SlideShare uma empresa Scribd logo
1 de 42
Baixar para ler offline
2016
John Freeborn
FDG Global, LLC.
Solar Business Opportunities
Solar Business Opportunities
2 of 42
Table of Contents
Page 3 Industry Overview
Page 4 Specific Industry Sectors to Consider
Page 6 Sample Industry Competitors
Page 10 Basic Industry Terminology/Industry Leaders
Page 14 Next Generation Solar/NREL Update
Page 16 Overview of Angel Investing
Page 20 Attachment-A: Feed in Tariffs
Page 26 Attachment-B: Who Benefits from SRECs
Page 32 Attachment C: Primer in Solar Rooftop Leasing
Page 40 Rooftop Lease Application Example
Page 41 About the Author
Cover photographs are courtesy of the U.S. Department of Energy.
This report was prepared for the general use of public information. Neither FDG Global, LLC., the Author
John Freeborn, the United States government or any agency thereof, nor any of their employees, makes
any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy,
completeness, or usefulness of any information, apparatus, product, or process disclosed, or represents
that its use would not infringe privately owned rights. Reference herein to any specific commercial
product, process, or service by trade name, trademark, manufacturer, or otherwise does not necessarily
constitute or imply its endorsement, recommendation, or favoring the United States government or any
agency thereof. The views and opinions of the author(s) expressed herein do not necessarily state of
reflect those of the United States government or any agency thereof.
Solar Business Opportunities
3 of 42
The market for solar products in the US (up 80% over next 18 months), Japan, China,
India, Germany, Italy, UK continue to grow. Worldwide - demand for solar installations was
up more than 9% last year ... and it appears to continue on this path.
A business will only survive if it has customers that want what you provide.
According to various research reports, up to 94% of the people in America like the idea of
solar energy and helping to save the planet – so that means there are a lot of potential
customers.
So – what are people willing to pay for? The answer again seems to be – anything solar.
Business Overview:
For the first time ever, solar beat out natural-gas
capacity additions, with solar supplying 29.5 percent
of all new electric generating capacity in the U.S. in
2015.
Led by California, North Carolina, Nevada,
Massachusetts and New York, the U.S. solar market
experienced a year-over-year growth rate of 17
percent. Geographically, the market continues to
diversify with 13 states installing more than 100
megawatts each in 2015. States that made major
solar strides include Utah, which jumped in the
rankings from 23rd to 7th place, and Georgia, which
moved from 16th to 8th in the nation.
The residential solar market grew 66 percent year-
over-year and, for the first time in history, eclipsed
the 2-gigawatt mark. The residential solar segment
now represents 29 percent of the entire U.S. solar
market -- its largest share since 2009.
For the fourth year in a row, the non-
residential market broke the 1-
gigawatt mark, but remained roughly
flat year-over-year.
The utility-scale sector, the mainstay
of the U.S. solar market, grew 6
percent year-over-year and
represented more than half of all solar
PV installed in 2015.
Cumulative U.S. solar PV installations
have now topped 25 gigawatts, up
from just 2 gigawatts in 2010.
Solar Business Opportunities
4 of 42
Specific Industry Sectors to Consider:
1. Sell Products – Billions of dollars of solar PV, solar thermal systems, solar attic fans,
solar cooling systems, etc. are sold each year not to mention all the component parts
required to build and operate such installations. Add solar lights, solar gadgets, solar
rechargers, and a growing list of related products and you have a lot to choose from.
2. Be a Distributor – As more and more manufacturers of products emerge – they need
distributors to get the products to the market. A company in Asia that produces technology
that helps solar systems produce more electricity (2 to 5 times), helps reduce electrical
consumption in your home (meaning you won't need to add as many solar panels), the low
cost solar street lights (with 5 day battery backup), solar backup generators and much more
… they will be looking to build a network of distributors to develop customers for their
products.
3. Develop & Own Solar Projects – With Solar Energy – anybody can become a solar
developer. Find a good location, put together a team of experts, develop a good business
plan, raise the money, build your project – use your experience and completed projects to
leverage yourself into other solar projects.
4. Sell After Market Products – There are products that can be sold to people who
already have solar installations to increase their yields, reduce the need for cleaning, etc.
5. Sell 3rd Party Provided Services - Besides selling products, you can also sell
services provided by other companies – such as solar insurance products, solar cleaning,
solar financing, etc.
6. Invent Solar Products – There's a whole bunch of new solar products being
developed. Need an idea? Take a look at any existing product that needs power to
operate. For example solar powered cooling systems.
7. Find Niches – Take what someone is successfully doing in one market – and do it in
your local market, or apply it to a niche market like (e.g., solar for RV vehicles, solar
products for boats, solar products for recreational users, solar powered agricultural
buildings, government, mobile apps for people interested in solar energy, etc.). There are a
lot of opportunities.
8. Produce Informational Products – With everything going on in the solar industry –
there is a strong demand for good quality information. If you are good at research –
consider producing research reports, how to ebooks, instructional videos, solar training
classes, the list of things you can make is limited only by your imagination.
9. Produce Financial Products - Set up a financial company – and offer specific
financing products – such as solar construction financing, long term solar project financing,
joint venture financing, provide angel financing, acquire solar projects, etc. There are a
growing number of private investment groups that do just this.
10. Independent Solar Consultant – A lot of people would like to know if it makes
sense to install solar on their property, and could benefit from a professional opinion that
looks at the various options and guides them through the entire process.
11. Solar Panel Cleaning – Clean solar panels produce more electricity than dirty panels
– and many customers would prefer to hire somebody to keep their solar panels clean
rather than clean them themselves, especially if the panels are located on their roofs.
Solar Business Opportunities
5 of 42
Specific Industry Sectors to Consider: Continued
12. Financing Consultant – Solar installations are expensive, and there are a lot of
different government programs out there. Also – some banks will lend money for solar
installations – so why not provide your services to help clients find the money they need to
build their projects. Just as there are mortgage brokers – why not create your own "solar
brokerage service.
13. Solar Appraisal – Just as there are real estate appraisals, a "solar appraisal
business" is needed to assess the value of a solar array on a property for sale … or the
future potential of adding a solar installation on an building.
14. Solar Repairs – Solar systems last a long time – but some maintenance is required
from time to time, especially on older systems that might need to be upgraded with new
inverters, wiring replaced, storm damage repairs, etc.
15. Start a Job Placement Service - On the one hand you have a lot of companies in
the solar industry that need to hire people … and on the other, you have a lot of people who
would like to work in the solar industry. A solar job placement service can offer tips and
advice to employers and job seekers alike.
16. Start a School - Have a skill already – like knowing how to install solar panels or
solar heaters – teach others. There is a big demand for skilled workers – and you can
provide training (either online … or hands on). There is a growing need for skilled
installers.
17. Start a Non-Profit - You don't have to be limited to for profit ideas – there are a
number of non-profit solar business opportunities. For example, you can start a foundation
to help bring solar energy to people in need, advocate the adoption of FIT programs in your
state, promote solar energy awareness in your community, promote greater awareness of
vitamin D to help prevent disease, raise money for installing solar systems in developing
countries, etc.
18. Nutritional Advice - A very high percentage of the population is vitamin D deficient
– and so there is a great need for vitamin D awareness, testing, counseling, vitamin D
supplements, etc.
19. Solar Broker - There is a growing market for companies looking to acquire and
develop portfolios of solar projects (at least in Europe). Typically, they will buy FIT eligible
projects that are connected to the grid – but in some cases you can also sell "shovel ready"
solar projects with permits.
20. Energy Auditor - Another service that is growing in demand is to conduct energy
audits and make recommendations how people can reduce their electrical consumption.
Solar Business Opportunities
6 of 42
Following are sample competitors in the solar distribution and private-commercial kits:
http://symtechsolar.com/pv-solutions/
Symtech Solar
Our Company
Symtech Solar is an American renewable energy company that develops, produces, and delivers the world’s most
complete and cost-effective photo voltaic solar energy solutions. With an established and proven track-record, and
a highly experienced management team Symtech Solar has created multiple product lines designed for specific
solar energy installations and applications, including industry leading PV kits. The use of PV kits designed by
Symtech Solar yields cost and time savings by offering users an all-in-one product, thus eliminating the need for
the customer to deal with multiple manufacturers and suppliers. Our innovative packaging solution (SymPack
Technology) offers our clients an easier and faster way to carry out their solar businesses.
Furthermore, our in house engineering and product development team ensure that every PV system is fully
compatible for turnkey installations, which are manufactured under Symtech Solar’s quality standards in its
assembly facility. Symtech Solar strives to provide leading solar energy solutions by offering install-ready PV
system packages that can be drop shipped throughout the world.
Our Vision
To simplify the solar energy experience.
Our Mission
To innovate by providing easy to use renewable energy products to an all-sustainable world.
Our Product Lines
Symtech Solar offers more than 5 different PV kits product lines with multiple design configurations and a variety
of component characteristics. Symtech’s ability to provide such flexibility creates a clear difference amongst its
competitors and has proven to be an attractive and innovative choice within the Solar Industry. Our Solar PV Kits
are carefully selected and designed for compatibility, then packaged together for a single shipment. Our added
value is created by offering pre-engineered solar energy systems (kits) that reduce the time and money required in
the design, purchasing, and logistics of solar energy systems. Our specialized kit packaging allows our Partners to
safely and efficiently receive a complete turnkey (ready to install) PV system.
Many of our PV Kits are shipped in an all-in-box configuration. Every Symtech Solar’s product line is offered,
designed or engineered with the customer in mind. Optimum flexibility in mounting systems, electrical layouts, and
component certifications ensure each and every system delivered meets or exceeds your expectations.
Solar Business Opportunities
7 of 42
Why GoGreenSolar.com?
We're experienced solar veterans, packaging solar kits since 2006. Our work has been featured on
CBS, USA Today, and we've earned a GSA contract with the Federal Government. More than just
supplying parts, we also provide value-added services including designs, permitting, and
interconnection. Choose us for a complete end-to-end experience - we help you every step of the way
until you're generating free energy from the sun!
Purchase Solar Parts & Components
Just looking for parts? No problem. We have the widest selection of parts at the best prices possible.
Click your category below to start browsing.
Micro Inverter Kits String Inverter Kits Solar Permitting
Solar Panels Grid-Tie Inverters Racks & Mounts
Solar Business Opportunities
8 of 42
Civic Solar now offers a commercial solar solution for less than $1.00 per Watt.
This is a best-in-class product mix that you can proudly display on every flat
rooftop. The value of this package goes well beyond the quality of products
included and the competitive pricing. CivicSolar has chosen a robust selection of
products and engineered a turnkey solution that will make it easier for you to do
business.
This commercial solution includes:
• Jinko Solar Panels – 315 Watt, 72 Cell Modules
• Huawei Inverters - 25 or 30 kW Three-phase, Grid Tied 1000 VDC 480 / 277
VAC Inverters
• Aerocompact Ballasted Roof-Mounted Racking
• CivicSolar Design & Engineering
We are very excited to offer you this package deal at an unmatched price.
CivicSolar continuously strives to empower our solar installer partners and turn
our strategic position in the market into your success.
Solar Business Opportunities
9 of 42
ADDITIONAL LINKS:
http://www.wholesalesolar.com/
http://straightupsolar.com/
http://www.solatube.com/
https://mysolarinstaller.com/
http://www.renvu.com/SKG
Solar Business Opportunities
10 of 42
Basic Industry Information: Terminology, Technology & Manufacturing
Before we start discussing the specifics of different technologies used to produce
photovoltaic cells, here are some basic terms to keep in mind:
Solar cell: is a device that converts the energy of sunlight directly into electricity by the
photovoltaic effect.
Solar Panel or Solar Module: Solar cells are wired in series and placed into a frame. The
size of the frame can vary with manufacturers … as a result of the technology used. A
protective coating on the top covers and protects (and sometimes increases the output) of
the solar cells. Any number of cells can be connected in series and most commercial
modules sold today incorporate 72 cells.
First Generation Solar Cells
Traditional solar cells are made from silicon, are currently the most efficient solar cells
available for residential use and account for around 80+ percent of all the solar panels sold
around the world. Generally silicon based solar cells are more efficient and longer lasting
than non silicon based cells. However, they are more at risk to lose some of their efficiency
at higher temperatures (hot sunny days), than thin-film solar cells.
There are currently four types of silicon based cells used in the production of solar panels
for residential use. The types are based on the type of silicon used, specifically:
1. Monocrystalline Silicon Cells
The oldest solar cell technology and still the most popular and efficient are solar cells made
from thin wafers of silicon. These are called monocrystalline solar cells because the cells are
sliced from large single crystals that have been painstakingly grown under carefully
controlled conditions. Typically, the cells are a few inches across, and a number of cells are
laid out in a grid to create a panel.
Relative to the other types of cells, they have a higher efficiency (up to 24.2%), meaning
you will obtain more electricity from a given area of panel. This is useful if you only have a
limited area for mounting your panels, or want to keep the installation small for aesthetic
reasons. However, growing large crystals of pure silicon is a difficult and very energy-
intensive process, so the production costs for this type of panel have historically are the
highest of all the solar panel types.
Production methods have improved though, and prices for raw silicon as well as to build
panels from monocrystalline solar cells have fallen a great deal over the years, partly driven
by competition as other types of panel have been produced.
Another issue to keep in mind about panels made from monocrystalline silicon cells is that
they lose their efficiency as the temperature increases about 25˚C, so they need to be
installed in such a way as to permit the air to circulate over and under the panels to
improve their efficiency.
Solar Business Opportunities
11 of 42
The following is a list of the leading companies that produce and offer monocrystalline solar
panels (we are in the process of building this database so please check back periodically.
Suntech Power is the worlds largest producer of crystalline solar panels, with more than
10 million PV panels sold in over 80 different countries.
SunPower produces the most efficient monocrystalline solar panels available. They also
offer all black panels (no visible metal strips), inverters and monitors.
Transform Solar produces a revolutionary new thin monocrystalline panel that is heat
resistant, even produces in conditions of partial shading, and is highly reliable. It also uses
just a fraction of the silicon to produce the same high levels of efficiency.
JA Solar is the largest producer of monocrystalline and polycrystalline solar cells, which it
sells to other solar module manufacturers. It also produces its own PV solar panels that it
sells primarily in China through its own solar development company Yangzhou Engineering.
2. Polycrstalline Silicon Cells
It is cheaper to produce silicon wafers in molds from multiple silicon crystals rather than
from a single crystal as the conditions for growth do not need to be as tightly controlled. In
this form, a number of interlocking silicon crystals grow together. Panels based on these
cells are cheaper per unit area than monocrystalline panels - but they are also slightly less
efficient (up to 19.3%).
Common brands of panels made up of polycrystalline modules include:
SunTech Power
BP SX (formerly Solarex)
Canadian Solar
Jaiwei
Kyocera
Luxor
Mitsubishi Electric
Quantum Solar
Schott, Sharp
Sunenergy
Tenesol
Trina Solar
Yingli
Yohkon
Note: Many of the leading firms make both monocrystalline and polycrystalline solar cells for
their panels.
Solar Business Opportunities
12 of 42
3. Amorphous Silicon Cells
You probably never thought about it before, but most solar cells used in calculators and
many small electronic devices are made from amorphous silicon cells.
Instead of growing silicon crystals as is done in making the two previous types of solar cells,
silicon is deposited in a very thin layer on to a backing substrate – such as metal, glass or
even plastic. Sometimes several layers of silicon, doped in slightly different ways to respond
to different wavelengths of light, are laid on top of one another to improve the efficiency.
The production methods are complex, but less energy intensive than crystalline panels, and
prices have been coming down as panels are mass-produced using this process.
One advantage of using very thin layers of silicon is that the panels can be made flexible.
The disadvantage of amorphous panels is that they are much less efficient per unit area (up
to 10%) and are generally not suitable for roof installations you would typically need nearly
double the panel area for the same power output. Having said that, for a given power
rating, they do perform better at low light levels than crystalline panels - which is worth
having on a dismal winter's day, and are less likely to lose their efficiency as the
temperature climbs.
However, there flexibility makes them an excellent choice for use in making building
integrated PV (e.g., roofing shingles), for use on curved surfaces, or even attached to a
flexible backing sheet so that they can even be rolled up and used when going camping /
backpacking, or put away when they are not needed!
UNI-SOLAR http://unisolar.com.ua/
SANYO http://panasonic.net/ecosolutions/solar/
SUNDANCE http://store.sundancesolar.com/powerfilm-flexible-thin-film-solar-modules/
POWERFILM http://www.powerfilmsolar.com/
4. Hybrid Silicon Cells
One recent trend in the industry is the emergence of hybrid silicon cells and several
companies are now exploring ways of combining different materials to make solar cells with
better efficiency, longer life, and at reduced costs.
Recently, Sanyo introduced a hybrid HIT cell whereby a layer of amorphous silicon is
deposited on top of single crystal wafers. The result is an efficient solar cell that performs
well in terms of indirect light and is much less likely to lose efficiency as the temperature
climbs.
Second Generation Solar Cells
Second-generation solar cells are usually called thin-film solar cells because when compared
to crystalline silicon based cells they are made from layers of semiconductor materials only
a few micrometers thick. The combination of using less material and lower cost
manufacturing processes allow the manufacturers of solar panels made from this type of
technology to produce and sell panels at a much lower cost.
Solar Business Opportunities
13 of 42
There are basically three types of solar cells that are considered in this category, amorphous
silicon (mentioned above), and two that are made from non-silicon materials namely
cadmium telluride (CdTe), and copper indium gallium diselenide (CIGS). Together they
accounted for around 16.8% of the panels sold in 2009.
First Solar, the number one producer and seller of solar panels in the world currently makes
their solar cells using cadmium telluride. The big appeal of these type of solar cells is that
they are inexpensive (currently below $1.00 / watt to produce and heading towards $0.70 /
watt). However, there are some concerns about this technology.
Venture capitalists love CIGS solar cells (or at least used to – as they have invested over
$2.3 billion into companies developing these cells but have yet to see them be a commercial
success) – as they have been able to reach efficiency levels of 20% in the laboratory.
Unfortunately it has turned out to be much more difficult to produce CIGS solar cells in
mass quantities at competitive prices with anywhere near than efficiency level, so the jury is
still out on this technology.
New Recently a Company based in Idaho has come up with a thin-film monocrystalline
solar cell - that uses about 20% of the crystalline silicon in current silicon based cells and
has number of advantages. The company “Transform Solar” is now out of business.
Third Generation Solar Cells
Currently there is a lot of solar research going on in what is being referred to in the in the
industry as Third-generation solar cells. In fact according to the number of patents filed last
year in the United States – solar research ranks second only to research in the area of fuel
cells.
This new generation of solar cells are being made from variety of new materials besides
silicon, including nanotubes, silicon wires, solar inks using conventional printing press
technologies, organic dyes, and conductive plastics. The goal of course is to improve on the
solar cells already commercially available – by making solar energy more efficient over a
wider band of solar energy (e.g., including infrared), less expensive so it can be used by
more and more people, and to develop more and different uses.
Currently, most of the work on third generation solar cells is being done in the laboratory,
and being developed by new companies and for the most part is not commercially available.
Solar Business Opportunities
14 of 42
NEXT GENERATION SOLAR
NREL Aims to Reduce Solar Energy Costs to $0.06/kWh
The NREL (National Renewable Energy Laboratory) ]is the U.S. Department of Energy's (DOE) primary national
laboratory for renewable energy and energy efficiency research and development. NREL is operated for the DOE by
the Alliance for Sustainable Energy, LLC.
The National Renewable Energy Laboratory is one of the best sources of R&D financing and information about Solar
Research. Supported by the US Department of Energy, it leads the way in helping meet the growing demand for
clean energy and has an impressive track record of 33 years of achievement,
The NREL is the only US federal laboratory dedicated to the research, development, commercialization and
deployment of renewable energy and energy efficiency technologies.
The lab's capabilities include:
• Research and Development
• Testing and Evaluation
• Deployment
Solar Technologies Overview
The lab is working with the Department of Energy to accelerate the development of solar technologies as energy
sources for the USA and world. It does this by supporting the Lab's R&D in two major solar energy technologies —
photovoltaic research and solar thermal research, and also by compiling a large database of Solar Radiation
information and research.
1. Photoelectric Research
The National Center for photovoltaic research is fully dedicated to meet the long-term goal of achieving $0.06/kWh
grid-tied distributed systems. It is working to meet this goal by lowering the cost of delivered electricity and
improving the efficiency of PV modules and systems. Their PV research contributes to these goals through
fundamental research, advanced materials and devices, and technology development.
Industry, academia, and the National Renewable Energy Laboratory partner to investigate properties and operating
mechanisms of cell materials and devices. This teamed research approach works to identify efficiency-limiting
defects in cell materials and analyze their electrical and optical properties.
PV R&D emphasizes innovative research, thin-film development, manufacturing R&D, and systems development
and reliability. We conduct this research in collaboration with universities and solar industry through research
partnerships and direct support of the Solar Program.
Solar Business Opportunities
15 of 42
The goal is to make large-scale solar energy systems cost-competitive with other energy sources by 2020. The
NCPV brings together researchers from across the country, including at NREL, the Quantum Energy and
Sustainable Solar Technologies (QESST) Center and the Bay Area PV Consortium. Sarah Kurtz and Greg Wilson are.
2. Solar Thermal Research
The National Renewable Energy Laboratory plays a leadership role in analyzing cost and performance of
concentrating solar power systems, developing parabolic trough technology for solar electricity generation, and
developing advanced technologies such as concentrating photovoltaics. Researchers support the development of
new designs and manufacturing processes for solar components and systems with an emphasis on improved
performance, reliability and service life.
The lab is also working with the solar industry to lower the cost of solar water heating systems. Laboratory
researchers provide assistance with prototype development of new polymer (plastic) systems through modeling
and optimization, characterization of the systems' performance, and accelerated materials durability testing.
Solar thermal research is performed in the Electricity, Resources, and Building Systems Integration Center.
Solar Radiation Research
Optimal siting of renewable energy systems requires knowledge of the resource characteristics at any given
location. NREL's solar radiation research and data collection is performed at the Solar Radiation Research
Laboratory. This unique research facility continually measures solar radiation and other meteorological data and
disseminates the information to government, industry, academia, and international laboratories and agencies.
