RUTHFULLY YOURS

Energy Insufficiency With a mission to create green jobs and bring green-energy loans to the poor, BlocPower has gained powerful backers in tech, finance, and government. Where are the results? by Lee Harris

Posted By Ruth King on September 7th, 2023

https://prospect.org/environment/2023-09-06-energy-insufficiency-blocpower/

For years, Donna Hope has helped landlords make their buildings greener. Two years ago, she told herself, “I’m going to walk the walk.”

The boiler at her two-family property in New Rochelle, New York, had just conked out. Hope inherited the cream-yellow house from her parents, and now leases out both units. When I visited in August, pear trees in the yard were dripping with ripe fruit.

Hope has degrees in civil and environmental engineering, and has made a career helping business owners comply with environmental laws, including work in the sustainability offices of two New York City mayors. So, she figured, why not switch to electric heat pumps? She reached out to several contractors, and to BlocPower, a green loan provider that also offers engineering and project management.

For over a decade, BlocPower has received glowing press for its promise to make clean energy affordable for poor households and small businesses. It emphasizes air-source heat pumps, the focus of a growing drive to electrify buildings, as well as insulation and other repairs necessary to make the heat pumps work. The idea is to bring decarbonization to people who can’t afford to buy the equipment outright.

 

To customers, it advertises itself as a “turnkey” provider, offering no-money-down financing, auditing buildings, and bringing in quality contractors. To governments, it has pitched itself as able to build community trust and convince building owners to use existing decarbonization incentives, while stretching every public dollar by combining it with private capital.

BlocPower’s lease is a separate payment from a customer’s electricity bill, but the company says customers will see such high savings from more efficient power use that the lease will more than pay for itself. The commitment, then, is to save customers money, reduce local and global air pollution, and deliver returns for its investors—a win-win-win.

“I knew of BlocPower and their rise to fame,” Hope said, through mutual acquaintances with CEO Donnel Baird. She loved what she heard, and selected BlocPower as her project manager.

That’s where Hope’s troubles started. After facing a bevy of problems with the system, Hope reported her concerns to an adviser with the state energy agency, NYSERDA, and requested an inspection. Today, she told the Prospect, she is considering suing BlocPower for the retrofit they financed, which has saddled her with a 15-year lease for equipment she fears has been damaged, and a long-term relationship with a firm she distrusts. “God knows I’ve had my share of shifty contractors,” she said. “This has been one of the most egregious.”

I FIRST WROTE ABOUT BLOCPOWER IN 2021, when the company invited Environmental Protection Agency (EPA) head Michael Regan to tour a Bronx church it had retrofitted. In January of this year, I published a deeper dive on its business model.

On average, BlocPower says, its customers save 20 to 40 percent on their annual heating and cooling bills by switching to heat pumps. But it offers no financial guarantee, and multiple HVAC contractors told the Prospect that such high average savings are unlikely.

Long popular in the Southeast, heat pumps have recently taken off in colder states like Maine as an electric-powered replacement for burning heating oil. But in states like California and New York, where electricity is expensive and most households rely on gas, it can be tough for conversions to create value at the kitchen table. Heat pumps can also be harder to install in the older, more run-down buildings BlocPower says it targets.

Baird is forthright about the challenges of retrofitting low-income buildings, which often need structural repairs. “We hope to fix neglect WHILE making buildings green. Most times it works,” Baird recently wrote on LinkedIn. “In 5-10% of our projects the Electrification has NOT gone well.”

But BlocPower is reluctant to provide referrals to that other 90-plus percent—the overwhelming majority of jobs that Baird says have succeeded.

For my story in January, I asked Baird to point me to satisfied clients, or a case study of the model, and he declined. In response to that article, I received a flood of feedback from clean-energy professionals in New York who doubted that BlocPower had achieved the scale it touts. Indeed, the company has repeatedly made contradictory statements on how many and what projects it has completed.

For this story, I asked BlocPower again for referrals to clients in New York. The company provided just three contacts, of which only one has had heat pumps installed. In that building, the landlord told me, energy costs for some units have actually risen. Multiple other customers found by the Prospect are in the same position as Donna Hope: frustrated about inferior quality or cost overruns, and seeking remedial action. And in Ithaca, where BlocPower won a flagship contract for citywide decarbonization of as many as 6,000 buildings, it has completed just a single heat pump conversion, according to a spokesperson.

Meanwhile, New York City has given BlocPower tens of millions of dollars on a no-bid contract to train New Yorkers at risk of gun violence for green jobs, as part of a new Civilian Climate Corps. The city declined to answer any questions about that program, including basic facts such as the number of participants who have been hired into full-time jobs, and what certifications it offers. But one trainee reached by the Prospect said they were not aware of anyone who had been hired into a full-time job. Most participants do not get hands-on experience installing green equipment, the trainee said.

This fall, as part of the Inflation Reduction Act, the EPA will review applications by nonprofits vying to distribute $27 billion in new incentives for home retrofits and the deployment of green technology. Baird is an adviser at Rewiring America, a nonprofit at the center of the push to “electrify everything,” and a board member at the Coalition for Green Capital, which is widely seen as a top contender to run one of the national nonprofits that will centralize the distribution of funds. That puts BlocPower in a prime position to influence the rollout of subsidies.

BlocPower would hardly be the first disruptive startup to sketch out bold ambitions and worry later about delivering the product. But it is not just operating in the frothy world of venture capital. It relies on a mix of tax-free philanthropic funds and government contracts. And its claims to consumers and investors have raced ahead of reality.

