solar energy, renewable,
Written by Rick Peters

PACE Solar Financing in Maryland and Washington DC

Typical Commercial Challenges

As veterans of the small commercial solar market in this region, we are very familiar with the challenges of financing solar energy systems to this group of property owners.  Small businesses want solar as much or more than any other market segment, but they are capital-constrained like no others so they need affordable financing.

Third party solar developers have been the answer for other markets.  They can easily finance large systems because the cost of assessing the applicant’s credit is well worth the return.  In the case of residential systems, they can use universal tools like credit scores to help manage their risk.  For the small commercial and non-profit market, there hasn’t been a super-attractive  way to finance solar, until now!

Commercial Solar Systems Now Recognized as Public Benefit

Washington DC and Maryland now have laws and programs in place for commercial (and nonprofit) property owners to utilize PACE.  Property Assessed Clean Energy (PACE) is a vehicle that is used to finance energy improvements for buildings.  It operates under the recognition that energy improvements are considered to be a public benefit.  As such, PACE uses the property tax as a vehicle to structure the financing payments – much like we would finance a sewer extension, but in this case specific to one property.

PACE is very appealing to property owners because they can add significant value to their building on a cash-flow-positive basis without personal guarantees or the application of additional debt to the balance sheet.  The financing payment must be less than the savings and it’s paid in the form of a special assessment on the property tax bill over the term of the financing arrangement (5-25 years at competitive rates).  Multiple energy improvements (i.e. lighting, solar, new roof) can be bundled into one financing package.

The best thing about this approach to financing solar is that the property owner will own the system, not a third party.  The property owner gets all of the benefits, including the energy savings, the substantial incentives, the marketing value, and the satisfaction.  All it costs them is the interest on the financing which pales in comparison to the savings.

More info is available on your webpage on our PACE webpage but you may just want to pick up the phone and call us to see if your property is eligible.

Commercial Solar Energy ,Residential Solar Panels
Written by Lisa Walsh

The Ballasted Solar Attachment: Maryland and DC Solar Panels

Commercial Solar Energy, Residential Solar PanelsWays in which solar panel arrays can affix to a commercial building are as many and varied as the buildings they serve.  In this article, we’re focusing on one popular method of attachment – the Ballasted roof mounted system.

Many commercial solar prospects in and around the Maryland/Washington DC area have buildings with flat or low-sloped roofs.  These are generally defined as a roof with a 3:12 pitch or less.  For these applications, ballasted systems can offer a way of attaching solar arrays without any (or few) roof penetrations.   Many building-owners prefer this method of attachment as it negates the risk of leaking, particularly on flat roofs that may collect water.  With a ballasted system, the arrays are held down using the weight of the existing solar panel arrays, racking and – most importantly – concrete blocks.  These blocks are placed methodically throughout the system design to secure the arrays in place, resisting wind loads or other types of disturbance.

The addition of the ballast blocks to the solar system arrays adds additional weight to the roof.   As with any commercial solar project, this weight load is analyzed and approved by a licensed structural engineer as required by the permitting jurisdiction – with some differences in each locale.   Ballast racking manufacturers also specify the amount of blocks required throughout a design.  The number of blocks per panel typically varies throughout design due to array proximity to building edges, parapets, or other inconsistencies that can affect wind and snow loads.

Although ballasted systems have many advantages, as with any design, they have their disadvantages and are not compatible with every type of commercial building.   Let’s look at a generalized comparison scenario between a roof penetrated system and a Ballasted System:

Roof Penetrated System

Ballasted System

Labor Costs and CriteriaHIGH:  Penetrations require flashing and sealing techniques – sometimes requiring coordination with a roofer.LOW.   Labor skills required for installation are fairly straight-forward and require no roofer coordination.
Panel CountINCREASED:  Systems attached to roof substructure require less roof space for mounting.DECREASED:  Ballast-blocks require roof space and can limit the available space for solar panels
Roof LoadingDECREASED.  No concrete/ballast blockINCREASED:  Ballast blocks add weight to the roof
Design CriteriaFLEXIBLE:  Attached racking systems can usually negotiate hatches, HVAC equipmentLESS FLEXIBLE:  Because of the increased space required per panel – designs may be more rigid.  However most ballast racking does have reasonable flexibility.
Roof Pitch5 – 45 degreesGenerally less than 10 degrees

 

Multi-roofed commercial applications may have a variety of racking types for both sloped and pitched roofs. There are other options for flat roofs also, including attached and hybrid solutions that use a combination of both penetrated and non-penetrated techniques.

Washington DC Solar Commercial Solar Service
Written by Rick Peters

Commercial Solar Water Heating: ANOTHER Renaissance?

Washington DC Solar ,Commercial Solar ServiceSolar water heating has quite a long history. In the United States alone, the industry has boomed and busted 3 times in the last 130 years – each time displaced by cheap energy. Many are surprised to know that the first US patent for a residential solar water heater was issued in 1891 to Clarence Kemp, a Baltimore inventor. That’s right, 1891.  In the 1920’s, 30% of the homes in Pasadena, CA had solar water heaters.  With the discovery of natural gas resources in the region, the industry evaporated almost overnight.  Solar thermal technology is mature and efficient; the problem lies with allowing our commitment to solar to dissolve in favor of decreasing natural gas prices.

