Assessing Solar Feasibility for Corporate Facilities FMA Progressive Energy, Environment and Sustainability Summit May 28 th, 2014
Introduction The business case for solar has improved markedly of late: Dramatic reductions in solar equipment & installation costs Proliferation of attractive state-level solar incentives Electricity price increases and volatility Growth in solar project structuring alternatives (lease, PPA, purchase) However, the patchwork nature of the U.S. solar market makes it difficult to assess solar feasibility across corporate real estate portfolios Project economics can vary significantly facility to facility Today we will discuss an analytical framework for assessing solar feasibility We will also highlight the primary project structuring alternatives available for corporate entities seeking to go solar 2
Why Go Solar? 3 Economics Well-structured Solar Projects can provide compelling financial investment returns with highly attractive risk/return characteristics Reliability Solar Systems have a proven and reliable track record, while remaining simple to install and easy to maintain throughout their 30+ year design life Sustainability Solar Energy Systems deliver on-site clean energy that can play a key role in achieving Corporate Environmental goals while also providing strong marketing and public relation benefits Energy Procurement Solar Energy provides a long-term hedge against future electricity price increases and volatility
Solar Power Basics Solar Photovoltaic ( PV ) Systems generate electricity by converting light energy into electrical energy via the photovoltaic effect Solar PV Systems are comprised of 4 Easy Pieces : Solar Modules Inverters Mounting System Monitoring System Ballasted Rooftop Solar PV System Ground-Mounted Solar PV System 4
Solar Project Assessment Criteria Realizable project-level financial returns drive solar feasibility Project-level solar economics are primarily a function of : Local solar resources Avoided Cost of Electricity Total cost of installed solar (inclusive of all financial incentives) $ / kwh $ 5 Solar-friendly interconnection policies (i.e. net-metering rules) are also a necessary pre-condition for solar project feasibility
6 Local Solar Resources
7 Avoided Cost of Electricity
Annual PV Installations (MW) Cost/Capacity of Installed Solar U.S. PV Installations and Average System Price, 2000-2013 $12.00 5,000 4,751 $10.00 4,000 3,000 2,000 1,000 0 3,369 1,919 852 435 298 4 11 23 45 58 79 105 160 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 $8.00 $6.00 $4.00 $2.00 $0.00 Weighted Average System Price ($/W) Residential Non-Residential Utility Weighted Avg. Source: seia.org 8
Solar Feasibility Ranking SOLAR RANKING CRITERIA Division Solar Incentives Solar Resources Avoided Cost Actionability Overall Solar Viability New York (NYSERDA -ConEd) 9 10 10 10 10 Long Island (LIPA) 9 10 10 10 10 California 9 10 8 9 9 Connecticut 10 10 9 10 10 Massachusetts 9 10 9 10 9 New York (NYSERDA - upstate) 9 10 7 10 9 New Jersey 9 10 8 9 9 Maryland 7 10 8 9 8 Rhode Island 6 10 9 8 8 Georgia 7 10 5 8 8 North Carolina 7 10 4 8 7 Vermont 6 9 7 7 7 Pennsylvania 4 10 8 2 6 Colorado 4 9 7 2 5 Texas 3 10 6 2 5 Lousiana 3 10 6 2 5 Illinois 3 8 6 2 5 9
Solar Project Assessment Criteria In addition to the empirical project level financial economics, it is important to consider relevant Objectives and Constraints Potential Solar Objectives: Electricity cost reduction Mitigation/hedging of future electricity cost volatility Environmental/Sustainability/LEED Goals Capital investment opportunity 10 Potential Resource Constraints: Capital Budget Tax Capacity/Appetite (i.e. ability to utilize tax incentives effectively) Facility characteristics (size, roof condition, structural, location) Underlying facility ownership (i.e. own vs. lease facilities) Time constraints
Multiple Ways to Go Solar When local solar project economics are favorable, there are typically multiple system ownership structure alternatives: Paths to Solar Direct Purchase Debt Finance Power Purchase Agreement (PPA) Solar Operating Lease Direct Ownership 3 rd -Party Ownership The appropriate project structure should be driven by the client s relevant Objectives and Constraints 11
12 Selected Solar Project Case Studies
Commercial Rooftop Project: Target Total Solar MWh Production - Year 1 100 MWh 80 MWh 60 MWh 40 MWh 20 MWh - Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec PROJECT SUMMARY. 13 System Owner... Location... Installation Type... System Size... Year 1 kwh Prod.. Transaction Type... Solar Incentives... Project Partners... Target Brands, Inc Glenville, NY Rooftop Solar PV 691 kw DC ~853,000 kwh Direct Purchase NYSERDA NY Sun Competitive PV Program New Generation
Ground Mount Solar Project: Croda 120 MWh Total Solar MWh Production - Year 1 100 MWh 80 MWh 60 MWh 40 MWh 20 MWh - Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec PROJECT SUMMARY. 14 System Owner... Location... Installation Type... System Size... Year 1 kwh Prod Transaction Type... Solar Incentives... Project Partners... Croda, Inc New Castle, DE Ground Mount 777 kw DC ~1,048,000 kwh Direct Purchase 20 year SREC Delaware Contract The Tri-M Group
Off-Site Solar Project: Dykes Lumber 30 MWh Total Solar MWh Production - Year 1 25 MWh 20 MWh 15 MWh 10 MWh 5 MWh - Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec System Owner... PROJECT SUMMARY. Dykes Lumber 15 Location... Installation Type... System Size... Year 1 kwh Prod. Transaction Type... Solar Incentives... Project Partners... Long Island City, NY Rooftop Solar PV 196 kw DC ~229,000 kwh Direct Purchase NYSERDA NY Sun Remote Net-Metering New Generation
Thank You FMA Summit Contacts: Paul Ahern Phone: (201) 293-0682 Email: pahern@entersolar.com Peyton Boswell Phone: (201) 293-0683 Email: pboswell@entersolar.com Joe Stofega Phone: (646) 513-3366 Email: jstofega@entersolar.com 16