Insights for your investment properties...

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Solar energy offers commercial real estate (CRE) property owners and managers an exceptional opportunity to generate revenue and reduce utility expenses.

Installing a solar photovoltaic (PV) systems also fosters closer connections with tenants and their client bases, facilitates lease extensions and enables a sustainable footprint.

Evaluating the benefits, financial structures and operations of a solar facility can be a time consuming and complicated process.  

This is where our SolarIncentives.tech team and their Solar partners come into play. SolarIncentives.tech partners with firms who provide solar development and possess a team of professional engineers, financial experts and project managers.   

Together, our partners and our team help educate the CRE industry about the opportunities of solar PV and help them sort through the array of options and financial structures available. 

Because of the CRE sector’s diversity in types of ownership, building styles, tenant arrangements and lease durations, solar installations can become relatively complex, multi-party transactions. 

This is where our experienced partners will help make the complex simpler.

Our research indicates many CREs have had difficulty quantifying and allocating the benefits of solar between tenants, landlords and investment partners. 

The good new is, the solar and financing industries have  worked hard to standardize project structures which improve building owner’s ability to demonstrate, capture and share the benefits of solar, and quantify and communicate these benefits to their tenants and partners as needed. 

We got you covered!

1.  Solar Can Improve Property Net Operating Income (NOI) and Net Cash Flow (NCF)

The right solar system can improve property performance through two primary avenues: (a) raise top-line revenues and (b) lower operating expenses.   

Research shows Energy accounts for nearly 20% of average office building expenses. 

By implementing solar, the building will lower the electricity bill by 20-40%, significantly improving their margins and bottom line.  

2. Solar Offers a Mechanism to Extend Lease Terms and Increase NPV 

The majority of CRE owners agree solar can provide tenants with a compelling reason to extend the terms of their lease. This, in turn, provides an opportunity for the owners to increase the NPV of their buildings. 

3.  Solar can serve common areas and individual tenants 

 Historically, solar on multi-tenant properties could only serve common areas.  Because of  the increased availability of “virtual net metering” – a policy which allows customers to benefit from solar systems, even if they are not directly integrated to that system -   individually metered customers can benefit from commercial solar systems. Availability of this type of solution may be limited by law and regulatory oversight.

4.  Solar+Storage is increasingly cost-effective and can offset demand charges 

Although not currently available in all areas,  batteries and other forms of energy storage are quickly improving in capability and decreasing in costs.

5.  Federal and State Incentives 

Commercial Solar is eligible for a variety of Federal and State incentives which lower the overall cost of going solar. The main Federal incentive is the Investment Tax Credit (ITC), this is a credit for as much as 30% of the total system cost.  

Additionally,  the owner can depreciate the system under the Modified Accelerated Cost Recovery System (MACRS), subject to certain conditions.  Many states also have different incentives, including Rebates, Renewable Energy Credits and other financing programs. 

6.  CRE owners can structure the solar energy costs and benefits in a variety of ways 

(a)  CRE owner takes all the income and sells power back to the grid. The tenant is not involved.  

(b)  CRE owner signs all benefit (and all responsibility) to tenant, and requires solar lease or PPA to be co-terminus with current lease. 

(c)  CRE owner splits the costs and benefits with tenant. This structure can provide the tenant a better rate on electricity and CRE owner gets rental or lease income. The CRE owner keeps liability/responsibility for solar, possibly beyond end of current tenant lease. 

7.  Solar can be financed through a variety of mechanisms, many with immediate cash flow benefits 

There are many financing options available for solar, many of which are flexible and can be matched to the building owner’s specific situation.  

(a)  Power Purchase Agreements (PPA) – the solar financier raises the necessary Tax Equity and other capital, develops and maintains the project, and charges a preset fee per unit of energy ($/kWh). Historically, this option has been limited to highly rated-credit entities based on a 20-year Agreement.  

(b) Operating Lease – Operating Lease structures allow for quick ownership of the solar asset and can provide the Tax Equity necessary to monetize the tax benefits.  

(c)  Self-finance – Companies that have available financing, tax appetite, and the right economic drivers can self-finance a system, sometimes backed with bank debt supported by the system assets. 

(d)  Property Assessed Clean Energy (PACE) - Commercial PACE, or C-PACE, is available in 35 states + DC currently, with more state programs in development. PACE financing is tied to the property, not the end-user or property owner.  More than $800 million in projects have been financed. There are advantages and disadvantages to PACE. Contact us for additional information and to ensure you make the right choice.

We are available to prepare a comprehensive  proposal estimate for you with no cost and no obligation. 

Solar Proposal Estimates typically include the following steps:

• Property Assessment - generally no need to visit property, done virtually
• Recommended Design - Size, Type (rooftop/carport, combo), Production, etc.
• Financial Modeling  - PPA, Operating Lease, Self-finance
• Review - Proposal review with Engineers and Finance team

Our Proposal Estimates provide you with all the information you need to make an informed business decision.  Does Solar make sense for your business?

We're here to help you discover!

856-477-2512

don@SolarIncentives.tech