These data are used for climate change studies, atmospheric research, renewable energy conversion system
testing, and more.
Solar Business Opportunities
16 of 42
Overview of Angel Investing in Solar Projects & Companies
The term "angel investing" came from the practice in the early 1900's when wealthy
businessmen invested in Broadway productions.
Today "angels" (called Business Angels in Europe) participate in all types of businesses
and typically offer expertise, experience and contacts in addition to money.
In this section we are going to look at some of the issues and opportunities related to
investing in Solar Projects and Solar Companies.
Market Size
The USA Small Business Administration estimates there are about two million people in the
United States with the discretionary net worth to make angel investments. And at least
250,000 angels are active in the USA, funding about 30,000 small companies a year.
The total investment from angels has been estimated at anywhere from $20 billion to $50
billion per year – which is substantially more than is invested by Venture Capital companies.
The practice of Angel investing is one of the reasons for the success of many new
companies in the USA and there are now angel investment groups in many countries.
Growth Financing
Two types of solar related financing exist. The first type is referred to as growth financing –
or, as it is sometimes called - startup-financing.
Startup financing refers to the amount of money required to take the business from a proof
of concept stage to prototype / manufacturing feasibility and sales.
Angel investors who provide start-up capital do so with the goal of helping the company
reach certain milestones so that the company can qualify for government grants / loan
guarantees, bank and/or supplier lines of credit, Venture, Public or other forms of financing
to continue to grow their business until it is self-sustaining.
This type of financing is high risk / high reward. High risk – because there can be a number
of issues related to the performance of the underlying product, manufacturing risk
associated with being able to mass produce products economically that perform as well or
better than the prototypes, and market risk (i.e., the ability to find customers in a highly
competitive international market).
Solar Business Opportunities
17 of 42
Investors who are exposed to good companies and/or choose wisely can make excellent
returns … but for most they could be looking at delays, requirements for additional capital,
and uncertain outcomes.
The mechanics of startup investing really isn't too complicated. You give a startup money
and they give you stock. You'll probably get either preferred stock, which means stock with
extra rights like getting your money back first in a sale, or convertible debt, which means
(on paper) you're lending the company money, and the debt converts to stock at the next
sufficiently big funding round.
When you negotiate terms with a startup, there are two numbers you care about: how
much money you're putting in, and the valuation of the company. The valuation determines
how much stock you get. If you put $50,000 into a company at a pre-money valuation of $1
million, then the post-money valuation is $1.05 million, and you get .05/1.05, or 4.76% of
the company's stock.
If the company raises more money later, the new investor will take a chunk of the company
away from all the existing shareholders just as you did. If in the next round they sell 10% of
the company to a new investor, your 4.76% will be reduced to 4.28%.
The secret to making it big is not getting the biggest chunk of shares – but rather getting in
on the "ground floor" of the next Microsoft, Google, Facebook, First Solar, Trina Solar, etc.
A venture capitalist once said “he is happy when out of 10 investments, 1 makes it big, 4
make some profit and 5 fail”.
He also stated that when he looks at a new company he uses the following selection criteria:
1) 50% Strength / experience of management team (he prefers if they invested!)
2) 25% Technology (what are its advantages over what is out there now)
3) 25% Market Potential (what is the market potential, how fast is it growing)
A lot of successful entrepreneurs like this type of Angel Financing because its potential high
rewards and opportunity to make a difference (e.g., see the movie The Social Network) and
usually they can bring in valuable experience and contacts to help realize the high rates of
return.
Solar Business Opportunities
18 of 42
Project Financing
There is however, another – less risky but also very rewarding type of early stage financing
– that is currently available for solar projects that appeals to a more conservative type of
investor – namely financing of specific solar projects.
For example with the current level of accuracy in predicting how much electricity a
particular solar panel installation will produce and with Feed in Tariffs (FITs) [see
attachment-A] the amount that electricity can be sold for makes solar projects "bankable" –
providing there is an equity component typically of 15% to 20% of the total project costs.
Solar Renewable Credits (SRECs) [see Attachment-B] are popular with politicians, but less
popular with solar developers and owners due to their uncertain value.
Using bank leverage – the cash flow returns to the equity investor can be quite attractive
(i.e., over 15% per year). But keep in mind on a solar project – this income can last 20
years or longer.
However, by including bankable and FIT qualifying co-generation units - and using an even
higher amount of leverage – it's possible to boost these returns to 60%+ per year. Typically
these deals are set up as either loans, partnerships or sometimes both. In some cases (such
as the one mentioned above) it's possible for the investor's funds to be returned in a
relatively short period of time (i.e., 3 to 5 years) … but continue to receive ongoing
participation in the solar project for the life of the project (FIT are typically specified for 20
years … but projects continue past that since the life of the panels is usually much longer).
Getting Started
The easiest way to get started in angel investing is to find a friend who already does it, and
try to get included in his syndicates. Then all you have to do is write checks. It is
recommended to participate with others – especially if you are considering startup investing
– because of the need for detailed due diligence, hands on involvement in the company, and
the most likely requirement to provide additional funding before the company can stand on
its own.
However, project financing having much less risk – is a more precise type of investment.
The project budget is very predictable up front, the technology is well known … and you can
rely on the lending bank to verify everything for you.
Additionally, with solar projects the solar panel manufacturer guarantees the performance of
the panels, and the government guarantees the price (FIT) you'll get for the electricity – so
Solar Business Opportunities
19 of 42
you're major risk is really the weather, and there are detailed insulation maps which the
banks rely on for estimating the amount of electricity that will be produced annually that are
quite accurate.
Another revenue generating concept that is gaining momentum is Solar Rooftop Leasing.
This industry is expected to see continued growth over the next decade. [See Attachment-C
for more information on this program].
Match Making
The biggest problem is for private investors to find out about the opportunities that are
available and vice versa for the entrepreneurs to be introduced to Angel Investors – since
by their very nature, startup companies are not very well known … and most private
investors prefer not to promote themselves.
That is why angel investment clubs, syndicates, forums, and other networking sites are
helpful in bringing both groups together – as they make investors aware of the
opportunities.
By their nature and personal involvement Angel Investment groups focus on local
opportunities – and usually cover the full spectrum of investment opportunities.
One goal may be to develop an investment platform specifically designed to identify solar
energy opportunities and to attract the investors who are most interested in these
opportunities.
Solar Business Opportunities
20 of 42
ATTACHMENT-A: Feed In Tariffs – An Overview
The concept of Feed In Tariffs was part of the of the original renewable energy friendly
policies in the USA in the 1970's and then expanded and successfully implemented in
Germany in 1990,
Governments the world over are now coming to see the wisdom of enabling everybody in
their country to produce and sell electricity using renewable technologies, and setting prices
that will attract new developments.
This policy mechanism is commonly known as "Feed In Tariffs" (FIT). In North America this
simple idea is known by many different names: Electricity Feed Laws, Feed-in Laws,
Advanced Renewable Tariffs (ARTs), Renewable Tariffs, and more recently Renewable
Energy Payments. Regardless of the name, they are the world's most successful policy
mechanism for stimulating the rapid development of renewable energy, and secondarily for
creating a large and growing base of jobs and income for the people involved.
What are Feed-in Tariffs?
Feed In Tariff policies typically include three key provisions:
1) Guaranteed grid access to all producers of electricity from approved renewable sources;
2) Long-term contracts (typically 20 years) to purchase the electricity produced at a set
fixed price per killowat hour (kWh) produced; and
3) Published prices for the electricity sold, which are set to provide an attractive rate of
return at the time the project is built. These prices are periodically adjusted to reflect
changing market and policy conditions.
Feed In Tariffs are the most egalitarian method for determining where, when, and how
much renewable generating capacity will be installed. Renewable Tariffs enable
homeowners, farmers, cooperatives, and independent producers to participate on an equal
footing with large commercial developers of renewable energy.
FIT permits the interconnection of renewable sources of electricity with the electric-utility
network and at the same time specify how much the renewable generator is paid for their
electricity and over how long a period.
Solar Business Opportunities
21 of 42
ATTACHMENT-A: Feed In Tariffs – An Overview [Continued]
Advance Renewable Tariffs
Advanced Renewable Tariffs (ARTs) are the most modern version of Feed In Tariffs. ARTs
differ from the simpler feed in tariffs in several important ways. Most importantly, FIT are
differentiated by technology. There is one price for wind energy, another price for solar, and
so on. Tariffs within each technology can also be differentiated by project size or, in the
case of wind and solar energy, by the productivity of the resource.
Additionally, in the case of solar they can be further differentiated between tariffs for roof-
top based; referred to as retrofit in the UK installations, which generally receive a higher
price for the electricity; and ground-based installations that usually receive a slightly lower
tariff rate.
Tariffs rate are subject to periodic review to determine if the tariff rates are sufficiently
robust or appropriate to meet the targets desired in the time allotted, and reflective of
current technologies, costs, and market conditions.
For purposes of this discussion when we use the term Feed In Tariffs or FIT, we are using
the term synonymously with Advanced Renewable Tariff / ART.
How are Feed In Tariff Rates Calculated?
In theory, FIT prices i.e., the price paid for electricity produced from renewable energy
sources, are determined by the cost of producing the electricity, plus a reasonable profit to
justify the expenditure. The cost-based prices therefore enable a diversity of projects (wind,
solar, etc.) to be developed, and for investors to obtain a reasonable return on renewable
energy investments. This principle was first explained in Germany's 2000 RES Act:
“The compensation rates…have been determined by means of scientific studies, subject to
the provision that the rates identified should make it possible for an installation – when
managed efficiently – to be operated cost-effectively, based on the use of state-of-the-art
technology and depending on the renewable energy sources naturally available in a given
geographical environment.” (RES Act 2000, Explanatory Memorandum A)
Not only do the costs of the equipment have to be considered – so does the availability of
the natural resource (e.g., solar irradiation levels, wind measurements, labor costs, etc.).
As a result, feed in tariff rates typically differ among various source of power generation,
installation place (e.g. rooftop or ground-mounted), projects of different sizes and,
sometime, by technology employed (solar, wind, geothermal, etc.), and by country.
Solar Business Opportunities
22 of 42
ATTACHMENT-A: Feed In Tariffs – An Overview [Continued]
Feed In Tariff rates are expected to decrease over time. This is consistent with keeping the
payment levels in line with actual generation costs. As a result of changing rates, there is
usually a big surge in projects prior to rate changes as developers push to get their projects
accepted at the higher rates to lock in better pricing.
Governments continually review these rates to determine what changes to make and when
they will implement the changes. Earlier this year, CDU politician Tanja Gönner, who is
"tipped to become federal environment minister," made the following statement about the
future of solar rates in Germany (which were set to change in April 2010 – but were
postponed to July) in an interview:
"Any sudden change would be wrong. It is true that solar arrays have become much
cheaper because the market collapsed. So we do have some leeway to reduce rates. But we
have to be prudent about it - it has to be based on a market analysis. We cannot chase
after the market by ramping rates up and down every six months. The solar market still
needs proper incentives for people to want to install the systems."
In reality, as can be seen by the Feed In Tariffs adopted in different countries, government
officials may set rates that are not completely cost-based depending on other objectives,
such as their desire to create new jobs in their country (e.g., France & Italy), attracting
outside investment to build up new electrical capacity (e.g., Czech Republic, Romania, etc.)
or to encourage existing property owners to install solar and to reduce the risk from
overbuilding ground based installations (e.g., Spain & Germany).
Typically, developers of medium and large sized projects monitor news about feed in rates
continuously. When possible, most developers will choose to build new projects in countries
with the highest Feed In Tariffs as this will allow them to achieve the highest rates of
returns by so doing.
Who Pays For the Feed In Tariffs?
Feed In Tariffs are not subsidies. They do not subsidize the cost of the equipment used to
produce renewably-generated electricity, like solar panels or wind turbines, nor do the
payments come from taxpayers. Instead, Feed In Tariffs are simply payment for the
generation of electricity.
The extra cost for the Feed In Tariffs is shared among all energy users, thereby spreading
the costs. In Germany in the average household pays about €1.01 per month for the Feed
In Tariff program.
Solar Business Opportunities
23 of 42
ATTACHMENT-A: Feed In Tariffs – An Overview [Continued]
A number of analyses have shown that these price increases, however, can be offset by the
price-dampening effect that large amounts of lower cost renewable energy sources (such as
wind power) can have on spot market prices. This has led to electricity price reductions in
Spain, Denmark, and Germany.
The German government estimates the actual cost is near zero, because the benefits of
reducing carbon emissions and other air pollutants as well as reducing the cost of expensive
fossil-fired generation (and social health costs), offsets the cost of the renewable energy.
Who Benefits From Feed In Tariffs?
Property Owners & Project Developers benefit. Anyone who installs Renewable Energy (RE)
can profit, spreading out the value among citizens and not just owners of large-scale power
stations. They are more equitable than Renewable Portfolio Standards (RPSs) because
homeowners, farmers, small and large businesses and cooperatives can all participate. To
date more than 400,000 German households have installed solar PV.
The government benefits. Feed-in tariffs are designed to provide sufficient financial
incentives without capital grants, rebates, or tax subsidies. Additionally, it's a very easy
system to implement. Feed In Tariff policies are easy to implement: there is no monitoring,
no penalties and no caps.
It's estimated by the end of 2010, more than €53 billion will have been invested in Germany
on renewable energy projects. Germany has benefited from taxes it has collected on the
income generated from the sale of the electricity.
Additionally studies have shown that money spent locally (e.g., for building new solar
energy projects) re-circulates 300-600% more than money sent out-of-country for oil or
gas, etc. This secondary affect also helps the economy grow.
Universities Benefit: Good FIT rates for renewable technologies increase the drive for
innovation, and encourage investment in technologies such as wind, photovoltaic solar
energy, or Concentrating Solar Power (CSP) that all have huge potential.
Businesses Benefit: In order to meet the demand, new companies have emerged, existing
companies have expanded, and opportunities abound. In fact, this is one of the fastest
growing industries in the world right now and most analysts say it is still only getting
started.
Solar Business Opportunities
24 of 42
ATTACHMENT-A: Feed In Tariffs – An Overview [Continued]
Workers benefit. In Germany, for example, the renewable energy industry now employs
about 234,000 people – almost 60% of whom were employed as a direct result of the
German FIT law. It is expected that by 2020 the renewable energy industry will employ
500,000 people.
Banks benefit: Unlike lending money on real estate, which can change in value or be subject
to defaults if the owners economic situation changes, the banks can accurately predict
based on FIT rates and the performance of the specific solar module how much cash will be
generated to repay any loans the bank makes. In other words, FITs make renewable energy
projects bankable.
Everybody benefits: Feed In Tariffs have contributed significantly to Germany's ability to
meet the targets set per the Kyoto accord. The greatest success in the efforts to reduce
greenhouse gas emissions has come from the energy industry. Development of renewable
energies has left positive traces. In 2008, some 20 million tons less CO2 than in the prior
year were emitted to the atmosphere in the energy production process. This amounts to 66
million tons less CO2 over 1990 volumes.
Additionally, FITs have spurred competition and innovation in the renewables energy field.
For example, within 20 years the cost of electricity produced from wind turbines is now less
than the cost of electricity produced from lignite, especially if the environmental costs are
factored in.
Benefits for Solar Energy Park Developers and Investors
The biggest benefit of Feed In Tariffs for developers and investors is that they can reliably
predict (at least for the term of the Feed In Tariff) the projected cash flows that will be
produced by each new Solar Energy Project and the financial risks associated with a such an
investment are dramatically reduced.
For anybody considering investing in a Solar Energy Project, knowing that Feed In Tariffs
are likely to decrease over time encourages people to move quickly to lock in the higher
rates/rates of returns for new projects.
Since Feed In Tariff rates can change over time, it is important to understand that
in most countries the Feed In Tariff rate applicable to a specific project is based on
the Feed In Tariff rate as of the day the first electricity is delivered to the grid.
Solar Business Opportunities
25 of 42
ATTACHMENT-A: Feed In Tariffs – An Overview [Continued]
Consequently, as more countries adopt Feed In Tariff policies, the demand for renewable
energy systems has risen dramatically and the installation costs are coming down fast. This
financing model has now been taken up widely around the world.
The Success of the FIT Policy
Feed in Tariffs has proven to be one of the most effective policy instruments in overcoming
the cost barriers to introducing renewable energy and making it economically viable. The
simple guarantees that FITs provide – including access to the grid, a set price per Kilowatt
Hour (kWh) that will cover the costs associated with electricity production, and a
guaranteed term for which they will receive that rate has turned several European countries
into world leaders in the renewables sector. This is the case for Denmark on wind energy
and for Germany on solar energy.
FITs have been empirically proven to generate the fastest, lowest-cost deployment of
renewable energy, and with this as a priority for climate protection and security of energy
supply. FITs are the best vehicle for delivering these benefits, plus the highly desirable
added benefits of new job creation and as a significant contributor to economic growth and
prosperity. This conclusion has been supported by a number of recent analyses, including by
the International Energy Agency, the European Federation for Renewable Energy, as well as
by Deutsche Bank.
As of April 2010, feed in tariff policies have been enacted in 63 jurisdictions around the
world, including in Australia, Austria, Belgium, Brazil, Canada, China, Cyprus, the Czech
Republic, Denmark, Estonia, France, Germany, Greece, Hungary, Iran, Republic of Ireland,
Israel, Italy, the Republic of Korea, Lithuania, Luxembourg, the Netherlands, Portugal,
Singapore, South Africa, Spain, Sweden, Switzerland, and in some (nowadays, a dozen)
states in the United States, and is gaining momentum in other ones as China, India and
Mongolia.
Solar Business Opportunities
26 of 42
ATTACHMENT-B: Who Benefits from SRECs? - Continued
Solar Renewable Energy Credits (SRECs) are popular with politicians of several states but
much less popular with solar developers and solar owners – due to their uncertain value. So
who actually benefits from them?
Brief History
The idea for an SREC-only market was born in New Jersey in 2004-2005, when the state
started running out of money for rebates. Due to continued problems funding the popular
program, the state phased out rebates for all but a limited number of residential projects.
During the transition, the state looked at both Feed in Tariffs and SRECs, but eventually
decided that SRECs were a more suitable way to create a market.
No surprise there – they don't cost the state anything and give the impression of promoting
solar energy … but do they work as well as Feed in Tariffs? Let's take a look.
States Offering SRECs
The "blue" states do not have SREC programs – but the rest of the states do so obviously
the idea has spread from New Jersey – especially through the Midwest.
Solar Business Opportunities
27 of 42
ATTACHMENT-B: Who Benefits from SRECs? - Continued
In states like Delaware, Massachusetts, Maryland, New Jersey, Ohio and Pennsylvania,
energy suppliers are required to accumulate a certain number of SRECs to meet a mandated
generation target. Power providers can generate the credits themselves by investing directly
in projects, or purchase the credits from project owners, brokers or aggregators.
Many states will certify solar electric systems from out-of-state and allow the SRECs from
those facilities to count towards the RPS. The map above shows what state individuals can
sell their SRECs into.
What are SRECs?
In SREC states, the Renewable Portfolio Standard (RPS) requires electricity suppliers to
secure a portion of their electricity from solar generators. The SREC program provides a
means for Solar Renewable Energy Certificates (SRECs) to be created for every megawatt-
hour of solar electricity created.
Once the installation of a solar system is complete, the system must then be certified by the
state(s) in which it is eligible to sell SRECs and then must create an account with the
tracking platform used by that state. Once registered, every month, the tracking platform
will issue SRECs based on the generation of your system.
In some states, estimated generation is used for systems under 10kW, while all other
systems are required to submit generation on a monthly basis.
1 SREC = 1,000 kWh of solar electricity = 1 MWh of solar electricity produced
10 kWp solar capacity = approximately 12 SRECs per year.
The SREC is sold separately from the electricity and represents the "solar" aspect of the
electricity that was produced.
How Much are SRECs Worth?
There is no assigned value to an SREC.
Prices are influenced by supply and demand. The supply is determined by the number of
solar installations producing SRECs and trading them.
Solar Business Opportunities
28 of 42
ATTACHMENT-B: Who Benefits from SRECs? - Continued
The demand is determined by individual state RPS solar requirements and the Solar
Alternative Compliance Penalty (SACP) set by the state.
The RPS solar requirement represents the number of SRECs the electric suppliers are
required to collect each year. The SACP is the penalty amount per SREC paid by the electric
suppliers if they do not collect enough SRECs.
In general the price that SRECs trade at is typically less than the SACP charged by the
states if the electric company does not reach it's quota. For example - in New Jersey, where
the SACP in 2010 is $693 SRECs are trading at around $570 … or approximately 82% of the
SACP rate.
Since the SACP rates can vary by state and even over time … the future value of the SRECs
is difficult to estimate … and therefore the long term benefit for the developer / solar project
owner makes it difficult for them to forecast their net revenues and therefore obtain long-
term financing.
Who Benefits?
In theory - the sale of SRECs is intended to promote the growth of distributed solar by
shortening the time it takes to earn a return on the investment. This is more easily
accomplished if the SRECs can be sold on a long-term basis, which larger projects require in
order to obtain project financing or solar energy investors require to produce predictable
yields … but much less so when sold into a fluctuating spot market (the typical situation for
residential and small commercial rooftop projects).
However, in practice while it is generally possible to fairly accurately predict the amount of
electricity a specific solar installation will produce over time the variability of SRECs in a
free-market economy – especially factoring the likelihood that SECP rates will change from
year to year for political and market reasons – estimating the potential economic values of
SRECs over the life of a project and newness of this incentive program and instability in the
pricing make it difficult to obtain the long term financing needed by most developers to
build mid-sized to larger solar energy projects.
Solar Business Opportunities
29 of 42
ATTACHMENT-B: Who Benefits from SRECs? - Continued
Is There a Market for the Buying and Selling of SRECs?
Yes there is … and its growing, but the market is dividing into two tiers:
Tier 1: Large project developers, who may be generating thousands of SRECs each year,
are able to negotiate contracts directly with energy suppliers, securing far more favorable
terms and pricing than smaller players. Some are worried that this could limit diversity in
the market.
Residential and small sized solar installations. To address this market, financing and
