leveraging ITCs and accelerated depreciation. This case study, titled “Empowering Alberta’s energy future: Unlocking potential and overcoming barriers in Alberta," is a good starting point.
2. Support capacity building: Focus on reducing skill gaps in financial modelling and project planning among co-ops and community groups.
3. Promote advocacy: Leverage relationships with municipalities to advocate for policies that simplify permitting and offer specific, well-designed incentives.

The collective understanding of these barriers is strong. The next steps for interest holders are to convert this knowledge into actionable initiatives that address these external challenges and advance the solar industry forward, particularly in urban environments.