Turn Buildings Into Teslas

BlocPower inspires devout faith in its partners and investors. Baird and co-founder Keith Kinch are former community organizers for President Obama, who built BlocPower’s reputation by advertising the merits of retrofits for churches and other community institutions. Baird puts their origin story at the center of his sales pitch, saying in a recent interview, “Keith and I had tough childhoods in tough neighborhoods when a lot of Brooklyn was still very rough.”

Baird has rare star power. Almost every single person I interviewed about him—critics, too—remarked that he is charismatic. But if Obama’s charisma is high-flown, Baird has the gritty intensity of an entrepreneur. He seems always to be conceding the hardness of the problem—bringing you in on ways it could fail—before explaining why he will succeed.

Baird grew up in Brooklyn, attended prep school in Buckhead, Georgia, and went on to Duke University. In 2009, he became national field director of green jobs for the Change to Win Federation, a labor coalition. After the 2010 stimulus package put billions in federal funding toward clean energy, Baird has said, he helped pensions design a plan to invest some $90 billion in decarbonization.

Recognizing a potentially massive market in clean-energy retrofits, Baird enrolled in Columbia Business School, and soon received backing from the Clinton Global Initiative. He registered BlocPower as an LLC in 2012. By the following year, The Wall Street Journal had run a story on Baird’s pilot project.

“There’s a missed opportunity in American inner cities. There’s a $400 billion market, and because of the subprime mortgage crisis, the renewable energy industry has largely skipped that market,” he told The Washington Post in 2015. “Residents of inner cities over-consume energy per square foot, relative to more affluent, early-adopter consumers.”

Baird pointed out that poor families face higher borrowing costs for even basic repairs, let alone green upgrades, leading to a cycle of underinvestment in buildings. He was convinced he could make green retrofits affordable if small businesses, community institutions like churches, and low-income residential buildings could be tranched and bundled together into securitized “blocs,” spreading around the risk of default. Hence the name “BlocPower.”

The idea has a certain elegance: Perhaps an instrument like the mortgage-backed security—the trigger of the financial crisis, which wiped out so much Black wealth—could become the salvation for inner cities and the climate.

TO RATE AND BUNDLE PROPERTIES FOR CLEAN-ENERGY LOANS, BlocPower has developed proprietary risk-rating software. The company says this technology assesses the unique risks of an individual property, allowing the company to turn homes with lower credit into investible assets.

“Our bet is that we can do risk management better than a traditional Wall Street firm for this category of investment, because we’ve invested millions and millions of dollars in software,” Baird told the Prospect in an interview.

At a Bloomberg panel in April 2022, he elaborated on the model. “We analyze all of the physical characteristics of the building—the maintenance and financial records of the building—but then also analyze the characteristics of the building owner. Do they drive a Tesla? OK. Well, are they a member of the Sierra Club? Maybe this is someone that we should talk to. And what are the kinds of messages that we would offer to them, based on who they are.”

But scaling up from Tesla drivers to the general public will be tough. Is Baird right that better risk-rating software and securitizing loans will do the trick? Or do the bottlenecks to decarbonization have more to do with basic supply and demand: labor shortages, competent contractors, sourcing parts, and homeowner appetite?

One hard-to-avoid fact is that, in cities with high electricity costs, the cost of running air-source heat pumps often breaks even with gas—even after the IRA’s energy efficiency incentives. Instead of advertising relatively slim cost savings, several HVAC contractors and heat pump proponents told the Prospect, they prefer to market heat pumps for their other benefits, like improved air quality, more available floor space when radiators are removed, and the reduction of carbon emissions.

“These are capital improvements to your home that have real benefits. They make you more comfortable, healthier, safer, they may increase the resale value of your home,” said Andy Frank, co-founder of Sealed, a clean-energy and HVAC financier that has grown by targeting market-rate housing in Westchester, where electricity is cheaper than in New York City.

Of course, investing in comfort is an easier case to make to a richer client. “It’s one thing to go to a market-rate customer and say, ‘We’re going to do this project, it’ll improve your quality of life.’ It’s more difficult to go to the low-income market, and do a similar project, with the added challenge of needing to be bill-neutral or negative,” Frank added.

Rebecca Evans, who is now leading Ithaca’s decarbonization effort, was even more matter-of-fact. “Nobody can guarantee that you would save money,” she told the Prospect. “If they do, then they’re lying to you.”

Clean-energy advocates are only beginning to share these caveats on the record. Privately, many say they are awaiting policy changes that will help put heat pumps on a more level playing field with gas. Multiple experts declined to describe this publicly, citing the highly charged political atmosphere. Electrification is “a cult,” one heat pump proponent in California, who asked not to be named, told me. “You can get excommunicated.”

BLOCPOWER HAS REMAINED STEADFAST that a major selling point is savings. At the Bloomberg panel in April, Baird put it this way: “What we want to do is come in and say, look, we’re going to remove the fossil fuels from your home, we’re going to save you a bunch of money, we’re going to reduce your energy bill, within this range, and then we’re going to help finance it.”

But in almost the same breath, Baird said, “We don’t guarantee energy savings … We don’t want to play those games.” In other words, if the homeowner doesn’t get any savings from their heat pump, investors won’t take the loss; the homeowner will. Other third-party financiers like Sealed, by contrast, do offer a financial guarantee, giving them some skin in the game.

BlocPower’s sales pitch has proved attractive. BlocPower has raised capital from a who’s who of Washington, Wall Street, and Silicon Valley. Investors include Goldman Sachs’s impact investing arm, Jeff Bezos’s Earth Fund, Eric Schmidt’s Family Foundation, Microsoft’s Climate Innovation Fund, and CNN host Van Jones. Nonprofit foundations like the Kresge Foundation have made commitments, too. According to a press release, Vice President Kamala Harris recently invited the company to her residence for recognition.

