Category: Uncategorized

HOW A SOLAR DEVELOPER MAKES MONEY

Solar CFO gives our clients the truth about commercial solar to make your transaction completely transparent
Solar CFO gives our clients the truth about commercial solar to make your transaction completely transparent

HOW A SOLAR DEVELOPER MAKES MONEY

Casey Gilley

Casey Gilley

Solar / Commercial Real Estate / Project Finance

If you are familiar with commercial real estate development, the risks and rewards associated with solar development are quite similar. This article will use real estate development as an analogy so you can understand how and when your solar developer is making money on your commercial solar project and you can ensure that you are getting the best deal possible.

So what does a solar developer do anyhow? Like real estate developers, solar developers source a project, line up financing (equity and debt), then design and build the project. Commercial solar is installed by an “EPC” contractor which is the equivalent of a “GC”. Hire an ENGINEER to design and permit the project, PROCURE the solar equipment, then hire a qualified installation crew to perform the CONSTRUCTION.

HERE’S HOW THE SOLAR DEVELOPER MAKES MONEY

A solar developer will make two fees: a development fee / construction management fee and a profit at sale of the project (unless they are building a project with their own funds under a buy-and-hold strategy).

Development fees can vary widely but a range of $0.10 to $0.50 per watt is possible depending upon system size and scale. This equates to about 5% to 15% of total project costs. The profit on a sale of a system is function of the system cost and future electricity revenue from the off-taker, just like real estate has a return on cost metric which is a function of annual rent and building cost.

Like real estate, you can sell a solar development project at different phases: Pre-NTP, NTP, or PTO (more on that later). The value of the project increases as each milestone is reached. Real estate can be sold as raw land, land with entitlements, a completed building, or a fully stabilized building. The phases of a solar project are similar.

NTP (NOTICE TO PROCEED): Finding a solar project and “entitling” it, is where the action is at. This is where solar developers make the highest ROI with a relatively small amount of capital out-of-pocket (around $20,000 for an average commercial solar project). It’s arguably the most difficult part because you are securing a deal. In real estate, a developer can tie-up land, put it in escrow, then start working on the entitlements to build a project. Once the real estate developer has the entitlements, they can close on the land and obtain cheap financing to build a project.

Once a solar developer has a project at NTP, the developer can go to a variety of financing sources including wall street funds, debt lenders, and private investors to obtain financing to build your project. Another option is the developer can sell your entitled project for a profit to an investor who wants to build and own the project. Many large solar funds do not take pre-development risk, so at NTP the pool of investors becomes much larger. Investors are looking to make somewhere around a 10-12% unlevered IRR (after thetax credits) at this point because there is still execution and construction risk. The solar developer is going to make the spread between their out-of-pocket costs and whatever the buyer will pay by backing into the 10-12% IRR target.

No alt text provided for this image

PRE-DEVELOPMENT

Most investors are not willing to take pre-development risk, so the solar developer must use their own cash for expenses leading up to the construction of the project. A solar developer needs a few signed documents and approvals to have a real deal and make money. These are like having entitlements for a piece of raw land to develop for real estate.

Site Control / rights to your roof or parking lot.This can come in the form of lease agreement, easement, or similar agreement. This can also come in the form of an “option” to control your roof / site once all of the approvals are received. For example, the building owner will give the developer exclusive rights to develop their solar project for a period of 6-12 months in exchange for consideration. The developer is incurring legal fees and spending time with the building owner negotiating these documents.

Off-taker PPA (Power Purchase Agreement).All projects need someone buy the electricity produced by the system at a set price.  The buyer is called the “off-taker”. The higher the electricity price, the more valuable the solar project. The price might be fixed or it could be a floating number that mirrors utility costs (i.e. you sell power for 5% less than the utility would have charged). The PPA could be with (A) one or more tenants in a building (NNN leases); (B) the building owner who is charging tenants for electricity and seeking reimbursement (gross leases); (C) the owner-user of a building; or (D) a municipal or government program such as community choice aggregator.

