Building Owners – Your Time Has Come!
Deployment of both residential and large utility-scale solar systems has exploded in the last 10 years. Much of that growth has been driven by policy and further sustained by scale and competition, which combine to continue bringing us cost reductions and technology advancements. To provide some historical perspective on this, our installed costs today are 75-80% lower than 10 years ago, before any incentives are applied.
With all that amazing progress, our industry still has not made similar inroads in the Commercial & Industrial (C&I) solar market. Many believe that is about to change. Washington, D.C. has led the way in this market segment with strong SRECs and a flexible rooftop Community Solar program that motivate building owners to monetize their rooftops. Property owners enjoying these benefits include churches and non-profits who are going solar at a remarkable pace, despite their lack of tax liability. Over the past several years, SES has installed more than 10MW of solar energy systems throughout the D.C. region, including several churches, apartment buildings and office/retail spaces.
Maryland has been noticing, learning from their neighbor that all this private investment in a cleaner and more reliable grid is something we should be incentivizing. Increasingly over the last few years, Maryland has improved commercial solar economics with enhanced incentives, driving the urgency for property owners to act now to maximize their solar incentives. Below is a quick summary of incentives and financing that exist for Maryland commercial property owners to act now on long term solar investments.
- Federal Investment Tax Credit (26% until Dec 31, 22% in 2021, 10% in 2022)
- Maryland authorized a 2020 commercial storage tax credit to incentivize businesses to add energy storage to their solar investment
Grants from Maryland Energy Administration (MEA)
- MEA provides solar grants of up to $20,000 based upon system size
- MEA offers incentives for solar carports of up to $200,000
Production Incentives (SRECs)
In addition to the value of the energy produced, the system owner in Maryland also benefits from selling the environmental attributes of that clean energy in the form of solar renewable energy certificates (SRECs). Legislation passed in 2019 in Maryland to increase the state’s clean energy goals has impacted the value of SRECs dramatically, further improving the economics for any system owner, regardless of tax appetite.
PACE (Property Assessed Clean Energy) is a program available in many Maryland counties to help property owners deploy energy improvements, even a new roof. The loan is backed by the improvement and is paid back through a property tax assessment. The return on the investment must exceed the loan payment to ensure positive cash flows for the building owner. The financing is off-balance-sheet and does not require personal guarantees. This underutilized program is a tremendous vehicle to make customer-owned energy investments with no out-of-pocket costs.
Solar Loans: Solar has become one of the most reliable and predictable long-term investments around. With projected annual returns for the building owner in the 10-20% range over 25 years, most banks are entirely comfortable loaning for commercial or residential solar projects.
PPA’s: Third-party entities will own and maintain solar systems for property owners, selling them the energy at a discount over the traditional supplier’s rate. For commercial building and land owners, these Power Purchase Agreements (PPAs) typically require relatively large projects to provide the necessary economics.
Aside from all the benefits above, there are two more strong business cases for solar investments. First, aside from the money savings, if you can fix a large portion of your energy expense by investing in solar, you’ve giving your CFO more control over future expenses while locking out price increases from the supplier for that energy. Secondly, by investing in solar, you are able to show your customers, your employees, your prospects and your recruits that you are committed to clean energy. In this day and age, there is a truckload of value right there.
So don’t wait another minute. SES is using technology to conduct remote meetings and preliminary evaluations in order to get budgetary numbers to prospective customers very quickly. We currently have availability for projects to be complete this calendar year, but let’s not wait another minute people – commercial contracts signed in 2020 get to realize the full 26% Federal Tax Credit and highest SREC values.
In other words…Sunshine’s a Wastin’!