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We talk a lot about the benefits of going solar for your home or business. (For example: Solar is a Resilient Investment Against Inflation and Solar Energy Increases the Value of Your Home.) But what if you own a building and don’t really use much electricity? This is a common scenario with property developers who often own large buildings – with ideal roofs for solar – and rent out the space. Folks in this situation may be interested in renewable energy, but have a hard time justifying the investment without large electricity bills. Luckily, you have options. Let’s explore.
- The Power Purchase Agreement (PPA)ReVision has worked hard to identify values-aligned investors who will take on the expenses and risk associated with developing a solar project. These impact investors own the panels. In turn, the building owners get solar installed at no cost to them and get to lock in a rate for their electricity for 20 years that is lower than what they would pay their electric utility! It’s a win-win. It’s also off the balance sheet, which can often be beneficial for the developer. Our PPAs come with a buy-out option; if ownership is a priority that can be arranged.
- Upfront purchase to increase borrowing limit. It’s well documented that adding solar to a building increases its property value. Purchasing the system outright is an upfront expense, but these systems pay for themselves within a few years. Additionally, the increase in property value also increases the amount of money a developer can borrow against this property, thus allowing them to pursue other projects.
- Lease payments. This option is less common, but still worth mentioning. If a developer owns a large roof that is otherwise not being used, they could be eligible to receive a lease payment from a solar investor who will pay for the use of the roof to create a solar farm. In this scenario, the solar investor owns and maintains the array while the building owner gets a monthly payment for use of the roof. This would be a much smaller payment compared to the savings from the other two options, but is still a reliable source of additional income.
Frequently Asked Questions
What are our options for going solar on our roof?
The building owner typically pays for electricity in common areas. This might include things like emergency lighting, elevators, and security systems. Depending on the size of your roof, you might be able to fully offset this electric load with the solar array. If the system produces more electricity than you need, you may be eligible to sell the excess back to the electric utility through a process called net metering. (Please note: net metering credits work differently in different areas, so please talk to your solar specialist to see if this is an option for you.)
What if we don’t really have any electricity bills for the building?
Maybe the electricity you provide for the building is negligible. You can still install a system and set it up as a ‘full export’ system. In this scenario, the array produces solar normally and 100% of that energy generated is sent back to the grid. You as the building owner can get a locked in price per kilowatt hour generated so the array basically creates passive income for you.
Can my tenants use the solar on my roof?
Yes! If you write a PPA into the tenant’s lease agreement, several co-benefits are put in motion. First, the tenant locks in a rate per kilowatt-hour of electricity from the solar array. The tenant will still receive a bill from the electric utility, but they will have reduced the amount of electricity they are buying from the grid! They get cleaner energy and save money. As the building owner, you can realize the tax benefits, own equipment that is revenue-generating, increase your property value, and create a new marketing point! This might sound like a lot of administrative work, but ReVision can help get you up and running; once set up, this plan takes a quarterly one-click report to get everything squared away.
Solar for Real Estate Developers: It Just Makes Sense
We have over 20 years of experience at ReVision Energy, and have seen how solar energy can have environmental, financial, and marketing benefits. With more tenants asking for cleaner sources of electricity, we see solarized buildings with higher occupancy rates and less turnover. If you have been thinking about increasing your sustainability, it is never too early to contact us to get a preliminary design. From securing LEED points, aligning with Passive House or Living Building Challenge standards, or simply enhancing your green building portfolio, it is advisable to bring solar specialists into the conversation sooner than later.