Design & Engineering Documents: A solar system layout, an electrical one line diagram, and a structural analysis of the site to verify the roof can support the system – all stamped by a Professional Engineer will be needed. Once the above documents are obtained, the solar developer can submit to the city or county planning department for approval. Engineering plans will cost the developer $5,000 to $20,000 for a typical commercial real estate project. Engineers can turn around a plan set within 2-4 weeks in most cases and the building permit will take a few weeks as well, depending on jurisdiction.

Interconnection agreement.This is the agreement that allows your building / solar project to feed into the grid of the local utility so that the building can draw power from the grid when solar electricity is not available, but also send any excess power generated by your project back into the grid. The solar developer may choose to submit an application to the utility to obtain approval for interconnection in parallel to the building permit application process. Interconnection costs vary by jurisdiction but about $5,000 is a ballpark estimate. The site layout and one line diagram from the engineering plans will be required to submit Interconnection.

Once the solar developer has all of the above approvals in-hand, this is considered “NTP” or notice-to-proceed.  The hard work is done, and the developer can cash-in for having a deal just like a real estate developer can sell a fully entitled project for a profit.  

No alt text provided for this image

PERMISSION TO OPERATE (PTO)

Now you are at NTP, next step is to procure the equipment and construct the project. Solar developers who want to make even more money will build the project through “PTO” or permission to operate. They will make more overall dollars, but the ROI is much lower because they are fronting all of the hard costs for materials and labor to construct the project.

The engineer should provide the solar developer with an exact bill of materials which can be used to solicit quotes from vendors to procure the equipment. A good system will have Tier 1 panels as rated by Bloomberg with a warranty of 25 years. The final step is to hire a qualified contractor to install the racking, solar panels, and complete all of the wiring for your project. Depending on size, a typical solar project for a commercial real estate building can be installed in about 2-6 weeks once materials arrive on site.

Once the physical components are installed, the system is ready to energize / commission. The contractor will ensure that the system is properly connected to the meter and that the interconnection requirements are met. The city will inspect the site, verify documentation, and then sign off on the final building permit. The formal industry term for this is PTO (permission to operate from the utility). The date the project is actually turned on, and responsibility handed over from the contract to the site owner is COD (Commercial Operation Date). Once the system is at PTO, this similar to a building that has a Certificate of Occupancy.

Execution and construction risk are no longer an issue, which means that even more investors are willing to buy the project from a solar developer. It’s the equivalent of a stabilized project, although there will still be some bugs to work out. At this phase, depending on the ultimate credit of the off-taker (or buyer of the electricity) an investor is looking to earn a 7-9% unlevered IRR.  The cost of the system including the development fee that the solar developer is charging, the PPA price, annual escalations, projected building vacancy, and term of agreement all impact the price that the buyer is willing to pay, and hence impact the overall IRR of solar project.

PORTFOLIO SALE

Like real estate, the institutional funds have a minimum check size to do a transaction. Developers will need to build up a portfolio of at least 2-3 mW of projects. Now they can go sell this portfolio for >$5 million and hopefully make even more money.

At Solar CFO, we are giving our clients the truth about commercial solar and making your transaction completely transparent. Please contact me if you have any questions[email protected] or visit our websitewww.solarcfo.com. P.S. Ask me in a couple years if this is a good path to get rich in the solar business!

Credit Link: https://www.linkedin.com/pulse/how-solar-developer-makes-money-casey-gilley/

New B.C. Strata Rules Empower Homeowners with Access to EV Charging Stations

Enhancing Strata Living with Convenient Electric Vehicle Charging

In a significant move, the British Columbia government has introduced new rules that streamline the process for homeowners within strata developments to request electric vehicle (EV) charging stations. These regulations, effective immediately, provide clarity on the procedure for homeowners to make such requests and set specific timelines for strata corporations to respond.

Housing Minister Ravi Kahlon emphasized the importance of ensuring that the absence of EV charging access should not deter individuals from choosing strata living, often considered a more affordable housing option. These regulations align with the province’s commitment to accelerating the transition to zero-emission and electric vehicles.

