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Buildings 2nd UCB Installation

Published on May 18th, 2014 | by Guest Contributor

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Why Now Is The Time For The Commercial Building Industry To Jump On Board With Solar

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May 18th, 2014 by  

By Jamie Evans

2nd UCB Installation

There’s no question about it, studies have proven most Americans agree that renewable energy is crucial to our future. In addition, while electricity rates across the country continue to increase, solar panels become more affordable and viable than ever. Yet, at a time when green technology is gaining popularity and prices are decreasing, one question still remains – why aren’t more commercial building professionals investing in clean energy projects?

A matter of trust

Before we get to the solutions, let’s establish a few of the challenges facing commercial buildings wanting to go solar. Choosing when and how to go solar is a big decision for many companies. To take the first step, sustainability officers, building officials, and facility managers want to be certain that they are working with a qualified company that will stand by their installation for years to come. Solar installations require committed, experienced partners capable of ensuring a seamless process from conception to maintenance.

The solar industry has seen tremendous growth over the last several years and with this comes new players, some with little real-life project experience. This raises concern among commercial building professionals who are wary of staking their reputation on a large project with unproven, and possibly unreliable, partners.

Figuring out the finance

Even though costs have dropped, solar is still a big investment. Financing and monetizing solar assets may be considered the trickiest aspect of solar project development. The financial structures are complex and require experienced investment partners, notably those who can monetize tax credits and depreciation benefits to assess the true cost of ownership.

Solar Power Purchase Agreements (PPAs) that allow customers to reap the benefits of solar electricity without the upfront capital expenditure have gained popularity, however, structuring these deals through multiple contracts can become increasingly confusing. Furthermore, for customers contemplating PPAs, many of the traditional metrics used to calculate a return-on-investment are less relevant in the context of new financing opportunities.

Unfortunately, financing options tend to be limited for those in the non-residential market sector typically looking to install anywhere from 250 kilowatts to 20 megawatts. Many corporate and institutional investors view these projects as too small to be worth their while and tend to favor large- scale solar projects.

Old habits die hard

Perhaps the biggest barriers to going solar are the hurdles put in place by traditional project models. At present, outdated, inefficient processes mean dealing with multiple partners at every phase of development. Need a designer? There’s a third-party for that. Financer? Find someone new! Installer? Time for a different partner and more contracts. It’s a fragmented process that, understandably, drives many potential customers away.

This practice of dealing with multiple vendors creates an unnecessary layer of complexity. Projects slow down when these multiple entities with divergent agendas try to work together to prepare the installation, arrange financing, and secure operations and maintenance agreements. These delays only increase cost and, more often than not, waste money because of the confusion and backtracking with each third-party.

Making it work

Let’s remember, we started off this story talking about solutions. Becoming energy independent does not have to mean going it alone. With the development of new structuring models, building officers, facility managers, and sustainability officials can now join forces with trusted partners who streamline the process and take the complexity out of project management and financing.

From development and engineering, through implementation and project financing, to long-term operation and maintenance service, a new wave of solar solutions is entering the industry offering comprehensive, integrated platforms tailored to each individual customer. Working side-by-side, these partners help developers, building owners and facility managers decide on a system that meets their facility’s needs based on engineering, sustainability, and financial goals or requirements.

This trend of simplifying and streamlining the process is removing barriers that once stopped projects in their tracks, allowing more facilities to achieve solar success, stabilizing their energy costs, and serving as a symbol of their commitment to a more sustainable future.

About the Author: Jamie Evans is Managing Director and Head of U.S. Eco Solutions for Panasonic Eco Solutions North America and is charged with managing all aspects of Panasonic’s expanding U.S. eco solutions platform. Mr. Evans joined Panasonic in August 2011 and previously served as Director of Project Finance.

Prior to joining Panasonic, Mr. Evans served as Vice President of Finance at Safari Energy where he was part of a team that developed and financed multiple commercial scale solar projects. He has more than a decade of banking, finance and capital markets experience, having worked previously at UBS, Oliver Wyman, and BlackRock.

Mr. Evans holds a BA in Environmental Science and Economics from Duke University and an MBA from Columbia Business School.

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  • jimjenal

    This *is* a complicated process, but not an impenetrable one. In fact, my book, Commercial Solar: Step-by-Step, lays out the entire path from painfully high bills to a successful installation from the perspective of a facilities manager. It’s up on Amazon, give it a look.
    http://www.amazon.com/Commercial-Solar-Step—Step-Jenal/dp/061584376X

    • Offgridmanpolktn

      It was not my intention to represent these projects as not doable nor to say that we shouldn’t be pushing for more of them. Just wanted to get across to Mr Wimberley that it is way different from the home owner situation of deciding on a contractor and hopefully being connected within a few months.
      Maybe it can be understood that when doing this type of project at the corporate and or commercial level it is possible for it to fail or not perform up to specs just by the lack of cooperation from even low level employees and or minor bureaucratic opposition.

    • Kyle Field

      while this seems relevant to the topic at hand, I still consider self promotion spam. just my 2 cents…

  • Richard Davies

    Typical sales point of view :) (shame on both of you!)
    They should all buy Homebugs first… then they can at least work out what’s good for them :D

  • JamesWimberley

    A typical consultant’s viewpoint. This is Very Complex and needs Experts like me! Or businesses can see rooftiop solar as a standard no-brainer facility less complicated than air-conditioning and just do it, like IKEA.

    • Offgridmanpolktn

      A typical outsiders opinion. As a former facilities engineer (manager) I can confirm that changes to the structure, especially involving electrical connections are this involved. Not only do you need the involvement and cooperation of everyone in the corporate structure from the bottom maintenance personell that will have to keep them clean and snow free on up to the CEO that will insist on seeing a high enough level of return on investment. Then you get into government permitting which can go way beyond building permits to environmental influences (how many pigeon nests will be displaced) to the esoteric of how the appearance change will influence tourists opinion of the city.
      When you have spent thirty years surviving the corporate food chain you will understand that IKEA didn’t ‘just do it’ but took almost ten years planning on how to apply their renewable energy policies here in the US.

    • Kyle Field

      It’s exactly this complexity that makes me think vertical integration is key for these “small utility scale” installations. They aren’t as straight forward as residential and have way more variables, players, etc to line up. I’m personally stuck in the middle of a project trying to install 6mw on an industrial property in so cal (as an internal advocate within corporate structure trying to install on our property).

    • 5man

      Not entirely true. The proof is in the pudding. It is complicated and a pain in the ###. Which is why so few commercial entities do it. Same with energy efficiency. EE and RE are not priorities and hardly any commercial building owners have in-house staff to understand it, manage it and implement it. Except those like Wal-Mart, Google, Apple and IKEA with boatloads of cash and real estate portfolios large enough to justify hiring that expertise. Other big issue is that no one wants to get locked into a 20-year agreement. Commercial building owners have absolutely no idea where energy prices are going to go even in the next 5-7 years, nor are they paid to know this. Let alone whether their company will want to sell the building in three years. Solar providers would do well to provide financing that doesn’t penalize the host for opting out of the solar agreement in certain events (i.e. sale of the property). The solar agreement can be re-priced based on the likelihood of such an event taking place within 5 years, 10 years, 15 years, etc. Or the owner can just finance the project using PACE (provided they can monetize the tax benefits themselves).

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