Three Paths to PV
October 14, 2010
Today's tip is about three different paths facility managers can take to financing and installing photovoltaic panels on their roofs.
Even with all the emphasis on green and sustainability, it's important to note that solar energy only makes up less than 1 percent of our nation's energy profile. So there is still much room for improvement. Here are three ways how.
The first is for facility managers to simply lay out the capital and pay for PVs upfront. This is by far the best option, say experts, because facility managers begin earning their payback from Day 1. Of course, not many facility managers will have that kind of cash, or be willing to accept the 10 or more year payback.
If that's the case, facility managers - at least those with larger-than-average expanses of roof - could enter into a power purchasing agreement, or PPA. The way this work is that a third-party company installs a PV array on your roof. That company will own and maintain the panels for a contracted amount of time - usually about 20 years. They'll then sell you the power produced by the panels for less than market rate. They win because they can sell the RECs associated with the PV power, and you win because you’re getting PV power for much cheaper than you would if you'd just buy it from the utility. At the end of the 20 years, a PPA contract usually stipulates that you’ll have to buy the PV array back from the third-party company, but usually at a cost much less than the system would be worth.
Finally, a third method, which is still in its infancy, is what's called property assessed clean energy - or PACE - financing. This works by allowing facility managers to pay for investments in energy upgrades or renewable energy with an annual assessment on their property tax bill over the course of anywhere from 5 to 20 years. Again, the advantage is that you'll not have to put out any initial capital outlay. Additionally, if you sell the building, the assessment stays with the building, not the owner. The downside is that only 23 states have initiated PACE-enabling legislation. And even if you live in a state with PACE-enabling legislation, your municipality has to enable similar legislation. So, keep an eye on this - as it may need a few years yet to really get going.