Baird intends to capitalize on the moment. While BlocPower may work with grimy hardware, tearing out oil boilers and drilling through walls, it hopes to grow at the pace of a software unicorn. Baird recently said that he wants BlocPower to become the Amazon of home electrification. The company is building an “augmented reality construction platform,” he has said, and has developed a “blockchain based verification system,” according to an SEC filing.

Baird tweets under the name “Turn Buildings Into Teslas,” and the analogy to Elon Musk, whose brother Kimbal is another funder, is apt. Baird minimizes the role of government support (“It’s a rounding error,” he told the Prospect of Ithaca’s $100,000 in public funding for BlocPower’s initiative) and vaunts the company’s backing from venture capitalists like Kapor Capital, an early investor in Uber.

Baird has even talked about disrupting what he describes as a highly inefficient construction industry in the style of Katerra, a SoftBank-backed startup that attempted to vertically integrate homebuilding (and, after wiping out $3 billion, became one of the best-funded startups to go bankrupt in U.S. history).

But to achieve this exponential growth, BlocPower will need to do the hard work of convincing millions of households to lease its green technology. The company says it has projects under way in 26 cities, from Menlo Park to Baltimore. To understand the gorge between BlocPower’s discourse and what it has delivered, I went to Ithaca, where the company and city leaders made staggeringly ambitious promises to deliver cheap, clean energy, and fix historic injustices along the way.

“Stop Eating Sugar”

Ithaca is offbeat. A college town of scientists and academics, it likes to experiment on itself. In the 1990s, a community organizer launched a new currency, the Ithaca HOUR, equivalent to one hour of work, or about $10. Hundreds of businesses soon accepted the paper bills, though they were awkward to use—they didn’t fit in a standard wallet. The founder described HOURS as part of a movement toward ecological economics.

The currency didn’t last, but the environmental movement grew. So it felt natural that, as socialist politicians gained national prominence on a “Green New Deal” platform in 2018, students got in on the action. Activists at Cornell and Ithaca College, the city’s two major universities, started local chapters of the youth climate organization Sunrise Movement, and urged local politicians to pass a citywide Green New Deal.

In May 2019, Svante Myrick, a Cornell graduate and the youngest mayor in Ithaca’s history, announced his support. In a talk at Cornell, he reached for a story about Mahatma Gandhi, who could only tell a boy to eat less sugar after he had reduced his own sugar consumption. Ithaca, he said, needed “moral authority.”

“It allows us to look our governor in the eyes, to look [at] our president, our senators, our congresspeople, and to tell them, ‘Listen, you need to stop eating sugar,’” Myrick said.

Some were skeptical. “I’m so fond of FDR’s original New Deal, because it invested in public works, not in subsidizing private companies, but building things under public ownership. It invested in prevailing-wage jobs and progressive taxation,” Alex Hyland, a local electrician, told the Prospect. He thought Ithaca’s plan didn’t have those labor protections and focus on middle-class advancement. To him, it seemed more like a “press conference project.”

In 2020, the pandemic paused many of Ithaca’s plans, and city employees were furloughed. By early the following year, Myrick’s attention shifted as he announced a campaign to Reimagine Public Safety, in which he pledged to “abolish the police department while not abolishing policing.”

But the following year, the city plowed ahead, pledging to decarbonize the entire stock of 6,000 buildings. To manage the Green New Deal, Myrick hired an international climate rock star as the city sustainability director, charged with turning public comment periods into a plan. Luis Aguirre-Torres is an engineering Ph.D. who began climate work with Arnold Schwarzenegger, and was later honored by President Obama for running State Department green-jobs programs in Latin America. His interest in Ithaca was a stroke of luck: His wife is a professor at Cornell, and he had decided to take a break from jet-setting.

His first priority, he told a local news site in an interview, was community engagement. “We started a program called 1,000 Conversations,” he told Ithaca.com. “It’s about engaging people in having 1,000 conversations.”

EXECUTIVE DIRECTOR CHAVON BUNCH WAS DELIGHTED when Aguirre-Torres showed up at a board meeting of the Southside Community Center. After all, it could use the attention. The center was built by the Works Progress Administration as part of a revitalization initiative of Eleanor Roosevelt, who attended its dedication in 1938. Only the gymnasium has central AC and heat. For years, the center had sought funding to expand its kitchen, which is the size of a closet and feeds busy after-school programs.

Bunch hadn’t heard much about Ithaca’s Green New Deal until Aguirre-Torres walked in and promised to make Southside the centerpiece. They talked about installing heat pumps and induction cooking stoves, replacing windows and improving insulation. “We were all a little taken aback, like wow, this man is really passionate,” Bunch said. “He got really emotional and there were some tears.”

In a town that can move at a crawl, Aguirre-Torres soon announced that they had secured private financing for retrofits that far exceeded the city’s annual budget. On August 2, the city issued a request for proposals for a program manager to run its building electrification program, asking for submissions by the end of the month. Before applications for program manager were due, Aguirre-Torres was quoted in The Guardian, touting how he had helped the city “raise $100m by offering investors entry to a large-scale program he pitched as low risk with the potential for lots of cashflow.” No investors or partners were named.

The city council wasn’t briefed until September, after the application window had closed. Some officials complained that Aguirre-Torres couldn’t supply all the details, even basic ones. Cynthia Brock, Ithaca’s longest-serving councilmember, asked whether, if a property was sold, the clean-energy equipment loan would follow the individual or the property. Aguirre-Torres told her he wasn’t sure, according to The Ithaca Voice.