In these previous industry “busts”, energy became cheap and we were lulled into a false expectation of stable prices. Each time, not long after the industry was dismantled, energy prices began to creep back up, making us long for that clean and cheap solar energy again. So today Solar Water Heating is on the rise again. Will it be different in the 21st century or are we doomed to repeat the same cycle? What was it that Winston Churchill said about failing to learn from history….?

The recent surge in US solar water heating deployments began in 2008. This resurgence, especially at the commercial scale, has helped to drive up adoption rates while scaling down installation costs. Several factors are converging in recent years to bring about this renaissance:

  • Engineers, architects, and contractors are becoming increasingly familiar with this mature technology – improving costs with increasing experience
  • Regional incentives are bolstering the existing federal incentives to reduce the capital investment.
  • The federal government has mandated that a minimum of 30% of water heating must come from solar for new construction or major renovations on federal buildings.
  • Project Developers like Skyline Innovations (http://www.nextility.com/) have introduced new business models to help deploy these systems for those without available capital.
  • Property owners increasingly want to have more control over their energy budget
  • Various societal pressures continue to reward solar adoption
  • An improving economy has allowed property owners finally to reinvest in their buildings

Remarkably, much of this has occurred despite a backdrop of rapidly falling natural gas prices (the primary heating fuel for commercial water heating), decreasing drastically from 2008 to 2012. However, in the last 18 months, natural gas prices are climbing again in a trend that is likely to continue: gas exportation; deployment of energy intensive manufacturing in the US; diversion of more natural gas to transportation (locomotives, trucks, fleet vehicles and eventually automobiles); conversion of more power plants and residential heating to natural gas.In light of these trends, property owners are rapidly moving forward to install solar water heating systems before the financial incentives expire. Business owners with substantial hot water loads in Washington DC and Maryland are able to achieve simple ROIs of 2-7 years. This approach requires them to take a slightly longer perspective, recognizing that they are buying 30+ years of energy up front for a fixed price (with generous subsidies). Whether financed independently or through the bank, building owners are able to lock in their energy prices and hedge the inevitable increase in fuel costs while leveraging all of the other benefits of renewable energy.

If you have any doubts about this trend, visit our commercial solar water heating page and take a look at the photos of just a subset of the projects we’ve been deploying in the region (https://solarsaves.net/commercial-solar-water-heating/).

If you want to know more about the history of solar water heating, check out this excellent book: The Golden Thread: 2500 Years of Solar Architecture and Technology, coauthored by Ken Butti and John Perlin.

Commercial Solar Service,solar services
Written by Rick Peters

Buying vs. Leasing a Solar System

Commercial Solar Service,solar servicesThe popularity of the residential solar lease has increased dramatically in the last several years as residential solar migrates to the mainstream. Big financing companies have been aggressively marketing these leases and a great deal of media attention has followed. It is a truly exciting development for the industry and prospective buyers since it expands the market to include many who might not have had the means to do so before now. As a result, many prospective buyers are now faced with the choice: Is leasing right for me or should I buy my system outright?

HOW DOES A SOLAR LEASE WORK?

In a typical leased scenario, the financing company owns the solar system as well as all the incentives associated with it, while the homeowner gets the solar energy that it produces for the duration of the term. The financing organization typically contracts with the homeowner for a 10 year monthly payment that is less than the monthly savings from solar, producing a monthly savings from month one for the homeowner. At the end of the term, the system is usually available for purchase at “fair market value”, but there are various options available for acquiring the asset. In addition, the homeowner can buy down the monthly payment by putting down some cash up front as a down payment. As would be required for any type of lease, the customer must have good credit.

THE DETAILS ARE COMPLEX, BUT THE BOTTOM LINE IS NOT…

Should I lease or buy? Well, it’s not as complex as you might think. In the majority of cases, if you can afford to purchase the system outright, your return on investment will be much greater than if you lease it. Why is that? A system owner who can leverage all of the available incentives can expect an ANNUAL return on investment of 10 – 15%. That is quite a return in today’s economic climate with an uncertain stock market and savings accounts paying less than 2%. If you choose to lease your system, the available incentives are going to be leveraged by the leasing organization, allowing them to profit significantly from the deal, even after they factor in your monthly energy savings from solar.

THEN WHO SHOULD CONSIDER A LEASE?

If you don’t have the cash to buy your system, then consider other sources of financing like a home equity loan or some other low interest loan that is well below 10%. Many installers offer 6-12 months “Same As Cash” financing to allow the buyer to capture most of their incentives before having to pay for the system. If these avenues are not available to you, but you still have good credit, then leasing might be the best route. Another reason to consider leasing is your tax liability. If you don’t have a federal income tax obligation because you annual income is not large enough to take advantage of the 30% federal tax credit then leasing is definately for you – but do remember, you have until the tax year of 2016 to use up your federal tax credit – even if it’s only a portion each year.

Incentives do vary…