aggregation companies like Sol Systems, SRECTrade and Flett Exchange have emerged to
help residential and small commercial project owners register, track and sell their SRECs to
energy suppliers. They have seen business explode as SREC markets have expanded.
How do you Sell your SRECs?
Since it is very costly for electric suppliers to buy direct from individuals, solar owners have
limited options for selling their SRECs. Most suppliers will either issue cumbersome requests
for proposals (RFPs) or work directly with third-party aggregators and brokers – such as the
three listed in the previous section.
Prior to these brokerage services, individual solar generators had little visibility into actual
SREC market prices as well as markups charged by middlemen. In many cases, an SREC is
traded several times before reaching the electric supplier.
Even with the emergence of aggregators / brokerage services it will typically take a few
months before you begin receiving payments. For example, if your system goes online on
January 1st, your January generation will be recorded on February 1st. Your first SREC(s)
will be actually credited to your account on March 1st. They would then be sold in the March
auction, so your first payment would come in late March. After that, payments will come as
SRECs are generated. Also note: some states operate on a quarterly basis, rather than
monthly.
Who Pays?
The primary buyers of SRECs are utility companies – who are looking to avoid paying the
legislated SEPC penalties. There are some private buyers too – but they appear to be in the
minority.
Solar Business Opportunities
30 of 42
ATTACHMENT-B: Who Benefits from SRECs? - Continued
As always – the utility companies pass along the cost the SRECs to their customers … in
much the same way that the costs for Feed In Tariffs are passed back to the customers.
Which is Better – Feed in Tariffs or SRECs?
While more than 63 countries and several states and provinces have implemented Feed In
Tariff systems - they have yet to make major headway in America. This is ironic, since the
original Feed In Tariff system was developed in the USA – although it took the Germans to
really make it work well – so well in fact that with much less sun than in most of the USA –
they lead the world in the installation of solar energy systems.
Speaking as a developer of solar energy projects – the appeal of a Feed In Tariff System is
simple. Under the Feed In Tariff system you know before you build your system and connect
it to the grid exactly how much you will be receiving for each kWh of electricity produced –
for the next 20 years. This stability in income means that homeowners, investors and
bankers can trust in the projections and provide the money to build new systems.
The appeal of the Feed In Tariff systems in the EU makes sense – because they have a lack
of fossil fuels and a ground swelling of support for renewable energy solutions to make them
energy independent. However, according to studies in the USA more than 90% of people
surveyed favor solar energy.
So why are SREC programs so popular? Is it because the states don't have to pay? Is it
because it favors big utility companies, who spend a lot of money on political lobbying?
The two policies are often compared side-by-side because they represent different ends of
the philosophical (and perhaps ideological) spectrum over how best to incentivize solar.
Because these programs are still so new, their effectiveness over the long term is unclear.
Some installers – many of whom are advocates of FITs – believe SREC programs create too
much volatility and favor larger commercial and industrial-scale project developers.
All the major emerging SREC markets are in deregulated states. Under deregulation, energy
suppliers are short-term players in the market. Thus, they have been unwilling to sign
contracts for longer than five years in states like New Jersey and Maryland. (In Maryland's
case, there is a requirement that SREC generators bid for 15-year contracts, but energy
suppliers have been more willing to pay the penalty than enter into such long agreements).
Thus, a number of installers have found it difficult to finance projects with a 30-year lifetime
based upon contracts for five years or less.
Solar Business Opportunities
31 of 42
ATTACHMENT-B: Who Benefits from SRECs? - Continued
New Jersey is the only state with enough experience to gauge success of SRECs. After a
couple years of missing solar targets during the program transition, the industry is finally
catching up – driven by the high prices of SRECs due to limited supply. The average market
price for an SREC has been about $570, or $0.57 per kilowatt-hour. That's well above the
cost of generating solar electricity.
The high SREC prices have driven a flurry of new development in the state. However, if the
industry overshoots its targets for 2011 and there's an oversupply of SRECs in the market,
prices could drop substantially and hurt the financial viability of projects. Some are worried
that it could put some installers out of business.
A number of fixes to these issues have been proposed: Some want to see required long-
term contracts to provide security; some are hoping to create a hybrid structure where FITs
target the smaller end of the market and SRECs are used for large projects; and a few
people are even proposing that states with SREC markets start from scratch and implement
pure-play FITs. (The likelihood of that is very slim).
While SRECs are certainly gaining traction and will likely be an important part of American
solar policy, it may be another year or two before we know how effective they are.
Depending on how these emerging markets perform, there may be a lot more
experimentation ahead.
So which program is best? I think it's pretty easy to determine in a "free economy" – just
look at how many GW of solar projects are being installed in countries with FIT programs …
and how many are being installed in areas that offer SRECs … FIT wins by a large margin.
Solar Business Opportunities
32 of 42
Attachment C: Primer in Solar Rooftop Leasing
Solar rooftop leasing is one of the three basic ways you can make money from your rooftop
with solar energy. The other two involve owning and operating solar panels on your own
roof and joint venturing with a developer who will install the solar panels and share the
income with you.
While a property owner might not have the resources to invest in a rooftop solar today …
they still might be interested in realizing some income from solar energy through leasing
their rooftop space to a developer – and make money while they learn more about the
benefits of installing solar energy on their building.
In this section we will focus primarily on what you need to know if you are considering solar
rooftop leasing.
Solar Energy is Creating a Demand for Rooftop Space
As the solar energy movement continues to grow in both size and stature, governments,
property owners and power providers are all seeking ways to access and leverage solar
energy resources to their best advantage.
Obviously, in order to produce electricity from the sun – you need someplace to install your
solar panels. In Europe, the Feed In Tariffs are generally structured in such a way as to pay
a higher amount per kWh of power produced. This not only encouraged homeowners to
install solar panels on their roofs – but also the owners of large buildings, Churches,
governments and even the military are installing solar panels on their property.
While a growing number of property owners are investing in the installation of solar panels
on their roofs – a new group of small to independent developers began exploring the
feasibility of leasing rooftops, attracting investors and raising the money to pay for the solar
installations.
Because of this growing demand – property owners are seeing interest from developers
willing to pay to lease the space.
Rooftops Can Generate Income
Many commercial, industrial and retail buildings can provide the real estate needed for
these systems, and are subsequently viewed as excellent candidates for roof rental.
In Germany – the optimum size installation is 250 kWh and above. These large PV systems
typically require large amounts of rooftop space – with the exact amount
Solar Business Opportunities
33 of 42
Attachment C: Primer in Solar Rooftop Leasing - Continued
depending on the type of solar panels used (i.e., solar panels with higher kWp require less
space.
A growing number of third-party solar power providers are looking to rent roof surfaces
from building owners in a designated area, install PV systems and sell the power generated
to the local utility companies through pre-negotiated agreements.
Building owners don’t have to get involved in marketing the power generated on their roofs,
and the lease agreements frequently guarantee at least 20 years of dependable rental
income.
In Germany – you are able to find roofs on large apartment complexes in East Germany for
about €1.00 / sqm / year. However, by offering to prepay the full 20 year lease in advance
we can usually negotiate an even lower lease cost.
Note: Roof lease rates are directly related to the prevailing FIT rates in Europe. As FIT rates
drop … the amount a developer is willing to pay to lease the rooftop also declines roughly
the same amount.
In the USA – the lease rate will depend on the price that the developer can realize from the
sale of the electricity produced.
Is Your Structure Suitable for a PV Array?
Not every rooftop will be suitable for a rooftop installation … and some are more suitable
than others. Your suitability will impact directly on what income you might be offered for
your rooftop.
In addition to being flat or angled to get good sun exposure and relatively free of
obstructions in order to permit PV installation, the ideal rooftop needs to be exposed to the
sun (not shaded by mountains, trees, other structures or potential future structures on the
building site or on neighboring properties) and physically capable of supporting the weight
of a PV array.
Size also matters, with the ideal size for a solar PV rooftop installation being in the range of
30,000 to 100,000 square feet.
A new or recently rebuilt roof is preferred, because it is less likely to require additional
structural support to accommodate the array, and because it will probably not require
Solar Business Opportunities
34 of 42
Attachment C: Primer in Solar Rooftop Leasing - Continued
significant repair or replacement during the operating period of the solar project, which
might necessitate the temporary removal or relocation of the solar array.
Understanding Lease Agreements
Many rooftop rental agreements can look lucrative at first glance. There are, however,
several important facts that building owners must be aware of before signing on the dotted
line and making a multi-decade commitment. Ignoring these realities could turn a potential
cash cow into a fire-breathing dragon that could do serious damage to the bottom line.
One of the first questions the solar developer will want to know is if the owner has full legal
control over the rooftop ... and if these legal rights can be split off from the underlying
property. That is, the rooftop must not be subject to existing liens, mortgages or other legal
restrictions, which may prevent the landlord from being able to grant exclusive rights to the
solar developer / operator.
Building owners need to be aware of is that most roof-mounted PV systems can easily last
up to 40 years, while the commercial roofing systems they are attached to typically have life
spans of between 10 and 13 years. With a 20-year roof rental in place for a PV system, it’s
highly likely that roof repairs — or even replacement — will be needed at some point over
the course of the rental period.
For example … one property owner needed a new roof but didn't have the money to pay for
it. His existing roof also contained asbestos (common in Italy and other countries). So what
he decided to do was to find somebody willing to sign a solar rooftop leasing agreement –
and then pledged that to his bank to get the money to repair his roofs – in essence getting
a new roof for free.
While a roof lease can provide secondary monthly income from space that previously
generated no income or was even classified as a liability, the attractiveness of the deal can
disappear quickly if roof maintenance is not factored into the lease agreement.
Any failure in the roof surface that causes leaks can disrupt day-to-day operations, drive
away customers and do serious damage to the financial stability of a business. Fixing the
problems with the roof surface once a PV system is in place will also take much longer and
cost much more than a typical roof repair.
If it takes days or weeks to fix a leaking roof surface, any financial benefits generated by
the roof rental can quickly be replaced with enormous losses that could potentially eliminate
Solar Business Opportunities
35 of 42
Attachment C: Primer in Solar Rooftop Leasing - Continued
several years of rental income. As a result, in any rooftop lease agreement, you need to
know who is going to pay if roof repairs are needed, especially if PV system removal is
required.
In simple terms, if maintenance is not an integral part of the lease agreement, roof rental is
not likely to be a lucrative deal in the long run.
NOTE: In Italy they came up with a concept called "Innovative Roof". Basically, instead of
mounting PV panels attached to the roof the developer removes the old rooftop and uses
special mounting brackets to create a brand new roof made up of solar panels. To
compensate for the added costs - the Italian government offers a much higher Feed-In-
Tariff for these type of solar installations. But there is also the advantage of a longer lease
for the owner / operator of the PV installation as well as the property because new roof has
a much longer life span ... and makes money over that time period. Expect this idea to
become more and more popular in the future.
Before you become involved in a rooftop rental agreement for a solar PV system, keep the
following four facts in mind:
• Rooftop rental can provide extra income each month, but can also open you up to
significant liabilities.
• The building, roofing systems and the operations conducted in your facility are your
primary concerns, not the PV system.
• Maintenance and troubleshooting must be part of any comprehensive rooftop lease
agreement.
• Know who is financially responsible for repairs and lost production so you don’t end up
holding the bag for costs and penalties.
Without a doubt, an FIT can be an excellent way to put your unused roof space to good use
and to collect rent at the same time. By doing your homework and reviewing lease
agreements carefully, you can benefit from green solar power generation while knowing that
all your financial bases are covered.
The following are some of the typical clauses you might see in a solar rooftop leasing
agreement – and the issues you might want to consider.
Solar Business Opportunities
36 of 42
Attachment C: Primer in Solar Rooftop Leasing - Continued
Given the nature of such leases it is recommended to ask your solar consultant or a real
estate lawyer (with solar leasing experience) to review the agreement before signing.
Option Agreement
Most rooftop solar developers require an option to lease the rooftop.
The option will permit the operator to have access to inspect and test the rooftop and do
such other investigations as it deems necessary to satisfy itself that the location is suitable
for a solar PV array and that the building owner is in a position to grant a lease to it.
The option will be open for exercise by the operator for a period sufficient to enable the
operator to conduct such inspections and investigations and to apply for and obtain a Feed
In Tariff (“FIT”) program approval or enter into a Power Purchase Agreement (“PPA”) with
the local electrical utility.
The option agreement will provide that if the developer exercises its option, the parties will
enter into a lease of the rooftop area on the terms set out in the option agreement.
Tenant Covenant
As with any lease, it is advisable for the landlord to consider the financial strength and
“track record” of the tenant, and to determine whether a deposit or other form of financial
security should be sought to protect the landlord from the consequences of a tenant default.
Term and Rent
The term of the lease must be at least 20 years (to match the term of the FIT or PPA ) and
the tenant will most likely ask for the exclusive option to renew the lease.
Renewal rights are potentially important, as it is anticipated that the productive life of the
solar photovoltaic (“PV”) array equipment may be substantially longer than 20 years.
Rent can be structured in several ways. Usually, it will be a fixed, all-inclusive “gross” rent,
but it may be calculated based on the size of the roof area or the portion of the rooftop
utilized, the wattage produced by the facility, a percentage of the revenues received by the
tenant, or on some other basis.
In addition, the lease may provide for the tenant to pay for its electricity consumption and
for any realty taxes associated with the solar PV array.
Solar Business Opportunities
37 of 42
Attachment C: Primer in Solar Rooftop Leasing - Continued
As mentioned above – how you receive your payment can also affect the rate, which is why
we prefer to prepare the lease and capitalize it – this way it qualifies for bank financing (at
least in Germany).
Access
The tenant will require access 24/7 to install, clean, maintain, repair and replace its
equipment – and issues of security access may need to be addressed in the lease depending
if the access has to be from within the building or not.
Roof Repair
The lease will need to address the necessity for installation, roof repairs and replacement.
Issues such as notice to the tenant, the period to do the work, relocation of the solar PV
equipment while the repairs or replacement are undertaken, and compensation to the
tenant for lost revenue during repair/replacement will be of concern.
Plans and Specifications
The landlord will want approval rights over the tenant’s plans and specification for the
original installation and for any subsequent alterations, repairs and replacements. The
tenant will want to ensure that such approval is not unreasonably withheld or delayed.
Ownership
It will be critically important to the tenant, for financing purposes, that its facilities are
never treated as building fixtures (i.e. they will not be part of the building and therefore will
not be the landlord’s property) but instead are always the sole property of the tenant.
The tenant will also require that the landlord waive any rights of distress or other rights to
claim a lien or other interest in the tenant’s equipment, in order to facilitate such tenant
financing.
The issue of ownership and transfer of title to the installation (e.g., at the termination of the
lease if not renewed) is also important at the term of the lease … specifically, if the
installation is no longer economically viable or if there are materials containing toxic
materials (such as solar panels that contain cadmium or other materials that or might be
deemed toxic materials in certain locations).
Solar Business Opportunities
38 of 42
Attachment C: Primer in Solar Rooftop Leasing - Continued
Financing
In order to obtain financing for its equipment, the tenant may need to assign the lease as
collateral security to its lender, and will need the landlord to agree to enter into an
agreement with the tenant’s lender enabling the lender to cure any default by the tenant
under the lease and to obtain a new lease on the same terms if the lease is terminated
without the lender’s consent (e.g. as a result of the bankruptcy of the tenant). The landlord
will want the lender to agree that any monetary or other curable default must be cured prior
to the new lease being granted.
Insurance
The landlord will want the tenant to obtain and maintain insurance on its facilities, and
adequate liability insurance, and the tenant will similarly want the landlord to obtain and
maintain insurance on its building as well as public liability insurance. Appropriate releases,
waivers and indemnities will also be important to both parties.
Interference
As noted above, it will be extremely important to the tenant that nothing happens that
blocks or otherwise interferes with sunlight reaching its solar PV array. Consequently, it will
require covenants from the landlord that it will not take or permit any action, which would
have such effect.
In addition to the normal termination for damage and destruction provisions found in a
typical lease, if at some point something happens (such as the construction of a building in
the vicinity) that impairs the availability of sunlight or otherwise prevents the tenant from
operating its facility, the lease will need to address the tenant’s rights to terminate the lease
in such circumstances.
Non-Disturbance
As would be the case for any lease, the tenant may require that the landlord obtain
agreements from each of its mortgage lenders to the effect that the lender will permit the
tenant to remain in possession of the leased rooftop, etc. notwithstanding any default by
the landlord under the mortgage, and will agree to recognize the lease and the tenant’s
rights.
Solar Business Opportunities
39 of 42
Attachment C: Primer in Solar Rooftop Leasing - Continued
Repair and Maintenance
Each party will want to ensure that proper repair and maintenance obligations are included
in the lease.
The landlord will want the tenant to properly maintain and repair its equipment to ensure it
is kept safe and in compliance with laws and regulations, and the tenant will want the
landlord to take adequate care of the building, especially the roof, to avoid any impairment
of the tenant’s ability to properly operate its solar facility.
Regular cleaning of the panels including snow removal, and disposal may also need to be
addressed depending on the location of the building and normal weather patterns.
Registration on Title
In order to obtain financing and to protect its interest in the event of a subsequent sale,
mortgage or other disposition of the landlord’s interest in the building, the tenant will want
the right to be able to register a notice of its lease on title to the landlord’s property.
The landlord will want the tenant to agree that it will “attorn to” (recognize as the landlord
under the lease) its mortgagee (if it goes into possession due to a mortgage default) and
any purchaser of the property.
Conclusions
Rooftop solar PV arrays are soon going to become very common, and while not all rooftops
will be suitable and not all building owners will be willing to commit to lease their roofs for a
twenty year period, with a little forethought and careful attention, rooftop solar leasing can
potentially be a win-win for both building owners and solar project developers.
[See Sample Rooftop Lease Application Example Next Page]
Solar Business Opportunities
40 of 42
Rooftop Lease Application Example
Address:______________________________________________________________________
Owner / Property Manager:_______________________________________________________
Broker / Telephone:_____________________________________________________________
Slope of the roof to the sun: ________________________
or Googlemap coordinates: ________________________
Type of Roof:_____________________________________________ Roof pitch:____ degrees
Building type use:_______________________________________________________________
Age of building:____________ Age of Roof: __________ Last development date:____________
Is building still in use: ___ yes ___ no Does the roof contain asbestos: ___ yes ___ no Type of
roof membrane: _________________ Can roof support an additional 15kg / m2 : __ yes __ no
Height of the roof (from ground to roof):_____________________________________________
Does building have independent source of power: __ yes __ no
Type: _______________________________
If no – name & address of power supplier:__________________________________________
Is there a company owned transformer?: __ yes __ no Is a transformer close by: __ yes __ no
Building dimensions: width :____________________ length: ________________
Do any shadows fall on the roof: __ yes __ no Source of shadows:
__________________________________________________________________________
Is there a lightning protection system on the roof: __ yes __ no
Further information regarding the location: __________________________________________
______________________________________________________________________________
Please enclose the the following (digital format preferred): 1. Site plan w/layout of the building
2. Photos of the complete building (all sides + roof if possible) 3. Photo of ground near sides of
building (for purposes of erecting scaffolding / use of a crane) 4. Photos showing any sources of
shading on the roof + measurements (e.g., height of object, location) 5. Detailed photos of the
roof / roof membrane 6. If possible, photo of the underbody of the roof (for structural review)
Solar Business Opportunities
41 of 42
About the Author:
Mr. Freeborn is an Advocate & Supporting Board Member for Education,
Employment, Entrepreneurship and Empowerment. He is experienced in
working with Government and Private agencies for Economic Development &
International Trade. He serves as an adviser for Business Contacts, Contracts
& Capital Consultant for Domestic and Foreign Direct Investment, Economic
Development, Education, and Business Development. He also serves as a
Small Business Project Mentor and Internship Adviser.
Mr. Freeborn is connected in 192 countries professionally and has worked with more than 40 different
industries worldwide. He has accepted numerous international awards on behalf of his international
development for companies he has represented. On LinkedIn he has over 60,000 connections, more
than 55,000 endorsements and over a dozen written recommendations.
Mr. Freeborn has authored books on international business, small business management, international
college internship handbooks and an internship guide for small business.
► PROFESSIONAL EXPERIENCE:
● Export/Import Business Development
● International and U.S. Business Funding
● Foreign Direct Investment
● Int'l and U.S. JV & Partnership Development
● Small Business Development & Funding
● Commercial & Industrial Project Funding
● M&As, Project Management & Development
● Project Due Diligence, Business Plan Analysis
● Business Acquisitions & Sales
● Initial Public Offerings
● Corporate Restructuring
● E&C Level Consulting & Management
► INDUSTRY EXPERIENCE:
● Agriculture,● Automotive ● Aviation ● Bio-Technology ● Chemical Production ● Commercial R.E.
Assessment and Development ● Diesel Power ● Education: Internship Development ● IT ● Energy
Production ● Environmental Planning & Assessment ● Hospitality ● Marinas ● Mass Transit ● Medical
● Mining ● Railroads ● Renewable Energy ● GSA & Military ● International Contracting - Finance -
Bidding - Proposal & Development.
Solar Business Opportunities
42 of 42
2016
FDG Global, LLC.
Solar Business Opportunities
Disclaimer: The views and opinions expressed in this publication are
those of the author and do not necessarily reflect the official policy or
position of any government agency. Information provided within this
publication is offered as only example. They should not be utilized in
real-world business analysis or products as they are based only on
very limited and dated open source information. Assumptions made
within this publication are not reflective of the position of any U.S. or
other government entity, public or private entities. There are no
endorsements of any of the companies or products mentioned within
this publication.

