Published on May 18th, 2014 | by Guest Contributor8
Why Now Is The Time For The Commercial Building Industry To Jump On Board With Solar
May 18th, 2014 by Guest Contributor
By Jamie Evans
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.