Key Highlights with “Power My Home”:

  1. Response Timeline: The regulations establish a specific timeline within which strata corporations must respond to a homeowner’s request for an EV charging station. This ensures a prompt and efficient process, promoting the adoption of electric vehicles.
  2. Exclusive Parking Permissions: Strata now has the authority to grant an owner exclusive use of a parking stall for up to five years if the installation of an EV charging station is in response to the owner’s request. This ensures convenient and dedicated parking for EV owners.
  3. Supporting Clean Energy Solutions with “Power My Home”: The regulations mandate strata to obtain an electrical planning report to prepare for necessary upgrades to accommodate low-carbon energy solutions, including EV charging. This move aligns with the recent legislation aimed at expediting the adoption of clean-energy vehicles. Explore more about clean energy at Power My Home.

Josie Osborne, Minister of Energy, Mines, and Low Carbon Innovation, highlighted that the surge in electric vehicle adoption in British Columbia necessitates such proactive measures. B.C. passed legislation last month to expedite the transition to zero-emission and electric vehicles.

Electrical Planning Reports:

The regulations require strata to obtain an electrical planning report to facilitate upgrades for low-carbon energy solutions, including EV charging infrastructure. This proactive approach enables strata corporations to plan for associated costs and operations linked to the growing demand for electric vehicles.

Voting Threshold Adjustment:

Part of Bill 22, the Strata Property Amendment Act, introduces a reduction in the voting threshold from three-quarters to a majority for approving decisions related to EV charging equipment.

Regional Implementation:

The deadlines for obtaining electrical planning reports are being phased in over three years. Strata in Metro Vancouver, the Fraser Valley, and Greater Victoria are expected to have reports by late 2026, while other areas have until late 2028.

These regulations reflect a balanced solution, according to Tony Gioventu, CEO of the Condominium Home Owners Association, addressing the needs of owners desiring electric vehicles and charging facilities.

For more information about B.C.’s EV charger rebate program, visit goelectricbc.gov.bc.ca

Or email us at [email protected]

 

Empowering Communities with Solar Grid Technology

Welcome to the world of Solar Microgrids, where the sun becomes the driving force behind powering homes, businesses, and farms. In this article, we’ll unravel the concept of Solar Microgrids, their applications, and the transformative impact they bring to communities.

What is a Solar Microgrid?

Solar Microgrids are integrated networks or ‘grids’ of power, functioning much like the shared electricity networks used by you and your neighbors. The key difference lies in the source of energy – solar power. This innovative system captures, stores, and distributes clean electricity to entire communities through the installation of large, high-quality solar panels and batteries in a central location, often referred to as a ‘hub.’ This hub, securely housed beneath the solar panels, completes the microgrid by connecting electrical wiring to nearby houses, businesses, and farms.

The solar microgrid operates similarly to conventional power sources, with the central hub providing on-demand electricity to connected users. Families pay either a flat usage fee or a metered bill, contributing to the collective fund managed by an elected committee of community members. These funds are then utilized for future repairs or expansions of the network.

Solar Microgrids have proven successful in powering homes, hospitals, schools, businesses, irrigation pumps, street lights, and more. In Kenya alone, we have installed 10 solar microgrids with a combined capacity of 25.42 kW, bringing reliable, clean electricity to over 3,000 people.

Where is the Solar Microgrid Appropriate?

Solar Microgrids present a robust solution for rural electrification, particularly in remote communities without access to existing infrastructure. Ideal for small islands, mountainous regions, and remote rural areas, these microgrids thrive in regions with ample sunshine. Storage capabilities enable them to operate even during periods of sparse sunlight, making them versatile and reliable.

The scalability of Solar Microgrids is noteworthy. Systems range from 1.5 kW, supporting 25 homes and 5 businesses, to larger systems with capacities of up to 15 kW, catering to hundreds of households and small businesses. As communities grow, the microgrid can be seamlessly expanded to accommodate more users.

How Does the Solar Microgrid Work?

While Solar Microgrids hold immense potential as a renewable energy solution, their sustainability hinges on community involvement, training, and cooperation. At the heart of our approach is placing communities in control, working hand-in-hand with them from the inception to create a long-term vision and management plan. Discover more about our collaborative journey with communities as partners.

Join us in the solar revolution, where communities are empowered, and sustainable energy becomes a shared reality. Explore Power My Home and Energy Economics for more insights. Ready to embrace solar energy? Take the first step at www.powermyhome.ca.