Mais conteúdo relacionado

Mais procurados

Solar product business plan
Solar product business planSolar product business plan
Solar product business planIndrajith Nair
 
Saudi Arabia-Solar power business plans
Saudi Arabia-Solar power business plansSaudi Arabia-Solar power business plans
Saudi Arabia-Solar power business plansSHAIK AMANULLA
 
Marketing Plan - Solar Company
Marketing Plan - Solar CompanyMarketing Plan - Solar Company
Marketing Plan - Solar Companymytra
 
Solar Sales & Marketing
Solar Sales & MarketingSolar Sales & Marketing
Solar Sales & MarketingOnGrid
 
Commercial Solar Presentation
Commercial Solar PresentationCommercial Solar Presentation
Commercial Solar PresentationChris Byers
 
Solar Business Proposal PowerPoint Presentation Slides
Solar Business Proposal PowerPoint Presentation SlidesSolar Business Proposal PowerPoint Presentation Slides
Solar Business Proposal PowerPoint Presentation SlidesSlideTeam
 
Solar photovoltaics
Solar photovoltaicsSolar photovoltaics
Solar photovoltaicsArvind Kumar
 
Organic solar cell material
Organic solar cell materialOrganic solar cell material
Organic solar cell materialMuhammadAleem58
 
Rooftop Solar Systems
Rooftop Solar SystemsRooftop Solar Systems
Rooftop Solar SystemsJay Ranvir
 
Solar to energy presentation geofrey yator
Solar to energy presentation geofrey yatorSolar to energy presentation geofrey yator
Solar to energy presentation geofrey yatorGeofrey Yator
 
Future of solar Power Projects in India
Future of solar Power Projects in IndiaFuture of solar Power Projects in India
Future of solar Power Projects in IndiaHarish Sharma
 
Solar Energy Presentation - OPEX / RESCO / BOOT with 100% Funding
Solar Energy Presentation -  OPEX / RESCO / BOOT with 100% FundingSolar Energy Presentation -  OPEX / RESCO / BOOT with 100% Funding
Solar Energy Presentation - OPEX / RESCO / BOOT with 100% FundingEnerco Energy Solutions LLP
 
Battery Energy Storage System (BESS) A Cost_Benefit Analysis for a PV power s...
Battery Energy Storage System (BESS) A Cost_Benefit Analysis for a PV power s...Battery Energy Storage System (BESS) A Cost_Benefit Analysis for a PV power s...
Battery Energy Storage System (BESS) A Cost_Benefit Analysis for a PV power s...JackRipper27
 
10 mw solar power plant
10 mw solar power plant10 mw solar power plant
10 mw solar power plantRusiru Sanjaya
 
Solar on grid application ppt
Solar on grid application pptSolar on grid application ppt
Solar on grid application pptswati malla
 

Mais procurados (20)

Solar product business plan
Solar product business planSolar product business plan
Solar product business plan
 
Opportunities in solar business
Opportunities in solar businessOpportunities in solar business
Opportunities in solar business
 
business plan Solar energy
business plan Solar energybusiness plan Solar energy
business plan Solar energy
 
Saudi Arabia-Solar power business plans
Saudi Arabia-Solar power business plansSaudi Arabia-Solar power business plans
Saudi Arabia-Solar power business plans
 
Marketing Plan - Solar Company
Marketing Plan - Solar CompanyMarketing Plan - Solar Company
Marketing Plan - Solar Company
 
Solar Sales & Marketing
Solar Sales & MarketingSolar Sales & Marketing
Solar Sales & Marketing
 
Commercial Solar Presentation
Commercial Solar PresentationCommercial Solar Presentation
Commercial Solar Presentation
 
Solar Business Proposal PowerPoint Presentation Slides
Solar Business Proposal PowerPoint Presentation SlidesSolar Business Proposal PowerPoint Presentation Slides
Solar Business Proposal PowerPoint Presentation Slides
 
Solar photovoltaics
Solar photovoltaicsSolar photovoltaics
Solar photovoltaics
 
Organic solar cell material
Organic solar cell materialOrganic solar cell material
Organic solar cell material
 
Rooftop Solar Systems
Rooftop Solar SystemsRooftop Solar Systems
Rooftop Solar Systems
 
Solar to energy presentation geofrey yator
Solar to energy presentation geofrey yatorSolar to energy presentation geofrey yator
Solar to energy presentation geofrey yator
 
Rooftop Solar Systems
Rooftop Solar SystemsRooftop Solar Systems
Rooftop Solar Systems
 
Future of solar Power Projects in India
Future of solar Power Projects in IndiaFuture of solar Power Projects in India
Future of solar Power Projects in India
 
Economics of Solar Park
Economics of Solar ParkEconomics of Solar Park
Economics of Solar Park
 
Solar Energy Presentation - OPEX / RESCO / BOOT with 100% Funding
Solar Energy Presentation -  OPEX / RESCO / BOOT with 100% FundingSolar Energy Presentation -  OPEX / RESCO / BOOT with 100% Funding
Solar Energy Presentation - OPEX / RESCO / BOOT with 100% Funding
 
Battery Energy Storage System (BESS) A Cost_Benefit Analysis for a PV power s...
Battery Energy Storage System (BESS) A Cost_Benefit Analysis for a PV power s...Battery Energy Storage System (BESS) A Cost_Benefit Analysis for a PV power s...
Battery Energy Storage System (BESS) A Cost_Benefit Analysis for a PV power s...
 