Brock felt like the heady enthusiasm had outpaced the plans. She told the Prospect that she believes BlocPower was selected before the RFP was even issued. Either way, Aguirre-Torres recommended BlocPower for the RFP, which applied in a consortium, along with a local contractor. By November, they had been selected. Baird phoned into the city council meeting from Portugal, where he was en route to a climate conference in Glasgow.

In the storm of press coverage that followed, Aguirre-Torres emphasized a few things: The city had secured $100 million from investors; it would negotiate affordable deals with economies of scale; homeowners would save money by electrifying; and property values would rise. When I interviewed Aguirre-Torres in 2021 for the Financial Times, he said he had structured the deal to assure “very, very low interest rates” for homeowners. He told local and national news outlets that rates would be equivalent to zero percent.

To achieve all this, Aguirre-Torres referred back to the record of the company they had identified as a program manager. With the help of BlocPower, Aguirre-Torres estimated in 2021, they could hit their target of 1,600 buildings in as few as three years. “When I say the government is not equipped to do this, BlocPower is,” Aguirre-Torres said.

LISA MARSHALL, THEN DIRECTOR of a regional clean-energy nonprofit, wrote to BlocPower with other local climate groups asking for a meeting, with basic questions like, “What is your upcharge for these services? Is it a flat fee or a percentage?”

BlocPower sent Marshall a report they had compiled on the Community Retrofit NYC program, a contract they had been awarded under then-Mayor Bill de Blasio. However, Marshall noticed, it dealt mostly with recruiting customers for smaller incentive programs, like installing efficient LED lighting, rather than the “deep” retrofits like insulation, heat pumps, and solar panels, on which BlocPower has built its reputation.

BlocPower also arranged a virtual meeting with local climate groups. Marshall hoped her questions would be answered there, she said, but it was set up as a webinar-style virtual presentation, and meeting attendees were muted, so they could not participate.

“They did this like, ‘We would never harm anybody, I grew up in poverty, this is my story’ sales pitch,” Marshall recalled. “I left the meeting and I was like, did somebody just try to sell me a timeshare?”

In May, a local news site published an op-ed by a resident of Dryden, about 12 miles from Ithaca, who had applied for a BlocPower loan. Dan Antonioli, a local environmentalist, had used BlocPower’s software and was shocked by the quote he received: $750 a month, for a 15-year lease, at the end of which he would have to purchase the equipment, return it, or renew the lease.

Antonioli was outraged. Far from BlocPower using its risk-assessment technology to lower the cost of capital, it seemed, they were offering rates that were not even competitive with an ordinary bank loan. “No money down is all fine and good, but if in the end you wind up paying two to three times the amount then how is this contributing to ‘climate justice’?” he wrote.

Ithaca’s results to date call into question what BlocPower has contributed. BlocPower was hired to tackle all 6,000 building retrofits by 2030, with an initial goal of 1,600 within the first few years. As of August—nearly two years in—it had completed heat pump installation for just one client, a local business named Gimme! Coffee. It has 20 more heat pump projects in the pipeline, it told the Prospect in a statement.

After BlocPower hosted a ribbon-cutting on the front steps of the Southside Community Center, Chavon Bunch stopped receiving updates on the plan. BlocPower did involve her in an advisory committee on decarbonization, she said. But when it comes to her own center, she told the Prospect she was not sure what BlocPower had intended, “because it never got that far.”

As a councilmember, Jeffrey Barken supported the Green New Deal; he has since become disillusioned. “While we’ve been successful attracting grant $$ it’s hard to say what, if anything, we’ve managed to build or retrofit,” he wrote the Prospect in a note. “I could never get a very clear answer on these 2 questions of mine: What are we building right now? What / how many ‘jobs of the future’ will we / have we created?”

Mounting Concerns

The Community Retrofit NYC project, which BlocPower cited to demonstrate its track record to Marshall, is a point of controversy among energy efficiency professionals in New York. The Prospect interviewed multiple people involved with the program’s rollout, most of whom asked not to be named.

The NYC Economic Development Corporation awarded BlocPower funding to run a free program advising building owners on how to complete water and energy efficiency retrofits. They also made referrals to the Department of Housing Preservation and Development. This was less about Baird’s poetic aspirations, and more about governing in prose.

“We really wanted to invest in a Black-led business from the community that we really sought to serve,” said Jenna Tatum, who worked at the time in the NYC Mayor’s Office of Sustainability and helped select BlocPower. “And they really helped us understand the histories of redlining and the distrust that existed in those communities, and leveraged their own networks to make progress in those communities on our behalf.”

Part of the idea of bringing in a company with roots in Brooklyn was that it would act like a community lender, building trust and a pipeline of clients willing to undertake complicated upgrades. But multiple people familiar with the program’s implementation said that BlocPower did not execute on the contract as expected.

First, one person recalled, BlocPower asked nonprofits that used its services to pay for the energy audits, though they were supposed to be a free service covered by the contract. Later, the person said, BlocPower struggled to hit their recruitment targets. Ultimately, they said, the mayor’s office helped BlocPower hit their goal by transferring around 300 projects from another program to theirs. A BlocPower spokesperson denied these claims.

A former contracting partner of BlocPower who also asked not to be named told the Prospect that they were never compensated for their work on the contract. “They just didn’t pay us,” the person said. “It was always a difficult relationship.” After raising the issue in a call with Baird, the person said, they ultimately did not pursue BlocPower for the money.