Embracing the Power of Solar: A Sustainable Path Forward

The solar photovoltaics (PV) industry is experiencing a global boom, offering a promising solution to contemporary challenges such as climate change and universal electricity access. The success of PV plants hinges on their quality and performance, making them integral to a sustainable future.

Untapped Solar Potential and Global Energy Disparities

According to the International Energy Agency (IEA), achieving universal electricity access is a prerequisite for any net-zero pathway. Astonishingly, nearly 700 million people worldwide lack access to electricity, with many lacking stable power for essential services like healthcare facilities. Paradoxically, the sun provides over 200,000 times the energy the world currently generates daily, with more than 80% of those without electricity residing in Sub-Saharan Africa—where sunlight is abundant.

Solar PV: A Catalyst for Change

Solar PV emerges as one of the most cost-effective ways to generate electricity globally. In 2022, solar PV generation witnessed a remarkable 26% annual growth, surpassing all other renewable energies. Projections indicate its continued ascent, set to exceed coal by 2027. This growth is a positive sign, especially considering the imperative to meet climate targets, reduce carbon emissions, and ensure electricity access for all.

The IEA asserts that by 2040, electricity generation must constitute almost half of total energy consumption to achieve net-zero targets by 2050. With electricity currently comprising only 20% of global energy consumption, solar PV stands as a transformative opportunity for the century.

Expert Insights into PV Industry Dynamics

Roger Taylor, a PV industry expert, underscores the significance of PV plant investment in quality products, design, and construction processes. He emphasizes the low operating costs of well-built PV plants, with sunlight being a free and abundant resource.

PV solar power plants are intricate systems comprising thousands of components. Taylor stresses that the safety and reliability of these plants depend on the complex interplay of various stages, including development, design, engineering, construction, operation, and maintenance, along with cybersecurity measures.

Standards: Ensuring Quality and Safety

IEC International Standards play a pivotal role in enabling solar PV installations to meet globally agreed requirements for quality, safety, and performance. With around 200 standards for PV components and additional standards for system design, quality management, and cybersecurity, the IEC ensures adherence to high-quality benchmarks.

Addressing End-of-Life Challenges

The International Renewable Energy Agency (IRENA) highlights a potential increase in landfill waste as the PV market grows. However, adherence to standards, especially those governing design and construction, can mitigate environmental impact. Industry experts stress the importance of certifying PV components to specified quality levels, preventing premature retirements and ensuring environmental sustainability.

Global Certification Programs: Ensuring Quality Assurance

IECEE’s PV certification program offers access to qualified testing laboratories, certifying PV components according to IEC International Standards. These certificates assure compliance with global quality and safety requirements, instilling confidence across the supply chain.

Wolfram Zeitz, Executive Secretary for IEC CA Systems IECRE and IECEE, emphasizes the critical nature of assessing both components and the entire PV plant. This approach ensures the correct implementation of standards, maintaining quality and safety throughout the value chain.

Unlocking Solar Potential in Africa

Recognizing the resource limitations in many countries, IECEE’s PV certification program facilitates mutual recognition of conformity assessment certificates. In Kenya, the national certification approval scheme operates based on IECEE test reports and certificates, streamlining the clearance process for imported goods.

Irene Njine, Assistant Manager-Quality Assurance at KEBS, attests to the benefits of this program, citing time savings and simplified market entry for products tested by IECEE-recognized labs. Such schemes can also support governments in implementing incentives for solar products, as seen in Senegal’s quality control scheme, which exempts certified solar products from VAT.

The Future of Solar PV: Sustainable Growth

As solar PV experiences exponential growth, it aligns with the IEA’s vision of achieving net-zero emissions by 2050. Declining module prices and increased policy demands fuel this growth. Standards and conformity assessment play a crucial role in ensuring sustainable development, longevity of PV plants, and the realization of solar energy’s full potential.

In conclusion, the future of solar power looks bright, promising a sustainable energy landscape and addressing global challenges. Standards, certification programs, and international collaboration are key drivers in ensuring that solar PV continues to shine as a beacon of renewable energy.