Solar Energy
Solar EnergySolar Energy
Solar Energy
 
10 mw solar power plant
10 mw solar power plant10 mw solar power plant
10 mw solar power plant
 
Solar on grid application ppt
Solar on grid application pptSolar on grid application ppt
Solar on grid application ppt
 

Semelhante a 2016 Solar Business Opportunity

How to Get a Job in the Solar Industry
How to Get a Job in the Solar IndustryHow to Get a Job in the Solar Industry
How to Get a Job in the Solar IndustryYoni Binstock
 
US solar PPA / leasing sector - research summary
US solar PPA / leasing sector - research summaryUS solar PPA / leasing sector - research summary
US solar PPA / leasing sector - research summaryHarald Överholm
 
SolarCity Plans Book
SolarCity Plans BookSolarCity Plans Book
SolarCity Plans BookSachi Howard
 
SolarCity Plans Book
SolarCity Plans BookSolarCity Plans Book
SolarCity Plans BookLauren Cox
 
Selling solar services as a contribution to a circular economy
Selling solar services as a contribution to a circular economySelling solar services as a contribution to a circular economy
Selling solar services as a contribution to a circular economyJudit Urquijo
 
Day4 solarSYSTEMS - Brochure
Day4 solarSYSTEMS - BrochureDay4 solarSYSTEMS - Brochure
Day4 solarSYSTEMS - BrochureJustin Lacey
 
RUNNING headTEAM 2 MARKETING PLAN SHELL2Team 2 Marketing Pl.docx
RUNNING headTEAM 2 MARKETING PLAN SHELL2Team 2 Marketing Pl.docxRUNNING headTEAM 2 MARKETING PLAN SHELL2Team 2 Marketing Pl.docx
RUNNING headTEAM 2 MARKETING PLAN SHELL2Team 2 Marketing Pl.docxjeffsrosalyn
 
Solar service and third-party (PPA) financing ventures in the US - research s...
Solar service and third-party (PPA) financing ventures in the US - research s...Solar service and third-party (PPA) financing ventures in the US - research s...
Solar service and third-party (PPA) financing ventures in the US - research s...Harald Överholm
 
Fact Sheet: Local Governments & Bulk Purchasing of Solar Energy Systems
Fact Sheet: Local Governments & Bulk Purchasing of Solar Energy SystemsFact Sheet: Local Governments & Bulk Purchasing of Solar Energy Systems
Fact Sheet: Local Governments & Bulk Purchasing of Solar Energy SystemsThe Solar Foundation
 
A visual review of america's online solar store solar systems usa - financial
A visual review of america's online solar store   solar systems usa - financialA visual review of america's online solar store   solar systems usa - financial
A visual review of america's online solar store solar systems usa - financialNathan Thompson
 
Fact Sheet: Solar Myths & Misconceptions - The Costs of Going Solar
Fact Sheet: Solar Myths & Misconceptions - The Costs of Going SolarFact Sheet: Solar Myths & Misconceptions - The Costs of Going Solar
Fact Sheet: Solar Myths & Misconceptions - The Costs of Going SolarThe Solar Foundation
 
Running headMARKET ANALYSIS 1MARKET ANALYSIS2.docx
Running headMARKET ANALYSIS 1MARKET ANALYSIS2.docxRunning headMARKET ANALYSIS 1MARKET ANALYSIS2.docx
Running headMARKET ANALYSIS 1MARKET ANALYSIS2.docxjeffsrosalyn
 
Sunpower Sales Call Planning Report
Sunpower Sales Call Planning ReportSunpower Sales Call Planning Report
Sunpower Sales Call Planning ReportAlexander Kotz
 
Case study pe& vc
Case study pe& vcCase study pe& vc
Case study pe& vcNoufA13
 
Solar means-business-2013
Solar means-business-2013Solar means-business-2013
Solar means-business-2013VoteSolar
 
Q&A - Webinar - Financing for Solar Offgrid Businesses
Q&A - Webinar - Financing for Solar Offgrid BusinessesQ&A - Webinar - Financing for Solar Offgrid Businesses
Q&A - Webinar - Financing for Solar Offgrid BusinessesTuong Do
 
Solar Jobs guidebook April 2015
Solar Jobs guidebook April 2015Solar Jobs guidebook April 2015
Solar Jobs guidebook April 2015Karen D
 

Semelhante a 2016 Solar Business Opportunity (20)

How to Get a Job in the Solar Industry
How to Get a Job in the Solar IndustryHow to Get a Job in the Solar Industry
How to Get a Job in the Solar Industry
 
US solar PPA / leasing sector - research summary
US solar PPA / leasing sector - research summaryUS solar PPA / leasing sector - research summary
US solar PPA / leasing sector - research summary
 
SolarCity Plans Book
SolarCity Plans BookSolarCity Plans Book
SolarCity Plans Book
 
SolarCity Plans Book
SolarCity Plans BookSolarCity Plans Book
SolarCity Plans Book
 
Product development assignment help
Product development assignment helpProduct development assignment help
Product development assignment help
 
Selling solar services as a contribution to a circular economy
Selling solar services as a contribution to a circular economySelling solar services as a contribution to a circular economy
Selling solar services as a contribution to a circular economy
 
Day4 solarSYSTEMS - Brochure
Day4 solarSYSTEMS - BrochureDay4 solarSYSTEMS - Brochure
Day4 solarSYSTEMS - Brochure
 
SolarCity
SolarCitySolarCity
SolarCity
 
RUNNING headTEAM 2 MARKETING PLAN SHELL2Team 2 Marketing Pl.docx
RUNNING headTEAM 2 MARKETING PLAN SHELL2Team 2 Marketing Pl.docxRUNNING headTEAM 2 MARKETING PLAN SHELL2Team 2 Marketing Pl.docx
RUNNING headTEAM 2 MARKETING PLAN SHELL2Team 2 Marketing Pl.docx
 
Solar service and third-party (PPA) financing ventures in the US - research s...
Solar service and third-party (PPA) financing ventures in the US - research s...Solar service and third-party (PPA) financing ventures in the US - research s...
Solar service and third-party (PPA) financing ventures in the US - research s...
 
Fact Sheet: Local Governments & Bulk Purchasing of Solar Energy Systems
Fact Sheet: Local Governments & Bulk Purchasing of Solar Energy SystemsFact Sheet: Local Governments & Bulk Purchasing of Solar Energy Systems
Fact Sheet: Local Governments & Bulk Purchasing of Solar Energy Systems
 
A visual review of america's online solar store solar systems usa - financial
A visual review of america's online solar store   solar systems usa - financialA visual review of america's online solar store   solar systems usa - financial
A visual review of america's online solar store solar systems usa - financial
 
Fact Sheet: Solar Myths & Misconceptions - The Costs of Going Solar
Fact Sheet: Solar Myths & Misconceptions - The Costs of Going SolarFact Sheet: Solar Myths & Misconceptions - The Costs of Going Solar
Fact Sheet: Solar Myths & Misconceptions - The Costs of Going Solar
 
Running headMARKET ANALYSIS 1MARKET ANALYSIS2.docx
Running headMARKET ANALYSIS 1MARKET ANALYSIS2.docxRunning headMARKET ANALYSIS 1MARKET ANALYSIS2.docx
Running headMARKET ANALYSIS 1MARKET ANALYSIS2.docx
 
Sunpower Sales Call Planning Report
Sunpower Sales Call Planning ReportSunpower Sales Call Planning Report
Sunpower Sales Call Planning Report
 
Case study pe& vc
Case study pe& vcCase study pe& vc
Case study pe& vc
 
Solar means-business-2013
Solar means-business-2013Solar means-business-2013
Solar means-business-2013
 
Q&A - Webinar - Financing for Solar Offgrid Businesses
Q&A - Webinar - Financing for Solar Offgrid BusinessesQ&A - Webinar - Financing for Solar Offgrid Businesses
Q&A - Webinar - Financing for Solar Offgrid Businesses
 
Solar Jobs guidebook April 2015
Solar Jobs guidebook April 2015Solar Jobs guidebook April 2015
Solar Jobs guidebook April 2015
 
Business report
Business reportBusiness report
Business report
 

Mais de JohnMFreeborn

2016 Capital Protection & Preservation Report 9-16F (1)
2016 Capital Protection & Preservation Report 9-16F (1)2016 Capital Protection & Preservation Report 9-16F (1)
2016 Capital Protection & Preservation Report 9-16F (1)JohnMFreeborn
 
Venture-Pulse-Report-Q2-2016
Venture-Pulse-Report-Q2-2016Venture-Pulse-Report-Q2-2016
Venture-Pulse-Report-Q2-2016JohnMFreeborn
 
UberPITCHRIDE-F1000 Venture Ride-VI
UberPITCHRIDE-F1000 Venture Ride-VIUberPITCHRIDE-F1000 Venture Ride-VI
UberPITCHRIDE-F1000 Venture Ride-VIJohnMFreeborn
 
Ferguson1000-Reception Program
Ferguson1000-Reception ProgramFerguson1000-Reception Program
Ferguson1000-Reception ProgramJohnMFreeborn
 
投资于美国-Invest in America-2015CN-RI (1)
投资于美国-Invest in America-2015CN-RI (1)投资于美国-Invest in America-2015CN-RI (1)
投资于美国-Invest in America-2015CN-RI (1)JohnMFreeborn
 
iST-Internship Program
iST-Internship ProgramiST-Internship Program
iST-Internship ProgramJohnMFreeborn
 
International Internship Handbook eBook Rev1-FB
International Internship Handbook eBook Rev1-FBInternational Internship Handbook eBook Rev1-FB
International Internship Handbook eBook Rev1-FBJohnMFreeborn
 
10 Ex-Im Export Finance Programs
10 Ex-Im Export Finance Programs10 Ex-Im Export Finance Programs
10 Ex-Im Export Finance ProgramsJohnMFreeborn
 
2015 Capital Protection & Preservation Report V-1
2015 Capital Protection & Preservation Report V-12015 Capital Protection & Preservation Report V-1
2015 Capital Protection & Preservation Report V-1JohnMFreeborn
 
Capital Protection & Preservation Newsletter V1
Capital Protection & Preservation Newsletter V1Capital Protection & Preservation Newsletter V1
Capital Protection & Preservation Newsletter V1JohnMFreeborn
 

Mais de JohnMFreeborn (12)

2016 Capital Protection & Preservation Report 9-16F (1)
2016 Capital Protection & Preservation Report 9-16F (1)2016 Capital Protection & Preservation Report 9-16F (1)
2016 Capital Protection & Preservation Report 9-16F (1)
 
Venture-Pulse-Report-Q2-2016
Venture-Pulse-Report-Q2-2016Venture-Pulse-Report-Q2-2016
Venture-Pulse-Report-Q2-2016
 
UberPITCHRIDE-F1000 Venture Ride-VI
UberPITCHRIDE-F1000 Venture Ride-VIUberPITCHRIDE-F1000 Venture Ride-VI
UberPITCHRIDE-F1000 Venture Ride-VI
 
Ferguson1000-Reception Program
Ferguson1000-Reception ProgramFerguson1000-Reception Program
Ferguson1000-Reception Program
 
Invest USA-2015RI
Invest USA-2015RIInvest USA-2015RI
Invest USA-2015RI
 
投资于美国-Invest in America-2015CN-RI (1)
投资于美国-Invest in America-2015CN-RI (1)投资于美国-Invest in America-2015CN-RI (1)
投资于美国-Invest in America-2015CN-RI (1)
 
iST-Internship Program
iST-Internship ProgramiST-Internship Program
iST-Internship Program
 
International Internship Handbook eBook Rev1-FB
International Internship Handbook eBook Rev1-FBInternational Internship Handbook eBook Rev1-FB
International Internship Handbook eBook Rev1-FB
 
TradeFinanceGuide
TradeFinanceGuideTradeFinanceGuide
TradeFinanceGuide
 
10 Ex-Im Export Finance Programs
10 Ex-Im Export Finance Programs10 Ex-Im Export Finance Programs
10 Ex-Im Export Finance Programs
 
2015 Capital Protection & Preservation Report V-1
2015 Capital Protection & Preservation Report V-12015 Capital Protection & Preservation Report V-1
2015 Capital Protection & Preservation Report V-1
 
Capital Protection & Preservation Newsletter V1
Capital Protection & Preservation Newsletter V1Capital Protection & Preservation Newsletter V1
Capital Protection & Preservation Newsletter V1
 

