GLUMAC - Engineers for a sustainable future

Erik Ring, P.E., LEED^®AP, Irvine Associate 

Although there is increasing interest in on-site renewable energy systems, many commercial building projects are not able to install photovoltaic (PV) solar electric systems due to the high initial cost of these systems. However, a new business model has emerged that allows buildings to install renewable energy PV systems without up front capital.

Several firms are offering third-party, turn-key financing and installation of PV systems to customers who enter long-term power purchase agreements for the electrical output of the on-site PV system.

Typically these third-party PV installers are seeking customers with at least 25,000 sf of unshaded roof or site area suitable for a 200-KW or larger PV system. These companies tend to work in states such as California and Colorado, that offer rebates and incentives for PV systems, along with utility net-metering laws. The PV installer designs, installs, and maintains the systems which are located at the customer's facility. Generally customers must sign a 10 to 20-year power purchase contractor with the PV installer, but often the power purchase agreement guarantees that the electrical rates charged by the PV installer for the on-site renewable energy will be at or below prevailing utility rates. At the end of the power purchase agreement, ownership of the PV system typically transfers to the customer.

The customer hosts a significant PV installation, contributing zero-emission renewable energy to their facility, with no up-front cost and with annual electrical costs that are at or below prevailing utility rates. The PV installers have learned how to leverage rebates, tax incentives, economies-of-scale and commercial financing to make a reasonable return for their investors over the long term power purchase contracts.

This type of third-party PV financing arrangement is a win-win for buildings with significant electrical loads and large unshaded roof area who can sign a long term agreement for their facility. A variety of customers meeting this basic criteria, including grocery stores, big-box retail stores, distribution warehouses, self-storage facilities, and government office buildings have all signed up for deals with third-party PV installations to provide renewable energy to their facility while maintaining or reducing their long term utility costs.

Leading firms that offer commercial financing of PV systems include:

• SunEdison
• Conergy
• BP Solar
• Solar Integrated Technologies
• Powerlight