BLOCPOWER SEEMED LIKE A PERFECT MATCH for Donna Hope when she hired them in 2021. Hope is passionate about ensuring that the benefits of the energy transition reach Black, Latino, low-income, and other groups that are often left behind by public policy. So she was thrilled, she recalled, when BlocPower recommended “a particular BIPOC-founded and -staffed HVAC company that we think is one of the best.”

“I was like, ‘Oh my god, all around, I love it. Yes. Let’s do it,’” she said. BlocPower brought in Super Cool HVAC, a contractor serving Westchester and New York City.

The team warned from the start that it would be tough to obtain the necessary permit for retrofits, Hope said, and sure enough, their first attempt was rejected. She expected BlocPower to do most of the project management, but found herself “micromanaging” the team, “to the point where I went with them to the copy center to make sure they made the correct size copies of plans.”

While still in the permit application process, Hope said, she entered the building one day and smelled copper. She was shocked to find that Super Cool had started welding without the permit. “They’re just like, ‘While we’re waiting, let’s just do it.’” Horrified, she said, she asked them to hold off. Super Cool representatives did not respond to requests for comment.

When the team finally obtained the permit and installed the heat pumps, Hope said, the machines malfunctioned and repeatedly shut off. Hope complained for weeks, she said, and brought the problem to independent advisers, who suggested that it might be a refrigerant leak. When Super Cool finally addressed the issue, she said, they discovered a refrigerant leak on an outdoor condenser. A potent greenhouse gas had been leaking for weeks.

The condenser was fixed, but the heat pumps knocked and whirred so loudly that tenants couldn’t sleep. “If I was Björk, I could make an awesome audio track with this,” Hope laughed.

The closer she looked, the more “sloppiness” she discovered. While filming a heat pump as evidence of the noise, Hope noticed that it had cracked, and apparently been fastened with Scotch tape. In another place, she found that the contractor had bolted shut a breaker box that needed to be able to open.

Hope’s BlocPower representatives were dismissive, she said, so she decided to go directly to Baird, since she had connections to him through other climate professionals. After a few months, she reached him. At that point, Hope said, things moved quickly.

A representative from the heat pump manufacturer Daikin came to her home with Super Cool, and quickly noticed that a critical “anti-siphoning” device, a small red plastic part, was missing. “You mean that piece we always throw away?” the Super Cool representative said, according to Hope. “We’ve never installed that.”

BlocPower eventually arranged for Super Cool to install the anti-siphoning devices. But the Björk soundtrack plays on. When I visited, the heat pumps periodically made a loud sucking noise, not unlike the sound of a dentist’s saliva-siphoning instruments.

Hope remains concerned that the initial improper installation may have damaged the heat pumps. She is stuck with a 15-year lease, paying BlocPower $75 per month, with a project manager and contractor she does not trust, she said.

In fact, she realized as she looked over her bills, BlocPower charged $175 each month for the first ten months, rather than the $75 she owed. When she discovered the error and reported it, she said, the company at first shot back that she had only overpaid for eight months. “It’s not like I paid them cash,” she said. She used bank-to-bank ACH payments, and kept the receipts. After disputing the error, she said, they returned the money to her through multiple wire transfers, and she incurred fees.

“I was like, OK, it’s bad enough that the management on-site has been terrible. You referred an HVAC company that’s done sloppy work. But even the finance piece, which is supposed to be your bread and butter? Like, this is basic,” she said.

Asked about Hope’s case, a BlocPower spokesperson said, “We are in close coordination with this customer and appreciate her patience as we persistently continue to work to address any and all of the obstacles that must be overcome before, during and after installing heat pumps in old, leaky buildings—many of which don’t present themselves until after the project has begun.”

One Thousand Forever

Even as BlocPower has raised millions in new funding, the company has made versions of the same claim for years: It has “greened” or retrofitted around 1,000 buildings.

In a 2019 Facebook post, when former President Bill Clinton visited a church the company was servicing, BlocPower wrote that they were working to make “another 1,000 buildings greener.”

In 2021 congressional testimony, Baird claimed that the company has “Greened 1100+ apartment and community buildings in NYC.” And multiple press releases that year echoed that same estimate: “Since its founding in 2014, the company has retrofitted more than 1,000 buildings in disadvantaged communities in New York City, with projects underway in 24 cities.”

Two years later, the company appears to have moved backwards. “Since 2012, our team has completed energy projects in nearly 1,000 buildings,” read multiple press releases from 2023.

Statements sometimes refer to completing 1,000 projects in buildings—implying individual units—or retrofitting 1,000 buildings, a considerably larger feat.

The company has also occasionally stated that it has completed projects in over 5,000 buildings, writing in December 2022 that it “completed hundreds of household retrofits across the country in 2022, bringing the total number of energy projects to over 5,000-projects.”

Claims about locations also raise questions. In April 2021, Baird said, “There are almost 900 buildings in Brooklyn that we’ve greened.” By March 2022, CNBC reported that BlocPower had “greened” more than 1,200 buildings in New York City. Yet later the same month, when BlocPower was featured in Time magazine and Fast Company’s lists of influential and innovative companies, it wrote in press releases that it had “retrofitted more than 1,200 buildings in more than 25 American cities.” A month later, the total count of cities had ticked up to 26, but the 1,200+ figure held constant.

And what exactly it means to “green” a unit—or a whole building—remains unclear. For this story, I asked BlocPower how many heat pump conversions it has completed to date, and what Baird meant when he said the company “greened” buildings.

A spokesperson replied, “BlocPower’s energy efficiency and green building upgrades in 1000s of buildings and homes include: LED lighting, fossil fuel furnace replacements, moving buildings off of oil, or gas, insulation, water waste reductions, smart pumps, smart valves, solar PV, weatherization and similar energy efficiency initiatives—all of which contribute to reductions in GHGs and increased comfort, health, and building decarbonization.”