2016 Solar Business Opportunity

  • 1. 2016 John Freeborn FDG Global, LLC. Solar Business Opportunities
  • 2. Solar Business Opportunities 2 of 42 Table of Contents Page 3 Industry Overview Page 4 Specific Industry Sectors to Consider Page 6 Sample Industry Competitors Page 10 Basic Industry Terminology/Industry Leaders Page 14 Next Generation Solar/NREL Update Page 16 Overview of Angel Investing Page 20 Attachment-A: Feed in Tariffs Page 26 Attachment-B: Who Benefits from SRECs Page 32 Attachment C: Primer in Solar Rooftop Leasing Page 40 Rooftop Lease Application Example Page 41 About the Author Cover photographs are courtesy of the U.S. Department of Energy. This report was prepared for the general use of public information. Neither FDG Global, LLC., the Author John Freeborn, the United States government or any agency thereof, nor any of their employees, makes any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of any information, apparatus, product, or process disclosed, or represents that its use would not infringe privately owned rights. Reference herein to any specific commercial product, process, or service by trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply its endorsement, recommendation, or favoring the United States government or any agency thereof. The views and opinions of the author(s) expressed herein do not necessarily state of reflect those of the United States government or any agency thereof.
  • 3. Solar Business Opportunities 3 of 42 The market for solar products in the US (up 80% over next 18 months), Japan, China, India, Germany, Italy, UK continue to grow. Worldwide - demand for solar installations was up more than 9% last year ... and it appears to continue on this path. A business will only survive if it has customers that want what you provide. According to various research reports, up to 94% of the people in America like the idea of solar energy and helping to save the planet – so that means there are a lot of potential customers. So – what are people willing to pay for? The answer again seems to be – anything solar. Business Overview: For the first time ever, solar beat out natural-gas capacity additions, with solar supplying 29.5 percent of all new electric generating capacity in the U.S. in 2015. Led by California, North Carolina, Nevada, Massachusetts and New York, the U.S. solar market experienced a year-over-year growth rate of 17 percent. Geographically, the market continues to diversify with 13 states installing more than 100 megawatts each in 2015. States that made major solar strides include Utah, which jumped in the rankings from 23rd to 7th place, and Georgia, which moved from 16th to 8th in the nation. The residential solar market grew 66 percent year- over-year and, for the first time in history, eclipsed the 2-gigawatt mark. The residential solar segment now represents 29 percent of the entire U.S. solar market -- its largest share since 2009. For the fourth year in a row, the non- residential market broke the 1- gigawatt mark, but remained roughly flat year-over-year. The utility-scale sector, the mainstay of the U.S. solar market, grew 6 percent year-over-year and represented more than half of all solar PV installed in 2015. Cumulative U.S. solar PV installations have now topped 25 gigawatts, up from just 2 gigawatts in 2010.
  • 4. Solar Business Opportunities 4 of 42 Specific Industry Sectors to Consider: 1. Sell Products – Billions of dollars of solar PV, solar thermal systems, solar attic fans, solar cooling systems, etc. are sold each year not to mention all the component parts required to build and operate such installations. Add solar lights, solar gadgets, solar rechargers, and a growing list of related products and you have a lot to choose from. 2. Be a Distributor – As more and more manufacturers of products emerge – they need distributors to get the products to the market. A company in Asia that produces technology that helps solar systems produce more electricity (2 to 5 times), helps reduce electrical consumption in your home (meaning you won't need to add as many solar panels), the low cost solar street lights (with 5 day battery backup), solar backup generators and much more … they will be looking to build a network of distributors to develop customers for their products. 3. Develop & Own Solar Projects – With Solar Energy – anybody can become a solar developer. Find a good location, put together a team of experts, develop a good business plan, raise the money, build your project – use your experience and completed projects to leverage yourself into other solar projects. 4. Sell After Market Products – There are products that can be sold to people who already have solar installations to increase their yields, reduce the need for cleaning, etc. 5. Sell 3rd Party Provided Services - Besides selling products, you can also sell services provided by other companies – such as solar insurance products, solar cleaning, solar financing, etc. 6. Invent Solar Products – There's a whole bunch of new solar products being developed. Need an idea? Take a look at any existing product that needs power to operate. For example solar powered cooling systems. 7. Find Niches – Take what someone is successfully doing in one market – and do it in your local market, or apply it to a niche market like (e.g., solar for RV vehicles, solar products for boats, solar products for recreational users, solar powered agricultural buildings, government, mobile apps for people interested in solar energy, etc.). There are a lot of opportunities. 8. Produce Informational Products – With everything going on in the solar industry – there is a strong demand for good quality information. If you are good at research – consider producing research reports, how to ebooks, instructional videos, solar training classes, the list of things you can make is limited only by your imagination. 9. Produce Financial Products - Set up a financial company – and offer specific financing products – such as solar construction financing, long term solar project financing, joint venture financing, provide angel financing, acquire solar projects, etc. There are a growing number of private investment groups that do just this. 10. Independent Solar Consultant – A lot of people would like to know if it makes sense to install solar on their property, and could benefit from a professional opinion that looks at the various options and guides them through the entire process. 11. Solar Panel Cleaning – Clean solar panels produce more electricity than dirty panels – and many customers would prefer to hire somebody to keep their solar panels clean rather than clean them themselves, especially if the panels are located on their roofs.
  • 5. Solar Business Opportunities 5 of 42 Specific Industry Sectors to Consider: Continued 12. Financing Consultant – Solar installations are expensive, and there are a lot of different government programs out there. Also – some banks will lend money for solar installations – so why not provide your services to help clients find the money they need to build their projects. Just as there are mortgage brokers – why not create your own "solar brokerage service. 13. Solar Appraisal – Just as there are real estate appraisals, a "solar appraisal business" is needed to assess the value of a solar array on a property for sale … or the future potential of adding a solar installation on an building. 14. Solar Repairs – Solar systems last a long time – but some maintenance is required from time to time, especially on older systems that might need to be upgraded with new inverters, wiring replaced, storm damage repairs, etc. 15. Start a Job Placement Service - On the one hand you have a lot of companies in the solar industry that need to hire people … and on the other, you have a lot of people who would like to work in the solar industry. A solar job placement service can offer tips and advice to employers and job seekers alike. 16. Start a School - Have a skill already – like knowing how to install solar panels or solar heaters – teach others. There is a big demand for skilled workers – and you can provide training (either online … or hands on). There is a growing need for skilled installers. 17. Start a Non-Profit - You don't have to be limited to for profit ideas – there are a number of non-profit solar business opportunities. For example, you can start a foundation to help bring solar energy to people in need, advocate the adoption of FIT programs in your state, promote solar energy awareness in your community, promote greater awareness of vitamin D to help prevent disease, raise money for installing solar systems in developing countries, etc. 18. Nutritional Advice - A very high percentage of the population is vitamin D deficient – and so there is a great need for vitamin D awareness, testing, counseling, vitamin D supplements, etc. 19. Solar Broker - There is a growing market for companies looking to acquire and develop portfolios of solar projects (at least in Europe). Typically, they will buy FIT eligible projects that are connected to the grid – but in some cases you can also sell "shovel ready" solar projects with permits. 20. Energy Auditor - Another service that is growing in demand is to conduct energy audits and make recommendations how people can reduce their electrical consumption.
  • 6. Solar Business Opportunities 6 of 42 Following are sample competitors in the solar distribution and private-commercial kits: http://symtechsolar.com/pv-solutions/ Symtech Solar Our Company Symtech Solar is an American renewable energy company that develops, produces, and delivers the world’s most complete and cost-effective photo voltaic solar energy solutions. With an established and proven track-record, and a highly experienced management team Symtech Solar has created multiple product lines designed for specific solar energy installations and applications, including industry leading PV kits. The use of PV kits designed by Symtech Solar yields cost and time savings by offering users an all-in-one product, thus eliminating the need for the customer to deal with multiple manufacturers and suppliers. Our innovative packaging solution (SymPack Technology) offers our clients an easier and faster way to carry out their solar businesses. Furthermore, our in house engineering and product development team ensure that every PV system is fully compatible for turnkey installations, which are manufactured under Symtech Solar’s quality standards in its assembly facility. Symtech Solar strives to provide leading solar energy solutions by offering install-ready PV system packages that can be drop shipped throughout the world. Our Vision To simplify the solar energy experience. Our Mission To innovate by providing easy to use renewable energy products to an all-sustainable world. Our Product Lines Symtech Solar offers more than 5 different PV kits product lines with multiple design configurations and a variety of component characteristics. Symtech’s ability to provide such flexibility creates a clear difference amongst its competitors and has proven to be an attractive and innovative choice within the Solar Industry. Our Solar PV Kits are carefully selected and designed for compatibility, then packaged together for a single shipment. Our added value is created by offering pre-engineered solar energy systems (kits) that reduce the time and money required in the design, purchasing, and logistics of solar energy systems. Our specialized kit packaging allows our Partners to safely and efficiently receive a complete turnkey (ready to install) PV system. Many of our PV Kits are shipped in an all-in-box configuration. Every Symtech Solar’s product line is offered, designed or engineered with the customer in mind. Optimum flexibility in mounting systems, electrical layouts, and component certifications ensure each and every system delivered meets or exceeds your expectations.
  • 7. Solar Business Opportunities 7 of 42 Why GoGreenSolar.com? We're experienced solar veterans, packaging solar kits since 2006. Our work has been featured on CBS, USA Today, and we've earned a GSA contract with the Federal Government. More than just supplying parts, we also provide value-added services including designs, permitting, and interconnection. Choose us for a complete end-to-end experience - we help you every step of the way until you're generating free energy from the sun! Purchase Solar Parts & Components Just looking for parts? No problem. We have the widest selection of parts at the best prices possible. Click your category below to start browsing. Micro Inverter Kits String Inverter Kits Solar Permitting Solar Panels Grid-Tie Inverters Racks & Mounts
  • 8. Solar Business Opportunities 8 of 42 Civic Solar now offers a commercial solar solution for less than $1.00 per Watt. This is a best-in-class product mix that you can proudly display on every flat rooftop. The value of this package goes well beyond the quality of products included and the competitive pricing. CivicSolar has chosen a robust selection of products and engineered a turnkey solution that will make it easier for you to do business. This commercial solution includes: • Jinko Solar Panels – 315 Watt, 72 Cell Modules • Huawei Inverters - 25 or 30 kW Three-phase, Grid Tied 1000 VDC 480 / 277 VAC Inverters • Aerocompact Ballasted Roof-Mounted Racking • CivicSolar Design & Engineering We are very excited to offer you this package deal at an unmatched price. CivicSolar continuously strives to empower our solar installer partners and turn our strategic position in the market into your success.
  • 9. Solar Business Opportunities 9 of 42 ADDITIONAL LINKS: http://www.wholesalesolar.com/ http://straightupsolar.com/ http://www.solatube.com/ https://mysolarinstaller.com/ http://www.renvu.com/SKG
  • 10. Solar Business Opportunities 10 of 42 Basic Industry Information: Terminology, Technology & Manufacturing Before we start discussing the specifics of different technologies used to produce photovoltaic cells, here are some basic terms to keep in mind: Solar cell: is a device that converts the energy of sunlight directly into electricity by the photovoltaic effect. Solar Panel or Solar Module: Solar cells are wired in series and placed into a frame. The size of the frame can vary with manufacturers … as a result of the technology used. A protective coating on the top covers and protects (and sometimes increases the output) of the solar cells. Any number of cells can be connected in series and most commercial modules sold today incorporate 72 cells. First Generation Solar Cells Traditional solar cells are made from silicon, are currently the most efficient solar cells available for residential use and account for around 80+ percent of all the solar panels sold around the world. Generally silicon based solar cells are more efficient and longer lasting than non silicon based cells. However, they are more at risk to lose some of their efficiency at higher temperatures (hot sunny days), than thin-film solar cells. There are currently four types of silicon based cells used in the production of solar panels for residential use. The types are based on the type of silicon used, specifically: 1. Monocrystalline Silicon Cells The oldest solar cell technology and still the most popular and efficient are solar cells made from thin wafers of silicon. These are called monocrystalline solar cells because the cells are sliced from large single crystals that have been painstakingly grown under carefully controlled conditions. Typically, the cells are a few inches across, and a number of cells are laid out in a grid to create a panel. Relative to the other types of cells, they have a higher efficiency (up to 24.2%), meaning you will obtain more electricity from a given area of panel. This is useful if you only have a limited area for mounting your panels, or want to keep the installation small for aesthetic reasons. However, growing large crystals of pure silicon is a difficult and very energy- intensive process, so the production costs for this type of panel have historically are the highest of all the solar panel types. Production methods have improved though, and prices for raw silicon as well as to build panels from monocrystalline solar cells have fallen a great deal over the years, partly driven by competition as other types of panel have been produced. Another issue to keep in mind about panels made from monocrystalline silicon cells is that they lose their efficiency as the temperature increases about 25˚C, so they need to be installed in such a way as to permit the air to circulate over and under the panels to improve their efficiency.
  • 11. Solar Business Opportunities 11 of 42 The following is a list of the leading companies that produce and offer monocrystalline solar panels (we are in the process of building this database so please check back periodically. Suntech Power is the worlds largest producer of crystalline solar panels, with more than 10 million PV panels sold in over 80 different countries. SunPower produces the most efficient monocrystalline solar panels available. They also offer all black panels (no visible metal strips), inverters and monitors. Transform Solar produces a revolutionary new thin monocrystalline panel that is heat resistant, even produces in conditions of partial shading, and is highly reliable. It also uses just a fraction of the silicon to produce the same high levels of efficiency. JA Solar is the largest producer of monocrystalline and polycrystalline solar cells, which it sells to other solar module manufacturers. It also produces its own PV solar panels that it sells primarily in China through its own solar development company Yangzhou Engineering. 2. Polycrstalline Silicon Cells It is cheaper to produce silicon wafers in molds from multiple silicon crystals rather than from a single crystal as the conditions for growth do not need to be as tightly controlled. In this form, a number of interlocking silicon crystals grow together. Panels based on these cells are cheaper per unit area than monocrystalline panels - but they are also slightly less efficient (up to 19.3%). Common brands of panels made up of polycrystalline modules include: SunTech Power BP SX (formerly Solarex) Canadian Solar Jaiwei Kyocera Luxor Mitsubishi Electric Quantum Solar Schott, Sharp Sunenergy Tenesol Trina Solar Yingli Yohkon Note: Many of the leading firms make both monocrystalline and polycrystalline solar cells for their panels.
  • 12. Solar Business Opportunities 12 of 42 3. Amorphous Silicon Cells You probably never thought about it before, but most solar cells used in calculators and many small electronic devices are made from amorphous silicon cells. Instead of growing silicon crystals as is done in making the two previous types of solar cells, silicon is deposited in a very thin layer on to a backing substrate – such as metal, glass or even plastic. Sometimes several layers of silicon, doped in slightly different ways to respond to different wavelengths of light, are laid on top of one another to improve the efficiency. The production methods are complex, but less energy intensive than crystalline panels, and prices have been coming down as panels are mass-produced using this process. One advantage of using very thin layers of silicon is that the panels can be made flexible. The disadvantage of amorphous panels is that they are much less efficient per unit area (up to 10%) and are generally not suitable for roof installations you would typically need nearly double the panel area for the same power output. Having said that, for a given power rating, they do perform better at low light levels than crystalline panels - which is worth having on a dismal winter's day, and are less likely to lose their efficiency as the temperature climbs. However, there flexibility makes them an excellent choice for use in making building integrated PV (e.g., roofing shingles), for use on curved surfaces, or even attached to a flexible backing sheet so that they can even be rolled up and used when going camping / backpacking, or put away when they are not needed! UNI-SOLAR http://unisolar.com.ua/ SANYO http://panasonic.net/ecosolutions/solar/ SUNDANCE http://store.sundancesolar.com/powerfilm-flexible-thin-film-solar-modules/ POWERFILM http://www.powerfilmsolar.com/ 4. Hybrid Silicon Cells One recent trend in the industry is the emergence of hybrid silicon cells and several companies are now exploring ways of combining different materials to make solar cells with better efficiency, longer life, and at reduced costs. Recently, Sanyo introduced a hybrid HIT cell whereby a layer of amorphous silicon is deposited on top of single crystal wafers. The result is an efficient solar cell that performs well in terms of indirect light and is much less likely to lose efficiency as the temperature climbs. Second Generation Solar Cells Second-generation solar cells are usually called thin-film solar cells because when compared to crystalline silicon based cells they are made from layers of semiconductor materials only a few micrometers thick. The combination of using less material and lower cost manufacturing processes allow the manufacturers of solar panels made from this type of technology to produce and sell panels at a much lower cost.
  • 13. Solar Business Opportunities 13 of 42 There are basically three types of solar cells that are considered in this category, amorphous silicon (mentioned above), and two that are made from non-silicon materials namely cadmium telluride (CdTe), and copper indium gallium diselenide (CIGS). Together they accounted for around 16.8% of the panels sold in 2009. First Solar, the number one producer and seller of solar panels in the world currently makes their solar cells using cadmium telluride. The big appeal of these type of solar cells is that they are inexpensive (currently below $1.00 / watt to produce and heading towards $0.70 / watt). However, there are some concerns about this technology. Venture capitalists love CIGS solar cells (or at least used to – as they have invested over $2.3 billion into companies developing these cells but have yet to see them be a commercial success) – as they have been able to reach efficiency levels of 20% in the laboratory. Unfortunately it has turned out to be much more difficult to produce CIGS solar cells in mass quantities at competitive prices with anywhere near than efficiency level, so the jury is still out on this technology. New Recently a Company based in Idaho has come up with a thin-film monocrystalline solar cell - that uses about 20% of the crystalline silicon in current silicon based cells and has number of advantages. The company “Transform Solar” is now out of business. Third Generation Solar Cells Currently there is a lot of solar research going on in what is being referred to in the in the industry as Third-generation solar cells. In fact according to the number of patents filed last year in the United States – solar research ranks second only to research in the area of fuel cells. This new generation of solar cells are being made from variety of new materials besides silicon, including nanotubes, silicon wires, solar inks using conventional printing press technologies, organic dyes, and conductive plastics. The goal of course is to improve on the solar cells already commercially available – by making solar energy more efficient over a wider band of solar energy (e.g., including infrared), less expensive so it can be used by more and more people, and to develop more and different uses. Currently, most of the work on third generation solar cells is being done in the laboratory, and being developed by new companies and for the most part is not commercially available.
  • 14. Solar Business Opportunities 14 of 42 NEXT GENERATION SOLAR NREL Aims to Reduce Solar Energy Costs to $0.06/kWh The NREL (National Renewable Energy Laboratory) ]is the U.S. Department of Energy's (DOE) primary national laboratory for renewable energy and energy efficiency research and development. NREL is operated for the DOE by the Alliance for Sustainable Energy, LLC. The National Renewable Energy Laboratory is one of the best sources of R&D financing and information about Solar Research. Supported by the US Department of Energy, it leads the way in helping meet the growing demand for clean energy and has an impressive track record of 33 years of achievement, The NREL is the only US federal laboratory dedicated to the research, development, commercialization and deployment of renewable energy and energy efficiency technologies. The lab's capabilities include: • Research and Development • Testing and Evaluation • Deployment Solar Technologies Overview The lab is working with the Department of Energy to accelerate the development of solar technologies as energy sources for the USA and world. It does this by supporting the Lab's R&D in two major solar energy technologies — photovoltaic research and solar thermal research, and also by compiling a large database of Solar Radiation information and research. 1. Photoelectric Research The National Center for photovoltaic research is fully dedicated to meet the long-term goal of achieving $0.06/kWh grid-tied distributed systems. It is working to meet this goal by lowering the cost of delivered electricity and improving the efficiency of PV modules and systems. Their PV research contributes to these goals through fundamental research, advanced materials and devices, and technology development. Industry, academia, and the National Renewable Energy Laboratory partner to investigate properties and operating mechanisms of cell materials and devices. This teamed research approach works to identify efficiency-limiting defects in cell materials and analyze their electrical and optical properties. PV R&D emphasizes innovative research, thin-film development, manufacturing R&D, and systems development and reliability. We conduct this research in collaboration with universities and solar industry through research partnerships and direct support of the Solar Program.
  • 15. Solar Business Opportunities 15 of 42 The goal is to make large-scale solar energy systems cost-competitive with other energy sources by 2020. The NCPV brings together researchers from across the country, including at NREL, the Quantum Energy and Sustainable Solar Technologies (QESST) Center and the Bay Area PV Consortium. Sarah Kurtz and Greg Wilson are. 2. Solar Thermal Research The National Renewable Energy Laboratory plays a leadership role in analyzing cost and performance of concentrating solar power systems, developing parabolic trough technology for solar electricity generation, and developing advanced technologies such as concentrating photovoltaics. Researchers support the development of new designs and manufacturing processes for solar components and systems with an emphasis on improved performance, reliability and service life. The lab is also working with the solar industry to lower the cost of solar water heating systems. Laboratory researchers provide assistance with prototype development of new polymer (plastic) systems through modeling and optimization, characterization of the systems' performance, and accelerated materials durability testing. Solar thermal research is performed in the Electricity, Resources, and Building Systems Integration Center. Solar Radiation Research Optimal siting of renewable energy systems requires knowledge of the resource characteristics at any given location. NREL's solar radiation research and data collection is performed at the Solar Radiation Research Laboratory. This unique research facility continually measures solar radiation and other meteorological data and disseminates the information to government, industry, academia, and international laboratories and agencies. These data are used for climate change studies, atmospheric research, renewable energy conversion system testing, and more.
