Solar energy is one the most promising investments commercial building owners can make to add value to their existing roof asset and to their business. Not only can solar extend the life of the roof by protecting it from harsh weather conditions, but the financial tax benefits and energy production when taken together can add significant value to an owner’s bottom line.
However, evaluating solar energy (PV) can be a daunting task for any commercial building owner. Solar is a complex and unfamiliar technology for many, especially when you begin to consider issues such as roof integration, utility connection, and ownership structuring.
The truth is solar PV can create tremendous value for a commercial building owner if designed and implemented correctly. Creating this value is a complex solution that requires specialized knowledge to achieve success. But if a building owner is considering solar, not all these complicated issues have to remain outside the purview of an owner’s control. There is relevant information commercial building owners can equip themselves with on the front end to make the decision easier on whether or not solar is the right fit for their building.
Below are a few key topics that every building owner should know about solar.
1. Important to Understand How Utility and/or Retail Electricity Providers Treat Solar
The US does not have a cohesive national energy policy, especially when it comes to the interconnection of solar and the compensation of renewable energy production sent to the electrical grid.
It is up to regional utilities or local jurisdictions to determine the value of solar and in some cases the treatment of distributed generation on the grid as a whole. In some markets, system owners pay a higher price for energy purchased from the grid than they receive for energy sold to the grid.
Specifically for the Texas market, no cohesive policy exists for addressing excess generation; rather individual Retail Energy Providers (REPs) determine the level of compensation for any energy you sell to the grid based upon their own policy.
Therefore, it is important to know how your own REP handles solar energy for its customers and, depending on how they structure their solar policy, system owners may need to renegotiate contracts or change providers altogether.
2. Know Your Building’s Energy Consumption Patterns
Understanding a building’s energy consumption patterns go hand-in-hand with the REP one maintains in Texas. The majority of REPs in Texas do not offer retail rate compensation for excess generation, so in order to maximize the economic return of the system, owners should try to match their own consumption demand profile with the PV production profile.
Bigger is not always better when it comes to designing system size for solar.
3. The Roof and Solar Work Well Together, if Installed Correctly
The roof is an important asset to protect for any building owner.
The idea that a newly installed solar system can cause leaks or disrupt the integrity of the roof during extreme weather events is an understandable and common concern. However, the growth of the industry has allowed contractors and developers alike to advance installation and design standards in order to address the specific concerns of both building owners and insurance companies.
Examples of these standards include UL 1703, which ensures modules do not create fire hazards when in operation, as well as the solar specific provisions within the International Fire Code, which requires 6-foot-wide perimeter setbacks to safeguard against creating dangerous wind-uplift scenarios during high wind events.
Due diligence of site specific conditions is still very important to evaluate whether the roof is capable of supporting the solar equipment. But in terms of whether installation practices or the technology itself pose a threat to the integrity of the roofing system, it is clear that these standards in a general sense lay these concerns to rest.
Finally, in order to ensure that the solar installation sufficiently protects the integrity of the roof, it is important for system owners to use quality contractors who are certified to install these types of systems, and who are obligated to meet or exceed these industry design standards.
4. Solar Panels are a Commodity but Reliable
The price of solar energy has fallen dramatically over the past decade, driven largely by technological advances in the design, production and installation of solar panels. Over a period of 40 years the price of a solar panel per watt has fallen from $100/Watt to now below $0.70/Watt.
This significant price reduction has influenced a corresponding increase in installations as panel manufacturers have realized cost efficiencies through increased demand and economies of scale.
For a commercial business owner considering solar, it’s important to understand that the commoditization of solar is due in large part to the simple technology behind the solar panel, which for traditional applications has employed inexpensive silicon as the semiconductor of choice.
The unchanged nature of solar is a testament to the reliability of this underlying technology. Solar panels maintain no moving parts, with no sources of friction that could cause performance issues. And although there is a very slight loss of the energy producing efficiency from solar panels over time, most manufacturers still warrant their panels for at least 25 years.
Commercial building owners can be confident that the technology on their roof will continue to produce energy without reliability concerns.
5. The Marketing Effect is Larger Than You Think
In the 1st Quarter of 2015, Millennials became the largest population group in the work force. As a force in the labor market, this generation is just now moving up in the ranks of middle management, and still decades away from their peak buying power in the economy.
The business impact of these demographic trends will be staggering as this generation, and the values it espouses, will directly impact the future strategy of corporations.
Simply stated, corporate profits will track with the success of both the recruitment and retention of employee talent, as well as the consumer buying power this particular group generates. And the recruitment and retention of employees begins with a corporation’s ability to align corporate values with the values of Millennials.
What we know about Millennial’s values is that energy is an important issue. In fact, when it comes to investment in renewable energy, this demographic group overwhelmingly supports solar, both in terms of policy priority and as the future of our nation’s energy supply.
Surprisingly, millennials as a group don’t see this issue as environmental activism, but instead view this issue as “practical thinking.”
Putting It Altogether
In summary, it is important for commercial building owners to understand the key aspects of solar so that they can better make an informed decision about the viability of solar for their property. The solar energy market has drastically changed over the past few years, and previous rules-of-thumb for evaluating the cost/benefit of solar are falling by the wayside. Technological advances have cut the production and installations costs of solar in recent years, and the electrical generating efficiencies of this latest generation of solar panels continues to improve.
Moreover, a properly designed and properly installed solar/roof system can provide an excellent investment opportunity for the building owner. Solar energy can immediately lower a company’s expenses, provide short-term and long-term investment returns, and provide unique corporate marketing opportunities to business owners. There is also a new generation of consumers and employees who are looking for (and expecting) a different corporate culture from American businesses. Understanding each of these changing dynamics is key, and it is through this increased knowledge that building owners will utilize the power of solar to shape their businesses and building ownership strategies going forward.
For more information about how solar can help your business and commercial building, visit reinnovations.us