ASKED BY THE PROSPECT TO PROVIDE five to ten clients of completed retrofits in New York, a spokesperson for BlocPower provided just three references. The first was a nonprofit called Historic Ithaca, where, the spokesperson acknowledged, heat pump installation has not yet occurred. (“We liken the process of greening homes and buildings to an ‘electrification journey,’” the spokesperson said.)

Another reference was Pastor Demetrius Carolina of First Central Baptist Church in Staten Island, where BlocPower helped finance the installation of solar panels, but no heat pumps. The church continues to rely on natural gas. Carolina told the Prospect he was pleased with the work.

The third referral was Lincoln Eccles, who owns a 14-unit building in Brooklyn. When his fuel oil boiler broke during the pandemic, supply chain shortages delayed his ability to replace it. Eccles contacted BlocPower, he told the Prospect, which brought in the contractor Super Cool HVAC and helped him finance the installation of air-source heat pumps.

BlocPower negotiated a ten-year payment plan, Eccles said, which made his payments roughly equal to the cost of oil and maintenance for his old fuel oil boiler. This is surprising, since a competent fuel oil conversion to heat pumps should yield significant savings. Originally, BlocPower had discussed another contractor installing solar, helping provide tenants a discount on their electric costs, but that part of the plan fell through, according to Eccles.

As building owner, Eccles said, he is pleased with the work, but energy bills for some of his tenants have gone up. He blamed tenants for using the system incorrectly. Heat pumps should be left to run continuously, he said, but they turn the system off and on too much. Eccles added that BlocPower is now adding “additional insulation.” This too is a red flag, according to experts on heat pump installation, who say buildings should be insulated first, in order to rightsize the heat pump system.

BlocPower has also discussed retroactively tightening the building envelope of churches in New York that it rehabbed as part of a project with Metro IAF, a community organizing group, according to Joe Morris, who runs the group’s clean-energy initiative.

Metro IAF contracted with BlocPower for planning and project development for ten projects, he said. About half are now seeking to remedy problems with quality or cost. The other half seem to be done, Morris said, but Metro IAF is still reviewing them.

Asked about these congregations, a BlocPower spokesperson said, “Replacing 100-year-old heating systems with several hundred cutting-edge heat pumps has proved challenging in 4 or 5 projects, especially where there are installation issues or faulty equipment, but we’re committed to meeting all customer expectations, improving operations as we go, and partnering with manufacturers, scientists, and industry experts to leave no building behind.”

Monte Sion Christian Church, on Manhattan’s Lower East Side, is one of the relative success stories of the partnership. The project is not seeking remediation, and is likely to be closed out soon.

The Rev. Getulio Cruz told the Prospect that he has had a positive experience with contractor Super Cool and with BlocPower. “I have a unique experience, in that I’m very happy with the work that they did. I know that other congregations that didn’t have the same experience, and I think it’s because their buildings were more complicated,” Cruz said.

Still, he added, since BlocPower replaced Monte Sion’s gas heating system and air- conditioning units with heat pumps, their heating bill has stayed about the same and their cooling bill has soared. The congregation is now adjusting its use of the cooling system, Cruz said, and hoping that it will come down.

“Hire 1,000 George Floyds”

A growing obstacle to building electrification is contractor capacity. While many new developments are being built all-electric, workers eager and equipped to install heat pumps in old buildings are scarce. Electricians, plumbers, and other parts of the HVAC workforce are aging.

The rising demand for electrification could create thousands of new jobs. Currently, however, training programs are producing just a trickle of engineers qualified to conduct comprehensive building audits and replace gas and fuel systems.

After years working at trade schools, Tauris McBride opened his own technical training school in Flushing, Queens. Despite six-figure starting salaries for building engineers, McBride said, he has sometimes struggled to find enthusiastic recruits.

“The biggest problem from my perspective is, for generations, young people were told that the only way you can have a good life is to go to college,” said McBride. “The trades have been viewed as being for the dumb and uneducated.”

McBride has told politicians that they should recognize heat pumps as an opportunity to create jobs in both installation and manufacturing. But his concerns have fallen on deaf ears; everyone seems to underestimate the technical challenges of installation. “You’re cutting open walls, running new electrical lines, running plumbing lines,” he said. “People think a heat pump is like an air conditioner—you just pop it in the window. It’s not. It’s a construction job.”

Baird, who sits on New York City’s Workforce Development Board, sees the problem differently. High labor costs can drive up the cost of electrification, he told the Prospect, potentially spoiling what would otherwise be money-saving deals for BlocPower customers. Baird’s answer is recruiting workers from the country’s most disadvantaged populations. He puts this bluntly.

“What if hiring 1,000 George Floyds could save the planet?” he asked in a 2021 press release celebrating a recognition he had received from one of his biggest investors. “BlocPower Honored by Goldman Sachs for Entrepreneurship, Plans to Hire 1000 George Floyds,” the headline reads.

Asked about the comment by Bloomberg, Baird doubled down, saying, “What if George Floyd, instead of floating between jobs as a bouncer, had a career in green construction?”

Baird seemed to suggest that Floyd, who was murdered by a white police officer with a record of misconduct and became a rallying symbol of the movement against police violence, might have fared differently if he had been hired by a green-jobs initiative.

ERIC ADAMS’S ADMINISTRATION HAS EMBRACED Baird’s ideas. New York City awarded BlocPower a $37 million contract in September 2021, under De Blasio, to create a Climate Tech Workforce Program targeting people in neighborhoods with high rates of gun violence. A year later, Adams announced a significant expansion to the program, now called the Civilian Climate Corps (elsewhere, the Precision Employment Initiative). Adams allocated the program $54 million for 2023, according to a press release.