  • 16. Solar Business Opportunities 16 of 42 Overview of Angel Investing in Solar Projects & Companies The term "angel investing" came from the practice in the early 1900's when wealthy businessmen invested in Broadway productions. Today "angels" (called Business Angels in Europe) participate in all types of businesses and typically offer expertise, experience and contacts in addition to money. In this section we are going to look at some of the issues and opportunities related to investing in Solar Projects and Solar Companies. Market Size The USA Small Business Administration estimates there are about two million people in the United States with the discretionary net worth to make angel investments. And at least 250,000 angels are active in the USA, funding about 30,000 small companies a year. The total investment from angels has been estimated at anywhere from $20 billion to $50 billion per year – which is substantially more than is invested by Venture Capital companies. The practice of Angel investing is one of the reasons for the success of many new companies in the USA and there are now angel investment groups in many countries. Growth Financing Two types of solar related financing exist. The first type is referred to as growth financing – or, as it is sometimes called - startup-financing. Startup financing refers to the amount of money required to take the business from a proof of concept stage to prototype / manufacturing feasibility and sales. Angel investors who provide start-up capital do so with the goal of helping the company reach certain milestones so that the company can qualify for government grants / loan guarantees, bank and/or supplier lines of credit, Venture, Public or other forms of financing to continue to grow their business until it is self-sustaining. This type of financing is high risk / high reward. High risk – because there can be a number of issues related to the performance of the underlying product, manufacturing risk associated with being able to mass produce products economically that perform as well or better than the prototypes, and market risk (i.e., the ability to find customers in a highly competitive international market).
  • 17. Solar Business Opportunities 17 of 42 Investors who are exposed to good companies and/or choose wisely can make excellent returns … but for most they could be looking at delays, requirements for additional capital, and uncertain outcomes. The mechanics of startup investing really isn't too complicated. You give a startup money and they give you stock. You'll probably get either preferred stock, which means stock with extra rights like getting your money back first in a sale, or convertible debt, which means (on paper) you're lending the company money, and the debt converts to stock at the next sufficiently big funding round. When you negotiate terms with a startup, there are two numbers you care about: how much money you're putting in, and the valuation of the company. The valuation determines how much stock you get. If you put $50,000 into a company at a pre-money valuation of $1 million, then the post-money valuation is $1.05 million, and you get .05/1.05, or 4.76% of the company's stock. If the company raises more money later, the new investor will take a chunk of the company away from all the existing shareholders just as you did. If in the next round they sell 10% of the company to a new investor, your 4.76% will be reduced to 4.28%. The secret to making it big is not getting the biggest chunk of shares – but rather getting in on the "ground floor" of the next Microsoft, Google, Facebook, First Solar, Trina Solar, etc. A venture capitalist once said “he is happy when out of 10 investments, 1 makes it big, 4 make some profit and 5 fail”. He also stated that when he looks at a new company he uses the following selection criteria: 1) 50% Strength / experience of management team (he prefers if they invested!) 2) 25% Technology (what are its advantages over what is out there now) 3) 25% Market Potential (what is the market potential, how fast is it growing) A lot of successful entrepreneurs like this type of Angel Financing because its potential high rewards and opportunity to make a difference (e.g., see the movie The Social Network) and usually they can bring in valuable experience and contacts to help realize the high rates of return.
  • 18. Solar Business Opportunities 18 of 42 Project Financing There is however, another – less risky but also very rewarding type of early stage financing – that is currently available for solar projects that appeals to a more conservative type of investor – namely financing of specific solar projects. For example with the current level of accuracy in predicting how much electricity a particular solar panel installation will produce and with Feed in Tariffs (FITs) [see attachment-A] the amount that electricity can be sold for makes solar projects "bankable" – providing there is an equity component typically of 15% to 20% of the total project costs. Solar Renewable Credits (SRECs) [see Attachment-B] are popular with politicians, but less popular with solar developers and owners due to their uncertain value. Using bank leverage – the cash flow returns to the equity investor can be quite attractive (i.e., over 15% per year). But keep in mind on a solar project – this income can last 20 years or longer. However, by including bankable and FIT qualifying co-generation units - and using an even higher amount of leverage – it's possible to boost these returns to 60%+ per year. Typically these deals are set up as either loans, partnerships or sometimes both. In some cases (such as the one mentioned above) it's possible for the investor's funds to be returned in a relatively short period of time (i.e., 3 to 5 years) … but continue to receive ongoing participation in the solar project for the life of the project (FIT are typically specified for 20 years … but projects continue past that since the life of the panels is usually much longer). Getting Started The easiest way to get started in angel investing is to find a friend who already does it, and try to get included in his syndicates. Then all you have to do is write checks. It is recommended to participate with others – especially if you are considering startup investing – because of the need for detailed due diligence, hands on involvement in the company, and the most likely requirement to provide additional funding before the company can stand on its own. However, project financing having much less risk – is a more precise type of investment. The project budget is very predictable up front, the technology is well known … and you can rely on the lending bank to verify everything for you. Additionally, with solar projects the solar panel manufacturer guarantees the performance of the panels, and the government guarantees the price (FIT) you'll get for the electricity – so
  • 19. Solar Business Opportunities 19 of 42 you're major risk is really the weather, and there are detailed insulation maps which the banks rely on for estimating the amount of electricity that will be produced annually that are quite accurate. Another revenue generating concept that is gaining momentum is Solar Rooftop Leasing. This industry is expected to see continued growth over the next decade. [See Attachment-C for more information on this program]. Match Making The biggest problem is for private investors to find out about the opportunities that are available and vice versa for the entrepreneurs to be introduced to Angel Investors – since by their very nature, startup companies are not very well known … and most private investors prefer not to promote themselves. That is why angel investment clubs, syndicates, forums, and other networking sites are helpful in bringing both groups together – as they make investors aware of the opportunities. By their nature and personal involvement Angel Investment groups focus on local opportunities – and usually cover the full spectrum of investment opportunities. One goal may be to develop an investment platform specifically designed to identify solar energy opportunities and to attract the investors who are most interested in these opportunities.
  • 20. Solar Business Opportunities 20 of 42 ATTACHMENT-A: Feed In Tariffs – An Overview The concept of Feed In Tariffs was part of the of the original renewable energy friendly policies in the USA in the 1970's and then expanded and successfully implemented in Germany in 1990, Governments the world over are now coming to see the wisdom of enabling everybody in their country to produce and sell electricity using renewable technologies, and setting prices that will attract new developments. This policy mechanism is commonly known as "Feed In Tariffs" (FIT). In North America this simple idea is known by many different names: Electricity Feed Laws, Feed-in Laws, Advanced Renewable Tariffs (ARTs), Renewable Tariffs, and more recently Renewable Energy Payments. Regardless of the name, they are the world's most successful policy mechanism for stimulating the rapid development of renewable energy, and secondarily for creating a large and growing base of jobs and income for the people involved. What are Feed-in Tariffs? Feed In Tariff policies typically include three key provisions: 1) Guaranteed grid access to all producers of electricity from approved renewable sources; 2) Long-term contracts (typically 20 years) to purchase the electricity produced at a set fixed price per killowat hour (kWh) produced; and 3) Published prices for the electricity sold, which are set to provide an attractive rate of return at the time the project is built. These prices are periodically adjusted to reflect changing market and policy conditions. Feed In Tariffs are the most egalitarian method for determining where, when, and how much renewable generating capacity will be installed. Renewable Tariffs enable homeowners, farmers, cooperatives, and independent producers to participate on an equal footing with large commercial developers of renewable energy. FIT permits the interconnection of renewable sources of electricity with the electric-utility network and at the same time specify how much the renewable generator is paid for their electricity and over how long a period.
  • 21. Solar Business Opportunities 21 of 42 ATTACHMENT-A: Feed In Tariffs – An Overview [Continued] Advance Renewable Tariffs Advanced Renewable Tariffs (ARTs) are the most modern version of Feed In Tariffs. ARTs differ from the simpler feed in tariffs in several important ways. Most importantly, FIT are differentiated by technology. There is one price for wind energy, another price for solar, and so on. Tariffs within each technology can also be differentiated by project size or, in the case of wind and solar energy, by the productivity of the resource. Additionally, in the case of solar they can be further differentiated between tariffs for roof- top based; referred to as retrofit in the UK installations, which generally receive a higher price for the electricity; and ground-based installations that usually receive a slightly lower tariff rate. Tariffs rate are subject to periodic review to determine if the tariff rates are sufficiently robust or appropriate to meet the targets desired in the time allotted, and reflective of current technologies, costs, and market conditions. For purposes of this discussion when we use the term Feed In Tariffs or FIT, we are using the term synonymously with Advanced Renewable Tariff / ART. How are Feed In Tariff Rates Calculated? In theory, FIT prices i.e., the price paid for electricity produced from renewable energy sources, are determined by the cost of producing the electricity, plus a reasonable profit to justify the expenditure. The cost-based prices therefore enable a diversity of projects (wind, solar, etc.) to be developed, and for investors to obtain a reasonable return on renewable energy investments. This principle was first explained in Germany's 2000 RES Act: “The compensation rates…have been determined by means of scientific studies, subject to the provision that the rates identified should make it possible for an installation – when managed efficiently – to be operated cost-effectively, based on the use of state-of-the-art technology and depending on the renewable energy sources naturally available in a given geographical environment.” (RES Act 2000, Explanatory Memorandum A) Not only do the costs of the equipment have to be considered – so does the availability of the natural resource (e.g., solar irradiation levels, wind measurements, labor costs, etc.). As a result, feed in tariff rates typically differ among various source of power generation, installation place (e.g. rooftop or ground-mounted), projects of different sizes and, sometime, by technology employed (solar, wind, geothermal, etc.), and by country.
  • 22. Solar Business Opportunities 22 of 42 ATTACHMENT-A: Feed In Tariffs – An Overview [Continued] Feed In Tariff rates are expected to decrease over time. This is consistent with keeping the payment levels in line with actual generation costs. As a result of changing rates, there is usually a big surge in projects prior to rate changes as developers push to get their projects accepted at the higher rates to lock in better pricing. Governments continually review these rates to determine what changes to make and when they will implement the changes. Earlier this year, CDU politician Tanja Gönner, who is "tipped to become federal environment minister," made the following statement about the future of solar rates in Germany (which were set to change in April 2010 – but were postponed to July) in an interview: "Any sudden change would be wrong. It is true that solar arrays have become much cheaper because the market collapsed. So we do have some leeway to reduce rates. But we have to be prudent about it - it has to be based on a market analysis. We cannot chase after the market by ramping rates up and down every six months. The solar market still needs proper incentives for people to want to install the systems." In reality, as can be seen by the Feed In Tariffs adopted in different countries, government officials may set rates that are not completely cost-based depending on other objectives, such as their desire to create new jobs in their country (e.g., France & Italy), attracting outside investment to build up new electrical capacity (e.g., Czech Republic, Romania, etc.) or to encourage existing property owners to install solar and to reduce the risk from overbuilding ground based installations (e.g., Spain & Germany). Typically, developers of medium and large sized projects monitor news about feed in rates continuously. When possible, most developers will choose to build new projects in countries with the highest Feed In Tariffs as this will allow them to achieve the highest rates of returns by so doing. Who Pays For the Feed In Tariffs? Feed In Tariffs are not subsidies. They do not subsidize the cost of the equipment used to produce renewably-generated electricity, like solar panels or wind turbines, nor do the payments come from taxpayers. Instead, Feed In Tariffs are simply payment for the generation of electricity. The extra cost for the Feed In Tariffs is shared among all energy users, thereby spreading the costs. In Germany in the average household pays about €1.01 per month for the Feed In Tariff program.
  • 23. Solar Business Opportunities 23 of 42 ATTACHMENT-A: Feed In Tariffs – An Overview [Continued] A number of analyses have shown that these price increases, however, can be offset by the price-dampening effect that large amounts of lower cost renewable energy sources (such as wind power) can have on spot market prices. This has led to electricity price reductions in Spain, Denmark, and Germany. The German government estimates the actual cost is near zero, because the benefits of reducing carbon emissions and other air pollutants as well as reducing the cost of expensive fossil-fired generation (and social health costs), offsets the cost of the renewable energy. Who Benefits From Feed In Tariffs? Property Owners & Project Developers benefit. Anyone who installs Renewable Energy (RE) can profit, spreading out the value among citizens and not just owners of large-scale power stations. They are more equitable than Renewable Portfolio Standards (RPSs) because homeowners, farmers, small and large businesses and cooperatives can all participate. To date more than 400,000 German households have installed solar PV. The government benefits. Feed-in tariffs are designed to provide sufficient financial incentives without capital grants, rebates, or tax subsidies. Additionally, it's a very easy system to implement. Feed In Tariff policies are easy to implement: there is no monitoring, no penalties and no caps. It's estimated by the end of 2010, more than €53 billion will have been invested in Germany on renewable energy projects. Germany has benefited from taxes it has collected on the income generated from the sale of the electricity. Additionally studies have shown that money spent locally (e.g., for building new solar energy projects) re-circulates 300-600% more than money sent out-of-country for oil or gas, etc. This secondary affect also helps the economy grow. Universities Benefit: Good FIT rates for renewable technologies increase the drive for innovation, and encourage investment in technologies such as wind, photovoltaic solar energy, or Concentrating Solar Power (CSP) that all have huge potential. Businesses Benefit: In order to meet the demand, new companies have emerged, existing companies have expanded, and opportunities abound. In fact, this is one of the fastest growing industries in the world right now and most analysts say it is still only getting started.
  • 24. Solar Business Opportunities 24 of 42 ATTACHMENT-A: Feed In Tariffs – An Overview [Continued] Workers benefit. In Germany, for example, the renewable energy industry now employs about 234,000 people – almost 60% of whom were employed as a direct result of the German FIT law. It is expected that by 2020 the renewable energy industry will employ 500,000 people. Banks benefit: Unlike lending money on real estate, which can change in value or be subject to defaults if the owners economic situation changes, the banks can accurately predict based on FIT rates and the performance of the specific solar module how much cash will be generated to repay any loans the bank makes. In other words, FITs make renewable energy projects bankable. Everybody benefits: Feed In Tariffs have contributed significantly to Germany's ability to meet the targets set per the Kyoto accord. The greatest success in the efforts to reduce greenhouse gas emissions has come from the energy industry. Development of renewable energies has left positive traces. In 2008, some 20 million tons less CO2 than in the prior year were emitted to the atmosphere in the energy production process. This amounts to 66 million tons less CO2 over 1990 volumes. Additionally, FITs have spurred competition and innovation in the renewables energy field. For example, within 20 years the cost of electricity produced from wind turbines is now less than the cost of electricity produced from lignite, especially if the environmental costs are factored in. Benefits for Solar Energy Park Developers and Investors The biggest benefit of Feed In Tariffs for developers and investors is that they can reliably predict (at least for the term of the Feed In Tariff) the projected cash flows that will be produced by each new Solar Energy Project and the financial risks associated with a such an investment are dramatically reduced. For anybody considering investing in a Solar Energy Project, knowing that Feed In Tariffs are likely to decrease over time encourages people to move quickly to lock in the higher rates/rates of returns for new projects. Since Feed In Tariff rates can change over time, it is important to understand that in most countries the Feed In Tariff rate applicable to a specific project is based on the Feed In Tariff rate as of the day the first electricity is delivered to the grid.
  • 25. Solar Business Opportunities 25 of 42 ATTACHMENT-A: Feed In Tariffs – An Overview [Continued] Consequently, as more countries adopt Feed In Tariff policies, the demand for renewable energy systems has risen dramatically and the installation costs are coming down fast. This financing model has now been taken up widely around the world. The Success of the FIT Policy Feed in Tariffs has proven to be one of the most effective policy instruments in overcoming the cost barriers to introducing renewable energy and making it economically viable. The simple guarantees that FITs provide – including access to the grid, a set price per Kilowatt Hour (kWh) that will cover the costs associated with electricity production, and a guaranteed term for which they will receive that rate has turned several European countries into world leaders in the renewables sector. This is the case for Denmark on wind energy and for Germany on solar energy. FITs have been empirically proven to generate the fastest, lowest-cost deployment of renewable energy, and with this as a priority for climate protection and security of energy supply. FITs are the best vehicle for delivering these benefits, plus the highly desirable added benefits of new job creation and as a significant contributor to economic growth and prosperity. This conclusion has been supported by a number of recent analyses, including by the International Energy Agency, the European Federation for Renewable Energy, as well as by Deutsche Bank. As of April 2010, feed in tariff policies have been enacted in 63 jurisdictions around the world, including in Australia, Austria, Belgium, Brazil, Canada, China, Cyprus, the Czech Republic, Denmark, Estonia, France, Germany, Greece, Hungary, Iran, Republic of Ireland, Israel, Italy, the Republic of Korea, Lithuania, Luxembourg, the Netherlands, Portugal, Singapore, South Africa, Spain, Sweden, Switzerland, and in some (nowadays, a dozen) states in the United States, and is gaining momentum in other ones as China, India and Mongolia.
  • 26. Solar Business Opportunities 26 of 42 ATTACHMENT-B: Who Benefits from SRECs? - Continued Solar Renewable Energy Credits (SRECs) are popular with politicians of several states but much less popular with solar developers and solar owners – due to their uncertain value. So who actually benefits from them? Brief History The idea for an SREC-only market was born in New Jersey in 2004-2005, when the state started running out of money for rebates. Due to continued problems funding the popular program, the state phased out rebates for all but a limited number of residential projects. During the transition, the state looked at both Feed in Tariffs and SRECs, but eventually decided that SRECs were a more suitable way to create a market. No surprise there – they don't cost the state anything and give the impression of promoting solar energy … but do they work as well as Feed in Tariffs? Let's take a look. States Offering SRECs The "blue" states do not have SREC programs – but the rest of the states do so obviously the idea has spread from New Jersey – especially through the Midwest.
  • 27. Solar Business Opportunities 27 of 42 ATTACHMENT-B: Who Benefits from SRECs? - Continued In states like Delaware, Massachusetts, Maryland, New Jersey, Ohio and Pennsylvania, energy suppliers are required to accumulate a certain number of SRECs to meet a mandated generation target. Power providers can generate the credits themselves by investing directly in projects, or purchase the credits from project owners, brokers or aggregators. Many states will certify solar electric systems from out-of-state and allow the SRECs from those facilities to count towards the RPS. The map above shows what state individuals can sell their SRECs into. What are SRECs? In SREC states, the Renewable Portfolio Standard (RPS) requires electricity suppliers to secure a portion of their electricity from solar generators. The SREC program provides a means for Solar Renewable Energy Certificates (SRECs) to be created for every megawatt- hour of solar electricity created. Once the installation of a solar system is complete, the system must then be certified by the state(s) in which it is eligible to sell SRECs and then must create an account with the tracking platform used by that state. Once registered, every month, the tracking platform will issue SRECs based on the generation of your system. In some states, estimated generation is used for systems under 10kW, while all other systems are required to submit generation on a monthly basis. 1 SREC = 1,000 kWh of solar electricity = 1 MWh of solar electricity produced 10 kWp solar capacity = approximately 12 SRECs per year. The SREC is sold separately from the electricity and represents the "solar" aspect of the electricity that was produced. How Much are SRECs Worth? There is no assigned value to an SREC. Prices are influenced by supply and demand. The supply is determined by the number of solar installations producing SRECs and trading them.
  • 28. Solar Business Opportunities 28 of 42 ATTACHMENT-B: Who Benefits from SRECs? - Continued The demand is determined by individual state RPS solar requirements and the Solar Alternative Compliance Penalty (SACP) set by the state. The RPS solar requirement represents the number of SRECs the electric suppliers are required to collect each year. The SACP is the penalty amount per SREC paid by the electric suppliers if they do not collect enough SRECs. In general the price that SRECs trade at is typically less than the SACP charged by the states if the electric company does not reach it's quota. For example - in New Jersey, where the SACP in 2010 is $693 SRECs are trading at around $570 … or approximately 82% of the SACP rate. Since the SACP rates can vary by state and even over time … the future value of the SRECs is difficult to estimate … and therefore the long term benefit for the developer / solar project owner makes it difficult for them to forecast their net revenues and therefore obtain long- term financing. Who Benefits? In theory - the sale of SRECs is intended to promote the growth of distributed solar by shortening the time it takes to earn a return on the investment. This is more easily accomplished if the SRECs can be sold on a long-term basis, which larger projects require in order to obtain project financing or solar energy investors require to produce predictable yields … but much less so when sold into a fluctuating spot market (the typical situation for residential and small commercial rooftop projects). However, in practice while it is generally possible to fairly accurately predict the amount of electricity a specific solar installation will produce over time the variability of SRECs in a free-market economy – especially factoring the likelihood that SECP rates will change from year to year for political and market reasons – estimating the potential economic values of SRECs over the life of a project and newness of this incentive program and instability in the pricing make it difficult to obtain the long term financing needed by most developers to build mid-sized to larger solar energy projects.
