Louisiana contractor picked by McKee administration abruptly goes bankrupt
By Rob Smith / ecoRI News staff
The program was supposed to put solar panels on
roofs and help Rhode Island’s low-income families with their electric bills.
Instead, it left homeowners dealing with a bankrupt company and nowhere to turn
for help.
Question: what due diligence did the McKee
administration do before giving out the contract?
Nearly two years ago, Gov. Dan McKee announced the Affordable Solar Access Pathways (ASAP) program. The
idea behind it was simple: provide cash incentives for homeowners in low-income
and environmental justice zones to install solar panels on the roofs of their
homes.
The state, using money from the Renewable Energy Fund, would
give incentives to a vendor to provide solar panels, leases and power-purchase
agreements to qualifying homeowners. Leases would be signed for 25 years. The
state would also provide energy efficiency measures and a home energy audit to
the homeowners, at no cost to them, as part of the program.
The idea behind the initiative was to spur solar panel
adoption among low-income homeowners and lower their energy costs. Areas of
Woonsocket, Central Falls, Pawtucket, Providence, Cranston, West Warwick, East
Providence, Warren, Middletown, and Newport would be eligible to apply.
The only other requirement for households was to have a roof
in good condition and have an income at or below 80% of the state median. There
was no credit score required, and homeowners in default electric service could
apply. The program, as designed, was guaranteed to provide savings for
homeowners in the first year.
“Low-to-moderate income communities have been historically
underserved in the solar marketplace and often experience the negative impacts
of climate change firsthand,” McKee said in a January 2024 press release announcing the launch of the program.
“Providing environmental justice communities with affordable access to rooftop
solar is essential to ensure all Rhode Islanders benefit from the renewable
energy transition.”
The state hired PosiGen, a Saint Rose, La.-based company, to administer the
program, which was similar to the service PosiGen provided, except the state
would subsidize a big chunk of the leases for enrollees in the program.
PosiGen ultimately owned the solar panels and the leases, and households in the program were actually paying back the company, not the state. That’s how its business model worked: the company installed the solar panels at no cost, recouping costs entirely via the lease payments.
The $1 million in incentives from the Renewable Energy Fund
would provide between 200 and 300 homes with solar panels, according to the
program launch’s press release.
By August 2024, 116 households had signed contracts with
PosiGen, with the state estimating the first year of energy savings to be $830
in electrical costs. The effective price of the energy was 13 cents per
kilowatt-hour, according to the program metrics recorded by the state Office of
Energy Resources (OER) — the last resort service rates last winter and this
winter were 16.39 cents and 14.77 cents per kilowatt-hour respectively.
The program was, by all measures, succeeding. It was putting
solar panels on the roofs of low-income homeowners in environmental justice
zones — areas determined by the state to suffer adverse environmental and
public health consequences usually caused by pollution — and lowering their
winter electricity costs. But developments with PosiGen in recent months have
put the program, and its enrollees, in uncertain waters.
Last month PosiGen filed for bankruptcy, and it’s not clear
what will happen to the Rhode Islanders who signed contracts in the solar
program. State officials aren’t saying much.
“It’s too soon to determine,” said Matthew Touchette,
director of communications for the state Executive Office of Commerce.
Touchette declined to provide ecoRI News with a copy of the PosiGen contract,
saying a request for the document must go through open records request
procedures.
We’re concerned about PosiGen going out of business. We continue to meet with the PosiGen team on a bi-weekly basis to ensure there is a pathway for existing customers to either cancel their contracts or move forward with a channel partner that PosiGen will identify soon.”
— Robert Beadle, chief public affairs officer for OER
Beadle said both state agencies are committed to offering a
low-income solar program, but had not made a decision on either finding a new
vendor or pursuing a different program. The existing program still has one
thing left: money. Touchette told ecoRI News the ASAP program still had most of
its funding; $842,199 was left when the program was paused.
On Aug. 24, PosiGen laid off nearly its entire staff. The
company at that point had furnished solar power for some 40,000 residential
customers across 15 states.
Solar Power World, a solar industry trade publication, reported that thanks to the Trump administration’s
“Big Beautiful Bill” clawing back tax credits related to renewable energy, the
company had failed to make interest payments on some of its debt, and the
company’s investors declined to put more money into the company.
With not enough cash left in the bank to cover its operating
expenses, PosiGen moved to lay off most of its staff instead, many of whom were
caught unaware. OER and Rhode Island Commerce paused applications for the ASAP
program shortly after, and have yet to find a new vendor to run the program.
On the state’s ASAP webpage, consumers are told to contact the company: “If you
are a current ASAP participant with questions about your project or billing,
please contact PosiGen customer service at 888-939-4442.”
The company remained in something of a holding pattern until
last month. Reuters reported the company filed for Chapter 11 protections
in Texas in November, and the company has been working its way through
bankruptcy court. The company has $206 million in funded debt and its primary
lender, Brookfield Asset Management, wants to foreclose on its assets and
transfer the customers to a new solar power provider.
Part of PosiGen’s problems was its core business model.
PosiGen provided solar panels at no cost to the consumer, instead of recouping
expenses through the 25-year leases, as well as selling tax credits and the
revenue from the leases to investors.
The second coming of the Trump administration was an
existential crisis for PosiGen and the larger renewable energy industry in the
United States. Trump’s hostility to renewables has been well documented. And
when Congress passed the “Big Beautiful Bill” this past summer, it sunset or
slashed dozens of tax credits used by the industry, which has as a result
sharply reduced its expectations for expansion in the coming years.
If you or someone you know has purchased solar panels from or been affected by the bankruptcy of PosiGen, please contact reporter Rob Smith at rob@ecori.org.
