Looking at Solar Benefits from the Perspective of a Commercial Real Estate Owner

“We’ve found that the solar energy system not only helps with retaining clients, but also in attracting new ones.”

For this month’s edition of NEREJ, we spoke with commercial real estate owner Emerson White and his decision to install solar energy on his multiple properties.

Can you tell us a little about your commercial property investments?
We have six buildings representing about 75,000 s/f over ten acres. The buildings range from a converted airplane hangar built in the 1950s to our most recent buildings constructed in 2005. We have 25 tenants ranging from offices, to a race car engine manufacturing shop, to a Crossfit facility.

What prompted you to initially explore solar for your property? And what ultimately was the deciding factor(s) to pursue solar?
Years ago, we had a business distributing Swedish Chainsaws. That company was very environmentally conscious and it got us thinking about our own operations and environmental footprint. We considered wind energy but quickly decided solar made a lot more sense. As we looked at solar more closely, we began to realize there was the potential for significant energy cost reduction. Our solar provider, Solect Energy, sat down with us and walked us through all the options and from there we developed our plan. We installed our first [solar] system in 2012 and then another in 2013. And now under the SMART program we’re installing solar to our three remaining suitable buildings.

What impact has solar had on your property, your tenants? 
We have installed meters for most of our tenants which allows us to see how much energy they use. Although as the building owner we pay the utility directly, we know how much each tenant would be spending and can bill our tenants for the energy they consume. I made the decision to pass the savings created from the solar system on to my tenants and I currently offer them a 10% discount of what they would normally be paying. Our tenants really appreciate the energy savings but they also like the sustainability attributes. We’ve found that the solar energy system not only helps with retaining clients but also in attracting new ones.

What advice would you give to other commercial property owners that are considering solar energy?
With the new simplified solar incentive program in Massachusetts (SMART program), solar is a no-brainer. If you have the space, you need to install a solar energy system! I would also advise people to seek out a solar provider that specializes in commercial scale systems. You need someone who understands how business works and will sit down with you to clearly explain your options.

Any last thoughts?
Solar has served as the foundation for our sustainability efforts. We have made many upgrades to our heating and lighting systems, implemented recycling programs and many other environmental investments. However many of these efforts, although good for the environment, don’t offer the pay back for us the same way solar does.

SOLECT ENERGY’S ROOF-TOP SOLAR ARRAY PROJECTED TO COVER 100% OF MEDFORD DPW’S ELECTRICITY NEEDS

The City of Medford, Massachusetts, has collaborated with Solect Energy and PowerOptions to install a 235-kW solar energy system on the roof of the city’s new DPW Building. The array consists of 588 solar panels, which are projected to produce approximately 300,000 kWh of energy annually. Medford anticipates the array will generate nearly 100% of the DPW’s annual demand for electricity, for a projected first year savings of $11,000.

“The city has been making strides toward our mission of fiscal and environmental stewardship,” said Mayor Stephanie M. Burke. “We are pleased to make these investments in and commitments to our community and remain dedicated to expanding our goal to be carbon neutral by 2050.”

Medford was able to install the solar array with no up-front costs through the Solect Energy and PowerOptions Solar Program. Under the program, Solect Energy financed, installed and will service the roof-top solar array, while the DPW receives the power generated at a fixed price for a period of 20 years under a Power Purchase Agreement (PPA) negotiated with PowerOptions.

“At PowerOptions, our mission is to help communities save time and money on energy, so more resources can be directed toward serving the public,” said PowerOptions President and CEO Cynthia Arcate. “We applaud the City of Medford’s forward-thinking approach to energy and resiliency.”

Medford is committed to a region-wide effort towards a carbon neutrality goal by 2050, as part of the Boston Metro Mayors Coalition. As such, Medford has committed to reducing their carbon footprint and doing their part for climate change mitigation under the administration of Mayor Stephanie M. Burke. This leadership is supplemented by the City Council’s unanimous vote supporting the solar initiative last summer.

“Installing solar was always a part of the plan at the new DPW building, as it was constructed to be solar ready,” said Alicia Hunt, Director of Energy and Environment for the City of Medford. “Our partnership with PowerOptions was instrumental in executing projects and we are actively pursuing solar on other municipal buildings as well.”

In addition to the solar array, the new energy-efficient DPW building will be outfitted with an energy storage solution, and a fully functional micro-grid funded by a MA Department of Energy Resources (DOER) Community Clean Energy Resiliency Initiative Grant of $700,000. The City’s strategy is to harden the DPW and be resilient to increased potential of electric grid outages and provide continuous service in the event of an emergency.

“Solect commends the City of Medford for their renewable energy and resiliency initiatives,” said Matt Shortsleeve, Vice President of Development at Solect Energy. “We are proud to play a role in this project, and more broadly the City of Medford’s transition to clean and resilient operations.”