 

Credit Liked to: Embracing the power of solar | IEC e-tech

Introducing PMH Energy Inc.: The Evolution of Power My Home

Energy Economics Solar

Energy Economics Solar

We’re partnering with IEP Energy Economics Ltd., known as Energy Economics, to:

In the world of renewable energy, change is the only constant. Today, we are thrilled to announce a significant evolution in our journey as a company. Power My Home has transformed into PMH Energy Inc., marking a pivotal moment in our commitment to providing sustainable, clean energy solutions to homeowners across the nation.

As we embark on this exciting new chapter, we want to take a moment to reflect on our roots and share our vision for the future.

Our Journey as Power My Home

Power My Home was founded with a simple yet powerful mission: to empower homeowners with the ability to harness the sun’s energy and reduce their carbon footprint. Over the years, we have had the privilege of helping hundreds of families make the switch to solar energy, leading to energy independence, lower utility bills, and a cleaner environment.

Our dedication to excellence, innovation, and customer satisfaction has driven our growth and success. We have strived to stay at the forefront of technological advancements in the solar industry, offering state-of-the-art solar panels and energy storage solutions to our valued customers.

Why PMH Energy Inc.?

The decision to rebrand as PMH Energy Inc. reflects our broader vision for the future. While “Power My Home” has served us well, we wanted a name that better encompasses our expanding range of services and our commitment to powering not only homes but also communities, businesses, and industries with clean, sustainable energy.

The “PMH” in PMH Energy Inc. still holds a special place in our hearts as a nod to our humble beginnings. However, it now stands for “Powering More Homes” and represents our broader commitment to addressing the energy needs of a changing world.

Our Continued Commitment

Our mission remains unchanged. PMH Energy Inc. is dedicated to:

Empowering You: We are here to empower you, the homeowner, with the tools and knowledge you need to take control of your energy future.
Innovating for Sustainability: We will continue to push the boundaries of solar technology and energy storage to provide you with the most efficient and eco-friendly solutions.
Fostering Community: We believe in the power of community and will work to create opportunities for shared energy solutions that benefit all.

Projects by Energy Economics

As part of our exciting partnership with Energy Economics, we are proud to highlight some of their noteworthy projects. You can explore their diverse portfolio and see the impact of their work in advancing renewable energy solutions by visiting [Energy Economics Projects]

What to Expect

With our new identity as PMH Energy Inc., you can expect the same level of professionalism, expertise, and dedication that you’ve come to know from Power My Home. Our website, contact information, and team members all remain the same, ensuring a seamless transition for our valued customers.

We are excited about this new chapter in our company’s history and the opportunity to serve you better. Thank you for being a part of our journey, and we look forward to a future filled with cleaner, greener energy together.

Stay tuned for more updates and exciting developments as PMH Energy Inc. continues to lead the way in sustainable energy solutions in BC.

What are Deep Cycle Batteries?

Deep cycle batteries are a type of rechargeable battery that are designed to be discharged and recharged multiple times. They are commonly used in a variety of applications, including solar power systems, wind power systems, and electric vehicles.

Deep cycle batteries are different from starting batteries (also called SLI batteries), which are designed to deliver a high current for a short period of time, like starting an engine. Deep cycle batteries, on the other hand, are designed to deliver a lower current over a longer period of time, making them ideal for applications where the battery is regularly discharged and recharged.

The most common types of deep cycle batteries are lead-acid batteries, which are widely used in a variety of applications. They are relatively inexpensive, durable, and easy to maintain, however they have a lower energy density compared to other types of batteries, and they are not as efficient in high-temperature environments. Another type of deep cycle batteries are Lithium-ion batteries, which have a higher energy density and they are more efficient in high-temperature environments, but they are more expensive and have a shorter lifespan than lead-acid batteries.

Battleborn direct replacement battery 50Ah 24v LiFePO4 Deep Cycle Batt – Volts energies

When it comes to deep cycle batteries, it’s important to choose the right type of battery for your specific application. Factors to consider include the depth of discharge (the amount of the battery’s capacity that will be used before recharging), the number of cycles the battery is expected to undergo, and the environment in which the battery will be used.

It’s also important to properly maintain deep cycle batteries, by keeping them clean, fully charged and at the right temperature. This will ensure that they last as long as possible and perform at their best.