  • 29. Solar Business Opportunities 29 of 42 ATTACHMENT-B: Who Benefits from SRECs? - Continued Is There a Market for the Buying and Selling of SRECs? Yes there is … and its growing, but the market is dividing into two tiers: Tier 1: Large project developers, who may be generating thousands of SRECs each year, are able to negotiate contracts directly with energy suppliers, securing far more favorable terms and pricing than smaller players. Some are worried that this could limit diversity in the market. Residential and small sized solar installations. To address this market, financing and aggregation companies like Sol Systems, SRECTrade and Flett Exchange have emerged to help residential and small commercial project owners register, track and sell their SRECs to energy suppliers. They have seen business explode as SREC markets have expanded. How do you Sell your SRECs? Since it is very costly for electric suppliers to buy direct from individuals, solar owners have limited options for selling their SRECs. Most suppliers will either issue cumbersome requests for proposals (RFPs) or work directly with third-party aggregators and brokers – such as the three listed in the previous section. Prior to these brokerage services, individual solar generators had little visibility into actual SREC market prices as well as markups charged by middlemen. In many cases, an SREC is traded several times before reaching the electric supplier. Even with the emergence of aggregators / brokerage services it will typically take a few months before you begin receiving payments. For example, if your system goes online on January 1st, your January generation will be recorded on February 1st. Your first SREC(s) will be actually credited to your account on March 1st. They would then be sold in the March auction, so your first payment would come in late March. After that, payments will come as SRECs are generated. Also note: some states operate on a quarterly basis, rather than monthly. Who Pays? The primary buyers of SRECs are utility companies – who are looking to avoid paying the legislated SEPC penalties. There are some private buyers too – but they appear to be in the minority.
  • 30. Solar Business Opportunities 30 of 42 ATTACHMENT-B: Who Benefits from SRECs? - Continued As always – the utility companies pass along the cost the SRECs to their customers … in much the same way that the costs for Feed In Tariffs are passed back to the customers. Which is Better – Feed in Tariffs or SRECs? While more than 63 countries and several states and provinces have implemented Feed In Tariff systems - they have yet to make major headway in America. This is ironic, since the original Feed In Tariff system was developed in the USA – although it took the Germans to really make it work well – so well in fact that with much less sun than in most of the USA – they lead the world in the installation of solar energy systems. Speaking as a developer of solar energy projects – the appeal of a Feed In Tariff System is simple. Under the Feed In Tariff system you know before you build your system and connect it to the grid exactly how much you will be receiving for each kWh of electricity produced – for the next 20 years. This stability in income means that homeowners, investors and bankers can trust in the projections and provide the money to build new systems. The appeal of the Feed In Tariff systems in the EU makes sense – because they have a lack of fossil fuels and a ground swelling of support for renewable energy solutions to make them energy independent. However, according to studies in the USA more than 90% of people surveyed favor solar energy. So why are SREC programs so popular? Is it because the states don't have to pay? Is it because it favors big utility companies, who spend a lot of money on political lobbying? The two policies are often compared side-by-side because they represent different ends of the philosophical (and perhaps ideological) spectrum over how best to incentivize solar. Because these programs are still so new, their effectiveness over the long term is unclear. Some installers – many of whom are advocates of FITs – believe SREC programs create too much volatility and favor larger commercial and industrial-scale project developers. All the major emerging SREC markets are in deregulated states. Under deregulation, energy suppliers are short-term players in the market. Thus, they have been unwilling to sign contracts for longer than five years in states like New Jersey and Maryland. (In Maryland's case, there is a requirement that SREC generators bid for 15-year contracts, but energy suppliers have been more willing to pay the penalty than enter into such long agreements). Thus, a number of installers have found it difficult to finance projects with a 30-year lifetime based upon contracts for five years or less.
  • 31. Solar Business Opportunities 31 of 42 ATTACHMENT-B: Who Benefits from SRECs? - Continued New Jersey is the only state with enough experience to gauge success of SRECs. After a couple years of missing solar targets during the program transition, the industry is finally catching up – driven by the high prices of SRECs due to limited supply. The average market price for an SREC has been about $570, or $0.57 per kilowatt-hour. That's well above the cost of generating solar electricity. The high SREC prices have driven a flurry of new development in the state. However, if the industry overshoots its targets for 2011 and there's an oversupply of SRECs in the market, prices could drop substantially and hurt the financial viability of projects. Some are worried that it could put some installers out of business. A number of fixes to these issues have been proposed: Some want to see required long- term contracts to provide security; some are hoping to create a hybrid structure where FITs target the smaller end of the market and SRECs are used for large projects; and a few people are even proposing that states with SREC markets start from scratch and implement pure-play FITs. (The likelihood of that is very slim). While SRECs are certainly gaining traction and will likely be an important part of American solar policy, it may be another year or two before we know how effective they are. Depending on how these emerging markets perform, there may be a lot more experimentation ahead. So which program is best? I think it's pretty easy to determine in a "free economy" – just look at how many GW of solar projects are being installed in countries with FIT programs … and how many are being installed in areas that offer SRECs … FIT wins by a large margin.
  • 32. Solar Business Opportunities 32 of 42 Attachment C: Primer in Solar Rooftop Leasing Solar rooftop leasing is one of the three basic ways you can make money from your rooftop with solar energy. The other two involve owning and operating solar panels on your own roof and joint venturing with a developer who will install the solar panels and share the income with you. While a property owner might not have the resources to invest in a rooftop solar today … they still might be interested in realizing some income from solar energy through leasing their rooftop space to a developer – and make money while they learn more about the benefits of installing solar energy on their building. In this section we will focus primarily on what you need to know if you are considering solar rooftop leasing. Solar Energy is Creating a Demand for Rooftop Space As the solar energy movement continues to grow in both size and stature, governments, property owners and power providers are all seeking ways to access and leverage solar energy resources to their best advantage. Obviously, in order to produce electricity from the sun – you need someplace to install your solar panels. In Europe, the Feed In Tariffs are generally structured in such a way as to pay a higher amount per kWh of power produced. This not only encouraged homeowners to install solar panels on their roofs – but also the owners of large buildings, Churches, governments and even the military are installing solar panels on their property. While a growing number of property owners are investing in the installation of solar panels on their roofs – a new group of small to independent developers began exploring the feasibility of leasing rooftops, attracting investors and raising the money to pay for the solar installations. Because of this growing demand – property owners are seeing interest from developers willing to pay to lease the space. Rooftops Can Generate Income Many commercial, industrial and retail buildings can provide the real estate needed for these systems, and are subsequently viewed as excellent candidates for roof rental. In Germany – the optimum size installation is 250 kWh and above. These large PV systems typically require large amounts of rooftop space – with the exact amount
  • 33. Solar Business Opportunities 33 of 42 Attachment C: Primer in Solar Rooftop Leasing - Continued depending on the type of solar panels used (i.e., solar panels with higher kWp require less space. A growing number of third-party solar power providers are looking to rent roof surfaces from building owners in a designated area, install PV systems and sell the power generated to the local utility companies through pre-negotiated agreements. Building owners don’t have to get involved in marketing the power generated on their roofs, and the lease agreements frequently guarantee at least 20 years of dependable rental income. In Germany – you are able to find roofs on large apartment complexes in East Germany for about €1.00 / sqm / year. However, by offering to prepay the full 20 year lease in advance we can usually negotiate an even lower lease cost. Note: Roof lease rates are directly related to the prevailing FIT rates in Europe. As FIT rates drop … the amount a developer is willing to pay to lease the rooftop also declines roughly the same amount. In the USA – the lease rate will depend on the price that the developer can realize from the sale of the electricity produced. Is Your Structure Suitable for a PV Array? Not every rooftop will be suitable for a rooftop installation … and some are more suitable than others. Your suitability will impact directly on what income you might be offered for your rooftop. In addition to being flat or angled to get good sun exposure and relatively free of obstructions in order to permit PV installation, the ideal rooftop needs to be exposed to the sun (not shaded by mountains, trees, other structures or potential future structures on the building site or on neighboring properties) and physically capable of supporting the weight of a PV array. Size also matters, with the ideal size for a solar PV rooftop installation being in the range of 30,000 to 100,000 square feet. A new or recently rebuilt roof is preferred, because it is less likely to require additional structural support to accommodate the array, and because it will probably not require
  • 34. Solar Business Opportunities 34 of 42 Attachment C: Primer in Solar Rooftop Leasing - Continued significant repair or replacement during the operating period of the solar project, which might necessitate the temporary removal or relocation of the solar array. Understanding Lease Agreements Many rooftop rental agreements can look lucrative at first glance. There are, however, several important facts that building owners must be aware of before signing on the dotted line and making a multi-decade commitment. Ignoring these realities could turn a potential cash cow into a fire-breathing dragon that could do serious damage to the bottom line. One of the first questions the solar developer will want to know is if the owner has full legal control over the rooftop ... and if these legal rights can be split off from the underlying property. That is, the rooftop must not be subject to existing liens, mortgages or other legal restrictions, which may prevent the landlord from being able to grant exclusive rights to the solar developer / operator. Building owners need to be aware of is that most roof-mounted PV systems can easily last up to 40 years, while the commercial roofing systems they are attached to typically have life spans of between 10 and 13 years. With a 20-year roof rental in place for a PV system, it’s highly likely that roof repairs — or even replacement — will be needed at some point over the course of the rental period. For example … one property owner needed a new roof but didn't have the money to pay for it. His existing roof also contained asbestos (common in Italy and other countries). So what he decided to do was to find somebody willing to sign a solar rooftop leasing agreement – and then pledged that to his bank to get the money to repair his roofs – in essence getting a new roof for free. While a roof lease can provide secondary monthly income from space that previously generated no income or was even classified as a liability, the attractiveness of the deal can disappear quickly if roof maintenance is not factored into the lease agreement. Any failure in the roof surface that causes leaks can disrupt day-to-day operations, drive away customers and do serious damage to the financial stability of a business. Fixing the problems with the roof surface once a PV system is in place will also take much longer and cost much more than a typical roof repair. If it takes days or weeks to fix a leaking roof surface, any financial benefits generated by the roof rental can quickly be replaced with enormous losses that could potentially eliminate
  • 35. Solar Business Opportunities 35 of 42 Attachment C: Primer in Solar Rooftop Leasing - Continued several years of rental income. As a result, in any rooftop lease agreement, you need to know who is going to pay if roof repairs are needed, especially if PV system removal is required. In simple terms, if maintenance is not an integral part of the lease agreement, roof rental is not likely to be a lucrative deal in the long run. NOTE: In Italy they came up with a concept called "Innovative Roof". Basically, instead of mounting PV panels attached to the roof the developer removes the old rooftop and uses special mounting brackets to create a brand new roof made up of solar panels. To compensate for the added costs - the Italian government offers a much higher Feed-In- Tariff for these type of solar installations. But there is also the advantage of a longer lease for the owner / operator of the PV installation as well as the property because new roof has a much longer life span ... and makes money over that time period. Expect this idea to become more and more popular in the future. Before you become involved in a rooftop rental agreement for a solar PV system, keep the following four facts in mind: • Rooftop rental can provide extra income each month, but can also open you up to significant liabilities. • The building, roofing systems and the operations conducted in your facility are your primary concerns, not the PV system. • Maintenance and troubleshooting must be part of any comprehensive rooftop lease agreement. • Know who is financially responsible for repairs and lost production so you don’t end up holding the bag for costs and penalties. Without a doubt, an FIT can be an excellent way to put your unused roof space to good use and to collect rent at the same time. By doing your homework and reviewing lease agreements carefully, you can benefit from green solar power generation while knowing that all your financial bases are covered. The following are some of the typical clauses you might see in a solar rooftop leasing agreement – and the issues you might want to consider.
  • 36. Solar Business Opportunities 36 of 42 Attachment C: Primer in Solar Rooftop Leasing - Continued Given the nature of such leases it is recommended to ask your solar consultant or a real estate lawyer (with solar leasing experience) to review the agreement before signing. Option Agreement Most rooftop solar developers require an option to lease the rooftop. The option will permit the operator to have access to inspect and test the rooftop and do such other investigations as it deems necessary to satisfy itself that the location is suitable for a solar PV array and that the building owner is in a position to grant a lease to it. The option will be open for exercise by the operator for a period sufficient to enable the operator to conduct such inspections and investigations and to apply for and obtain a Feed In Tariff (“FIT”) program approval or enter into a Power Purchase Agreement (“PPA”) with the local electrical utility. The option agreement will provide that if the developer exercises its option, the parties will enter into a lease of the rooftop area on the terms set out in the option agreement. Tenant Covenant As with any lease, it is advisable for the landlord to consider the financial strength and “track record” of the tenant, and to determine whether a deposit or other form of financial security should be sought to protect the landlord from the consequences of a tenant default. Term and Rent The term of the lease must be at least 20 years (to match the term of the FIT or PPA ) and the tenant will most likely ask for the exclusive option to renew the lease. Renewal rights are potentially important, as it is anticipated that the productive life of the solar photovoltaic (“PV”) array equipment may be substantially longer than 20 years. Rent can be structured in several ways. Usually, it will be a fixed, all-inclusive “gross” rent, but it may be calculated based on the size of the roof area or the portion of the rooftop utilized, the wattage produced by the facility, a percentage of the revenues received by the tenant, or on some other basis. In addition, the lease may provide for the tenant to pay for its electricity consumption and for any realty taxes associated with the solar PV array.
  • 37. Solar Business Opportunities 37 of 42 Attachment C: Primer in Solar Rooftop Leasing - Continued As mentioned above – how you receive your payment can also affect the rate, which is why we prefer to prepare the lease and capitalize it – this way it qualifies for bank financing (at least in Germany). Access The tenant will require access 24/7 to install, clean, maintain, repair and replace its equipment – and issues of security access may need to be addressed in the lease depending if the access has to be from within the building or not. Roof Repair The lease will need to address the necessity for installation, roof repairs and replacement. Issues such as notice to the tenant, the period to do the work, relocation of the solar PV equipment while the repairs or replacement are undertaken, and compensation to the tenant for lost revenue during repair/replacement will be of concern. Plans and Specifications The landlord will want approval rights over the tenant’s plans and specification for the original installation and for any subsequent alterations, repairs and replacements. The tenant will want to ensure that such approval is not unreasonably withheld or delayed. Ownership It will be critically important to the tenant, for financing purposes, that its facilities are never treated as building fixtures (i.e. they will not be part of the building and therefore will not be the landlord’s property) but instead are always the sole property of the tenant. The tenant will also require that the landlord waive any rights of distress or other rights to claim a lien or other interest in the tenant’s equipment, in order to facilitate such tenant financing. The issue of ownership and transfer of title to the installation (e.g., at the termination of the lease if not renewed) is also important at the term of the lease … specifically, if the installation is no longer economically viable or if there are materials containing toxic materials (such as solar panels that contain cadmium or other materials that or might be deemed toxic materials in certain locations).
  • 38. Solar Business Opportunities 38 of 42 Attachment C: Primer in Solar Rooftop Leasing - Continued Financing In order to obtain financing for its equipment, the tenant may need to assign the lease as collateral security to its lender, and will need the landlord to agree to enter into an agreement with the tenant’s lender enabling the lender to cure any default by the tenant under the lease and to obtain a new lease on the same terms if the lease is terminated without the lender’s consent (e.g. as a result of the bankruptcy of the tenant). The landlord will want the lender to agree that any monetary or other curable default must be cured prior to the new lease being granted. Insurance The landlord will want the tenant to obtain and maintain insurance on its facilities, and adequate liability insurance, and the tenant will similarly want the landlord to obtain and maintain insurance on its building as well as public liability insurance. Appropriate releases, waivers and indemnities will also be important to both parties. Interference As noted above, it will be extremely important to the tenant that nothing happens that blocks or otherwise interferes with sunlight reaching its solar PV array. Consequently, it will require covenants from the landlord that it will not take or permit any action, which would have such effect. In addition to the normal termination for damage and destruction provisions found in a typical lease, if at some point something happens (such as the construction of a building in the vicinity) that impairs the availability of sunlight or otherwise prevents the tenant from operating its facility, the lease will need to address the tenant’s rights to terminate the lease in such circumstances. Non-Disturbance As would be the case for any lease, the tenant may require that the landlord obtain agreements from each of its mortgage lenders to the effect that the lender will permit the tenant to remain in possession of the leased rooftop, etc. notwithstanding any default by the landlord under the mortgage, and will agree to recognize the lease and the tenant’s rights.
  • 39. Solar Business Opportunities 39 of 42 Attachment C: Primer in Solar Rooftop Leasing - Continued Repair and Maintenance Each party will want to ensure that proper repair and maintenance obligations are included in the lease. The landlord will want the tenant to properly maintain and repair its equipment to ensure it is kept safe and in compliance with laws and regulations, and the tenant will want the landlord to take adequate care of the building, especially the roof, to avoid any impairment of the tenant’s ability to properly operate its solar facility. Regular cleaning of the panels including snow removal, and disposal may also need to be addressed depending on the location of the building and normal weather patterns. Registration on Title In order to obtain financing and to protect its interest in the event of a subsequent sale, mortgage or other disposition of the landlord’s interest in the building, the tenant will want the right to be able to register a notice of its lease on title to the landlord’s property. The landlord will want the tenant to agree that it will “attorn to” (recognize as the landlord under the lease) its mortgagee (if it goes into possession due to a mortgage default) and any purchaser of the property. Conclusions Rooftop solar PV arrays are soon going to become very common, and while not all rooftops will be suitable and not all building owners will be willing to commit to lease their roofs for a twenty year period, with a little forethought and careful attention, rooftop solar leasing can potentially be a win-win for both building owners and solar project developers. [See Sample Rooftop Lease Application Example Next Page]
  • 40. Solar Business Opportunities 40 of 42 Rooftop Lease Application Example Address:______________________________________________________________________ Owner / Property Manager:_______________________________________________________ Broker / Telephone:_____________________________________________________________ Slope of the roof to the sun: ________________________ or Googlemap coordinates: ________________________ Type of Roof:_____________________________________________ Roof pitch:____ degrees Building type use:_______________________________________________________________ Age of building:____________ Age of Roof: __________ Last development date:____________ Is building still in use: ___ yes ___ no Does the roof contain asbestos: ___ yes ___ no Type of roof membrane: _________________ Can roof support an additional 15kg / m2 : __ yes __ no Height of the roof (from ground to roof):_____________________________________________ Does building have independent source of power: __ yes __ no Type: _______________________________ If no – name & address of power supplier:__________________________________________ Is there a company owned transformer?: __ yes __ no Is a transformer close by: __ yes __ no Building dimensions: width :____________________ length: ________________ Do any shadows fall on the roof: __ yes __ no Source of shadows: __________________________________________________________________________ Is there a lightning protection system on the roof: __ yes __ no Further information regarding the location: __________________________________________ ______________________________________________________________________________ Please enclose the the following (digital format preferred): 1. Site plan w/layout of the building 2. Photos of the complete building (all sides + roof if possible) 3. Photo of ground near sides of building (for purposes of erecting scaffolding / use of a crane) 4. Photos showing any sources of shading on the roof + measurements (e.g., height of object, location) 5. Detailed photos of the roof / roof membrane 6. If possible, photo of the underbody of the roof (for structural review)
  • 41. Solar Business Opportunities 41 of 42 About the Author: Mr. Freeborn is an Advocate & Supporting Board Member for Education, Employment, Entrepreneurship and Empowerment. He is experienced in working with Government and Private agencies for Economic Development & International Trade. He serves as an adviser for Business Contacts, Contracts & Capital Consultant for Domestic and Foreign Direct Investment, Economic Development, Education, and Business Development. He also serves as a Small Business Project Mentor and Internship Adviser. Mr. Freeborn is connected in 192 countries professionally and has worked with more than 40 different industries worldwide. He has accepted numerous international awards on behalf of his international development for companies he has represented. On LinkedIn he has over 60,000 connections, more than 55,000 endorsements and over a dozen written recommendations. Mr. Freeborn has authored books on international business, small business management, international college internship handbooks and an internship guide for small business. ► PROFESSIONAL EXPERIENCE: ● Export/Import Business Development ● International and U.S. Business Funding ● Foreign Direct Investment ● Int'l and U.S. JV & Partnership Development ● Small Business Development & Funding ● Commercial & Industrial Project Funding ● M&As, Project Management & Development ● Project Due Diligence, Business Plan Analysis ● Business Acquisitions & Sales ● Initial Public Offerings ● Corporate Restructuring ● E&C Level Consulting & Management ► INDUSTRY EXPERIENCE: ● Agriculture,● Automotive ● Aviation ● Bio-Technology ● Chemical Production ● Commercial R.E. Assessment and Development ● Diesel Power ● Education: Internship Development ● IT ● Energy Production ● Environmental Planning & Assessment ● Hospitality ● Marinas ● Mass Transit ● Medical ● Mining ● Railroads ● Renewable Energy ● GSA & Military ● International Contracting - Finance - Bidding - Proposal & Development.
  • 42. Solar Business Opportunities 42 of 42 2016 FDG Global, LLC. Solar Business Opportunities Disclaimer: The views and opinions expressed in this publication are those of the author and do not necessarily reflect the official policy or position of any government agency. Information provided within this publication is offered as only example. They should not be utilized in real-world business analysis or products as they are based only on very limited and dated open source information. Assumptions made within this publication are not reflective of the position of any U.S. or other government entity, public or private entities. There are no endorsements of any of the companies or products mentioned within this publication.