A Closer Look at the Changing Landscape for Solar Energy: Key Trends to Watch in 2019

 

 

 

 

 

 

 

 

As real estate developers and property owners across the state fine tune their forecasts for existing buildings and new projects for 2019, its worthwhile to take a closer look at the changing landscape for solar energy. Massachusetts has been a regional leader for solar friendly policies and the deployment of solar energy. For 2019, the Commonwealth is making a number of significant changes to its incentive programs that are particularly helpful for commercial real estate owners and may serve as an example for other states. In addition, new technologies and approaches are continuing to drive down costs and enhance returns through innovative O&M practices. We take a look at three trends, (revised solar incentives, energy storage and new O&M opportunities) that should drive the market in the next year.

Attractive Incentives/Predictable Financing Under SMART (Solar Massachusetts Renewable Target). The new solar incentive program from the Massachusetts Department of Energy Resources which is rolling out the end of 2018 offers many attractive benefits for building owners.

• Project cash flows are more predictable under SMART because the tariff rate is locked in at the start of the project and paid monthly, so revenue streams are predictable for 20 years (as opposed to ongoing monthly aggregations and yearly auctions under the current SREC program).

• Predetermined rates simplify forecasting: Building owners earn a predetermined rate for the energy they produce. In addition, they will get paid directly from the utility every month as opposed to quarterly with no predetermined value for SRECs. All of this will make it much easier to predict revenue and energy cost savings.

• SMART has attractive “adders:” Essentially additional incentives that are designed to encourage specific types of projects. These are in addition to the base tariff rate for projects providing additional benefits to the community; such as low-income housing, building mounted, public, or a project sited on a landfill.

• Lease Your Roof and Maybe Finance a New One: This deserves a closer look. Would you like to add a new revenue stream to your building and benefit from a new roof at the same time? A key provision in SMART is the ability to more easily create “stand-alone” solar projects, meaning that they are no longer behind the meter. Now building owners can install projects and sell the energy directly to their utility, and at a predetermined monthly price for 20 years. Owners aren’t burdened with finding/engaging tenants or other off-takers (energy consumers). Also, since the “customer” for the power is your utility, owners benefit from an investment grade credit entity. This combination of fixed monthly payments and an investment grade credit allows solar developers to structure deals that can include the costs of roof upgrades and even new roofs as part of the solar project.

Solar + Storage: There is a lot of excitement in the state, and across the country, about energy storage and its potential in the commercial and industrial (C&I) sector.

• Storage Reduces Peak Demand Costs and Builds Resiliency: Working in tandem with a rooftop solar PV system, an energy storage system allows a facility to generate its own power, store it and use it when needed. Building owners benefit by reducing expensive demand charges, avoiding time-of-use rates, providing power quality assurance, and in some cases enabling back-up power when needed. We expect 2019 to be the year that truly launches energy storage with a spate of new incentives, including a storage “adder” in the SMART program, as well as new incentives for “active demand management” being developed through the State’s energy efficiency programs and expected to start next year. Massachusetts will also be developing rules for a “clean peak standard,” which will be another revenue opportunity for owners of solar and storage systems, though this program will be a bit further out with a scheduled start date of Jan. 1, 2020.

Cost Effective O&M Services:   New technology and more sophisticated software offer unprecedented insight into ensuring that a solar system operates at peak capacity.

• New data acquisition systems (DAS): Make it possible to remotely and constantly monitor a solar energy system. Your service providers will know if your system is working at maximum efficiency and will be alerted immediately should your array experience a loss in production. These tools can also be used to track a building’s overall energy use, providing helpful information that can give property managers and owners insights into where they might implement additional energy reduction measures.

• Drones have emerged as a cutting-edge tool in the O&M toolkit: Equipping drones with infrared cameras allows a solar service provider to identify specific panels or other pieces of equipment that are not performing properly–in a fraction of the time it might take manually. This reduction in man-hours is highly cost effective. By speeding up the time of issue identification, diagnostics and correction can be more addressed immediately ensuring an array can quickly get back up and operating at peak efficiency.

• New user-friendly interfaces and reports: Show how much energy the system has produced and track SREC (or other incentive) payments. This makes it easier to understand how a system is contributing to your bottom line, making fiscal planning easier. It will also give you a clearer picture of how much energy you are generating versus how much you are still buying from the utility. An added bonus is that these systems provide the data necessary to identify any discrepancies on your utility bill.

As you plan your budgets for 2019, it is worth calculating the benefits of solar energy, and how it can shine a brighter light on your bottom line.

 

 

ROOFTOP SOLAR ARRAY PROJECTED TO COVER 100% OF MEDFORD DPW’S ELECTRICITY NEEDS

The City of Medford has collaborated with Solect Energy, the state’s leading commercial-scale developer and installer of solar energy systems, and PowerOptions, the region’s largest energy buying consortium, to install a 235 kilowatt (kW) solar energy system on the roof of the City’s new DPW Building. The array consists of 588 solar photovoltaic (PV) panels, which are projected to produce approximately 300,000 kilowatt hours (kWh) of energy annually. Medford anticipates the array will generate nearly 100 percent of the DPW’s annual demand for electricity, for a projected first year savings of $11,000.