“You don’t wake up in the morning and say, “I want to be a gangbanger,” Adams said at a press conference with Baird. “If you happen to have a learning disability, happen to be dyslexic, went through a broken home … we are going to nurture you.”

According to New York City’s government spending tracker, BlocPower was granted a contract worth more than $175 million, of which about $64 million has been spent to date. That puts BlocPower among the city’s top private vendors. The contract was awarded directly as a negotiated acquisition, rather than through a competitive bidding process.

In an interview last summer, prior to that expansion, Baird said that BlocPower has 1,000 workers available to electrify buildings. But as with retrofits, it has been difficult to verify details on BlocPower’s workforce initiative, or the accuracy of that round number.

Meanwhile, HVAC experts interviewed by the Prospect questioned whether recruiting troubled youth for a technical career in electrical and plumbing work, which takes years of committed study, is the scalable workforce solution BlocPower suggests.

The Prospect asked Adams’s office and BlocPower to provide a progress report or basic summary of the program, and whether BlocPower could refer the Prospect to people who had completed the training. BlocPower and the city declined to offer either.

Both also declined to answer basic questions about the program, including: What are job placement outcomes? What percentage or number of program participants have been placed in full-time work? What sectors graduates are working in? What are the names of any contractors or employers who have hired them?

The mayor’s office directed the Prospect’s inquiry on the Civilian Climate Corps to Mark Zustovich, the chief public information officer of the Department of Youth and Community Development (DYCD). Zustovich declined to provide any specifics about the program, saying, “DYCD recently took over this initiative.” He directed me to send my questions directly to a BlocPower spokesperson.

The Prospect had already sent BlocPower the same set of questions it sent the city. An hour after the note from Zustovich directing me to reach out to BlocPower, a BlocPower spokesperson wrote, “As I was compiling this, we received a request from the City of New York to hold off sending information about the CCC program until they review/approve it.”

Public advertising for the program suggests that the program is a pipeline to a green job. “Train for a career in green construction,” one ad reads. “Apprenticeships and skills training, Career services, Internships and Fellowships.”

The Prospect spoke with a Civilian Climate Corps trainee who has spent more than six months in the program, who asked not to be named. The trainee said that program participants are paid an hourly wage to take classes provided by training schools such as Willdan Clean Energy Academy, an implementer of energy efficiency programs for local utility ConEd.

Through programs like Willdan’s, trainees are paid to take classes and earn certifications in handling everything from refrigerants to drones, they said. (Willdan did not respond to requests for comment). The program stresses soft skills and career readiness.

But hands-on experience is limited, the trainee said. More commonly, they shadow equipment installations performed by contractors, or tell clients about the technology. And only about 40 percent of program participants make it into those roles, the trainee estimated. The rest remain in training classes or work in “maintenance,” the trainee said, “sweeping buildings, mopping building floors, making sure the garbage is thrown out, stuff like that.”

The trainee added that the Civilian Climate Corps is a labor pool available for “outsourcing” to other parts of the city, such as DYCD. The trainee does not know of a single person who has been hired out of the program by a contractor, they said, adding that two people were hired by another career readiness program called Power Tools.

Asked about these claims by the Prospect, a spokesperson wrote, “We are extremely proud of NYC’s Civilian Climate Corps, where thousands of at-risk NYC residents receive hands-on training and certification in OSHA, carpentry, hazardous materials mitigation, EV installation, solar installation, broadband installation, metal fabrication, and heat pump installation, in addition to trauma-based case management and peer coaching.”

Beyond ads and press releases, public information on the program, and what it offers, is scant. BlocPower does not appear on lists of state-certified proctors of key HVAC training courses, for example, such as refrigerant or fire safety licenses.

To learn more about what the program offers, I signed up for the training and was contacted by an onboarding case manager who introduced herself as representing “Ara Case Management, sponsored by BlocPower.”

Asked what work opportunities the program offered, the case manager declined to say which employers would hire participants, upon completion. “It’s not to be confused with employment. It’s not employment, it’s a training program. Even though there is a monetary factor involved,” she said. She said the program lasts eight weeks total.

BlocPower advertises the Civilian Climate Corps as a training course that produces skilled professionals. General Manager Keith Kinch said the company has hired some 300 trainees, according to an interview with Harvard Business School, and added that the International Brotherhood of Electrical Workers (IBEW) Locals 3 and 79 have been helpful.

Reached for comment, Christopher Erikson, the business manager of IBEW Local 3, said he had not heard of BlocPower.

In the Harvard interview, Kinch listed eight companies with which BlocPower has partnered. I contacted all eight, and managed to get on a call with Erik Forman of People’s Choice Communications, a cooperative internet provider, which partnered with BlocPower to install Wi-Fi in New York buildings.

But Forman quickly clarified that they are under contractual agreement not to discuss their partnership with BlocPower. Currently, the city is tearing out equipment installed by that program because of a legal dispute.

McBride, who runs the workforce development program in Queens, also briefly partnered with the Civilian Climate Corps, agreeing to train around 40 members, he told the Prospect. His own past made him sympathetic to the program’s goals. “I was a teenage runaway, a high school dropout, arrested with gun possession at 16 years old. And I’m trying to give people a different path to follow,” he said. But after hitting numerous snags, he ultimately terminated the partnership.

Green Planning

Energy efficiency initiatives have long been associated with President Jimmy Carter, a sweater-wearing moralist who deregulated power markets and touted the virtues of market-led capital allocation. Carter announced a war on energy waste with his 1970s Weatherization Assistance Program.