In conclusion, deep cycle batteries are a type of rechargeable battery that are designed to be discharged and recharged multiple times. They are commonly used in solar power systems, wind power systems, and electric vehicles. The most common types of deep cycle batteries are lead-acid batteries and lithium-ion batteries. It’s important to choose the right type of battery for your specific application and properly maintain the batteries to ensure they last as long as possible.

What’s “Off-Grid Living”?

Off-grid living refers to the practice of living independently from the traditional power grid by generating one’s own electricity, water, and other necessities. This can be achieved through a variety of methods, such as solar power, wind power, hydropower, and even alternative energy solutions like biomass or geothermal.

One of the main benefits of off-grid living is the ability to be self-sufficient and not rely on the power grid or other public utilities. This can be especially appealing for those who live in remote or rural areas where access to the power grid is limited. Additionally, off-grid living can also be a more sustainable and environmentally-friendly lifestyle choice, as it reduces the dependence on fossil fuels and reduces the carbon footprint.

Off-Grid Solar System - Off-Grid Solar Kit | Unbound Solar

However, off-grid living also has its challenges. It can be costly to set up and maintain an off-grid system, and it requires a significant level of knowledge and expertise to install and maintain the system. Additionally, off-grid living often means living with limited resources and without the luxury of modern conveniences such as air conditioning, dishwashers, or other high-energy-consuming appliances.

In order to successfully live off-grid, it’s important to carefully plan and design the system. It’s also important to be aware of local regulations, as there may be legal restrictions or permit requirements for installing off-grid systems.

In conclusion, off-grid living is the practice of living independently from the traditional power grid by generating one’s own electricity, water, and other necessities. This can be achieved through a variety of methods such as solar power, wind power, hydropower, and alternative energy solutions. Living off-grid offers the benefits of self-sufficiency and sustainability but also comes with its own set of challenges like cost, maintenance, and limited resources. It is important to plan and design the system accordingly and be aware of local regulations.

Nova Scotia Power ‘working to resolve’ backlog of solar installation permits

The frontlines of solar energy say Nova Scotia Power is pushing their industry to a breaking point because of a backlog in permit approvals for hundreds of installations. The utility says it’s working diligently to get through the delay and is committed to green energy but opposition parties say that’s not the message they’re sending.

Nova Scotia’s solar energy sector went public this week with concerns over Nova Scotia Power’s processing time for solar installation permits.

“Huge demand for solar among Nova Scotians but we risk losing the summer install season with close to 1000 projects stalled,” Solar Nova Scotia tweeted on May 18, 2022.

For their part, the public utility says it is dealing with a backlog but it’s committed to working through it.

“Since January, we have processed approx. 650 electrical permitting requests and acknowledge that there continues to be a backlog which we are working to resolve as quickly as possible,” Stacy O’Rourke, Nova Scotia Power’s communications director, wrote in an email statement.

O’Rourke wrote that the utility is committed to phasing out coal and that processing permits for solar installations is a priority.

“Nova Scotia is not incentivized to bring on renewables at all, let alone in a timely fashion, and that’s a big problem,” said Claudia Chender, the Nova Scotia NDP critic for natural resources and renewables.

Chender says Nova Scotia Power’s attempt to charge solar customers a connection fee earlier this year demonstrates the need for the provincial government to reform how the utility is regulated.

“So that there’s a service standard for solar installation. So, that they’re incentivized differently not just for selling power but also for meeting our environmental targets and getting us towards renewables,” she said.

Tory Rushton, Nova Scotia’s minister of natural resources and renewables, says regulation changes are a possibility.

“I’ve been very clear right from day one, there’s nothing off the table. We made some amendments to the acts during the recent legislative sitting. We’re in the middle of regulations. This is an open file,” he said.

Rushton says the high demand from homeowners to have solar panels installed is a positive sign in Nova Scotia’s pathway to phasing out coal.

“I understand from comments made on social media from Solar Nova Scotia that there’s a high-interest rate so that’s a good thing. And we encourage Nova Scotia Power to move these things forward,” he said.

×
Powered by MoversBoost
SMS
Email
Phone