“The City has been making strides towards our mission of fiscal and environmental stewardship,” said Mayor Stephanie M. Burke. “We are pleased to make these investments in and commitments to our community and remain dedicated to expanding our goal to be carbon neutral by 2050.”

The City of Medford was able to install the solar array with no up-front costs through the Solect Energy and PowerOptions Solar Program. Under the program, Solect Energy financed, installed, and will service the roof-top solar array, while the DPW receives the power generated at a fixed price for a period of 20 years under a Power Purchase Agreement (PPA) negotiated with PowerOptions.

“At PowerOptions, our mission is to help communities save time and money on energy, so more resources can be directed toward serving the public,” said PowerOptions President and CEO Cynthia Arcate. “We applaud the City of Medford’s forward-thinking approach to energy and resiliency.”

The City of Medford is committed to a region-wide effort towards a carbon neutrality goal by 2050, as part of the Boston Metro Mayors Coalition. As such, Medford has committed to reducing their carbon footprint and doing their part for climate change mitigation under the administration of Mayor Stephanie M. Burke. This leadership is supplemented by the City Council’s unanimous vote supporting the solar initiative last summer.

“Installing solar was always a part of the plan at the new DPW building, as it was constructed to be solar ready,” said Alicia Hunt, Director of Energy and Environment for the City of Medford. “Our partnership with PowerOptions was instrumental in executing projects and we are actively pursuing solar on other municipal buildings as well.”

In addition to the solar array, the new energy-efficient DPW building will be outfitted with an energy storage solution, and a fully functional micro-grid funded by a MA Department of Energy Resources (DOER) Community Clean Energy Resiliency Initiative Grant of $700,000. The City’s strategy is to harden the DPW and be resilient to increased potential of electric grid outages and provide continuous service in the event of an emergency.

“Solect commends the City of Medford for their renewable energy and resiliency initiatives,” said Matt Shortsleeve, Vice President of Development at Solect Energy. “We are proud to play a role in this project, and more broadly the City of Medford’s transition to clean and resilient operations.”

SMART Solar Application Checklist

Finally the time has come, with the SMART solar program officially kicking off on Monday! The initial application period will last from Monday November, 26 until 11:59 PM ET on November 30, 2018. All applications submitted between opening day and midnight November 30, 2018 will be considered to have been submitted at the same time for the purposes of establishing a queue to process applications for placement into Capacity Blocks. All applications received on/after December 1, 2018 will be reviewed on a first come, first served, basis. This means that unless your project is already built, now is the time to get started!

Time is of the essence for the SMART program, due to the declining blocks for the incentive values, so it’s imperative to move quickly with application items. Accordingly, we thought it would be helpful to share a checklist of items needed in order to submit your commercial solar project to be included in the program. While the list looks daunting, remember, if you are working with a full-service solar provider they will ensure all items are completed, properly filed, and organized every step of the way. All you need to do is make the commitment to solar!

  1. The Application Fee is self explanatory, and one of the easiest pieces of the puzzle. This is taken care of by some providers, like Solect.
  2. A counter signed Interconnection Service Agreement (ISA) represents your approved agreement with the utility to connect your array to the grid.
  3. Evidence of site control is represented with either a fully-executed LOI, contract, PPA or Lease Agreement, which demonstrates the ownership of the real estate where the array is situated, and the ownership structure for the array itself.
  4. Online Certification Form – signing off on terms and conditions as you submit your application online is as simple as it gets!
  5. Submission of a one line diagram and site plan of the solar array is standard operating procedure for solar installation, and having an engineer stamped proof is all part of the process.
  6. A recent copy of the utility bill if solar is being installed behind-the-meter (BTM)

 

The following requirements are only necessary for certain project types, but will apply to many projects waiting to be accepted to the program.

  1. The documentation for incentive “adders” is needed on a case by case basis, based on how your array is being constructed and what adders you are applying for.
  2. In the event your array is over 1 MW, evidence of your filing for FERC Qualified Facility (QF) status is required to properly classify your array.
  3. For solar ground mounts and canopies, all non-ministerial permits need to be obtained to ensure your array is zoned properly and in accordance with all the applicable rules and regulations. Building large ground mounted projects often entails more rigorous zoning requirements, and may need supplemental evidence of proper approval that goes beyond the ministerial proof required for smaller arrays.

Ultimately, the SMART Application Checklist is a culmination of all the paperwork, design, and contracts that need to come together to build your array and ensure you can receive the SMART incentives. In order to be accepted into the program quickly, and be able to take advantage of higher-value incentives it’s imperative to make the commitment to solar sooner than later and partner with a provider you can trust to take care of you every step of the way.