Barack Obama carried that legacy forward, putting billions in stimulus toward cleantech, with a special emphasis on energy sobriety. Federally funded smart meters, for example, were intended to help millions of homeowners moderate their energy usage.

In messaging, at least, Biden’s building electrification drive breaks with that legacy of market-led change plus individual restraint. It harks back to the New Deal, with its emphasis on long-range planning, public investment, and public health. The IRA made billions in incentives available to support insulation, heat pumps, solar panels, and other green appliances. To ensure that it is spent, the administration plans to create “centralized, long-term financing institutions with the scale required to transform financial markets.”

But this green-planning push raises strategic questions. Take the question of ownership, for example. The new, national financing institutions will be structured as nonprofits, and encouraged to draw on additional sources of capital, including private foundations.

Using nonprofits to manage the disbursal of funds could allow the administration to achieve more of its goals. For example, the federal government is subject to strict lending rules that prohibit explicit privileging of groups like Black and Hispanic homeowners. Using a nonprofit to distribute cash could give the programs more latitude to deliver on Biden’s goal for 40 percent of climate change investments to go to disadvantaged communities.

But reliance on philanthropic and private capital—a fuzzy distinction, given the growth of impact investment funds and charities’ increasing use of arcane financial strategies—could also make these entities more subject to the preferences of influential donors and investors.

Another debate concerns the role of community financing institutions, as the administration looks to scale up the distribution of funds. Organizations such as the Coalition for Green Capital have argued for a more top-down approach to lending, which they say would do more with limited public funds. Others argue that CDFIs and local lenders, as “capillaries of the financial system,” are better positioned to meet the distinct needs of individual communities.

That emphasis on community trust is part of why New York City selected Brooklyn-based BlocPower to implement its community retrofit program to begin with—and why some green-finance experts now question whether a startup that emphasizes its local roots should spin its financing model into the Amazon of home electrification.

And the revival of ambitious public investment carries with it debates over risk. Baird’s move-fast-and-break-things mentality could inject some much-needed dynamism into the world of green finance, which is moving from the margins of the policy discussion to the heart of the national economic planning agenda. In existing green banks, the risks are too often the opposite sort—moving too slowly to avoid failure, and incurring huge, invisible opportunity costs.

But there are also risks to adopting Silicon Valley’s mode of destructive creation, which focuses on the financing first and delivering the product later. While it may work for software design, there is typically less human toll when those companies, as Baird put it, “go under.” If the complex work of decarbonization is left to captivating founders who succeed with tech investors by articulating big ideas, it raises the question of how to make the public sector dynamic while avoiding the reputational and real risks to the green transition of a failure to deliver.

IN ITHACA, SOUTHSIDE COMMUNITY CENTER Director Chavon Bunch has heard that the green building overhaul is unlikely to go forward.

“Your email prompted me to find out what is happening, because I haven’t heard a thing from anybody,” she told me. “It seems as though we are on the chopping block.”

Bunch is mostly determined to secure a renovation for the kitchen, which the city council had backed with an additional $200,000 in funding. Barken, the councilmember who championed that grant, recently resigned. He has increasing misgivings about the decisions Ithaca made to support its Green New Deal, he told the Prospect.

“In many respects it was entirely inappropriate for us to spend in this fashion when there were other city-owned operations that deserved funding and would be more accountable to city oversight,” Barken said of the funding for Southside. “But I pursued this aggressively because I felt the building had become symbolic, and that the perception of broken promises would be devastating for the Green Deal.”

Little of the original team is left. Myrick, the young mayor who spearheaded the Green New Deal, announced last year that he would resign to become executive director of People for the American Way, a progressive advocacy group. Shortly thereafter, Aguirre-Torres left his post as sustainability director. After a stint at Rewiring America, Aguirre-Torres is now director of financial planning and analysis and financing solutions at the state energy agency.

Implementation of the Green New Deal has fallen to Rebecca Evans, who got her start as a sustainability coordinator at Ithaca College. Evans saw Baird more frequently at the start of the program. “I see him intermittently. I think he’s very charismatic,” she said.

The $100 million Aguirre-Torres and BlocPower had raised to finance the retrofits is no longer available, Evans told the Prospect, because “that financing was not locked in at current interest rates in 2021.” Evans said she believes BlocPower will soon announce that it is “shifting to a referral model,” in which it will direct potential clients to local contractors.

BlocPower’s engineering partner, Taitem, has paused its participation in the program, according to founder Ian Shapiro. The emphasis on financing constraints, he argued, may have been flawed from the start. Contractors are oversubscribed, with monthslong waiting periods for heat pumps.

Commercial and multifamily developers are increasingly frustrated, Shapiro said, since they insist, “we know how to get low-interest financing. Our hurdle is getting competent contractors and doing good work.”

Ithaca’s electrification plans seem poised to keep trundling along. There may never be a reckoning. BlocPower said it is preparing to bid on a new RFP for energy audits of municipal buildings, and hopes to bring heat pump incentives to the local wastewater treatment plant, which has struggled to hire public employees due to uncompetitive wages, The Ithaca Voice reported. To manage the staffing shortage, Ithaca brought in a private contractor, which came at a premium. If there is a gap between rhetoric and reality, here, it doesn’t look like it will be crossed anytime soon.

“I have mounting fears that electrification itself is not the answer,” confessed Barken, the ex-councilmember. “Our likely next mayor, Rob Cantelmo, seems eager to embrace the glitz of flashy green-deal slogans, but I question his ability to articulate the challenges that have hindered progress with the honesty necessary to really lead.”

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