commentSolar Services Bridge the Owner-Tenant Gap
It’s no secret that there are lots of underutilized flat roofs out there—roofs that could be producing energy instead of just cooking in the sun. San Francisco-based Recurrent Energy estimates that just by putting today’s off-the-shelf photovoltaics on the large flat roofs of leased buildings in the U.S. with good solar exposure, it could generate 15,000 megawatts (MW) of power. (For reference, a single large power plant produces on the order of 1,000 MW.) In December 2007, Morgan Stanley committed $200 million over the next two years to finance these installations.
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In single-tenant leased buildings the tenant typically pays the utility bills, so the owner has little financial incentive to lower the energy costs, while the tenant can’t justify a long-term investment in a building it doesn’t own. To bridge that gap, Recurrent Energy offers to install its own photovoltaic (PV) panels on rooftop space leased from the owner and to sell the power it generates to tenants. This is an extension of the power-purchasing agreement model that some companies are using to install PVs on owner-occupied buildings. A newly published report from the U.S. Department of Energy and the National Renewable Energy Laboratory in Golden, Colorado, “Assessment of the Technical Potential for Achieving Net Zero-Energy Buildings in the Commercial Sector,” estimates that most single-story buildings could meet all their energy needs with rooftop PVs.
In markets with strong financial rebates and other incentives, such as California, New Jersey, and Hawaii, Recurrent Energy says it can guarantee rates to the tenant that are no higher than standard utility rates. Some of those rates are governed by time-of-day pricing, and the output from the PVs will coincide with the hottest time of day—when energy demand and utility rates are highest. There is also an option to unbundle the solar electricity from its environmental benefits and sell plain vanilla power to the tenant while selling its virtues separately as renewable energy certificates (“green tags”) to another customer. In this scenario, the power sold to the tenant would be cheaper than grid power, according to CEO Arno Harris, but he expects that most tenants will want the power with its environmental benefits intact.
Recurrent Energy has yet to sign its first deal, but it is “in late-stage negotiations with several large customers,” said Harris, and hopes to have its first installation in place by the summer of 2008. The company is targeting real-estate investment trusts (REITs) and institutional owners of real estate portfolios, especially those with big, flat buildings. “We’re going after the types of structures in which solar economics are good, such as industrial, office, and commercial-type buildings,” said Harris.
For more information:
Recurrent Energy, Inc.
San Francisco, California
415-675-1500
www.recurrentenergy.com
This article was produced by BuildingGreen, Inc.- www.buildinggreen.com
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