Commercial and industrial (C&I) solar has lagged behind other solar segments residential and utility-scale for two significant reasons: lack of financing and difficulty in explaining its benefits to commercial real estate owners.
The Solar Energy Industry Association wants to change that – and it released two documents yesterday in an attempt to move the segment along.
First, it released a model contract for commercial installers that combines the benefits of a power-purchase agreement (PPA) with Property Assessed Clean Energy (PACE), a financing model that is currently rare in the industry.
Created to comply with California’s strict financing regulations, the new model contract should work in most jurisdictions. SEIA, with the help of Ballard Spahr and CleanFund Commercial PACE Capital, built on an original commercial PPA model contract, giving commercial solar installers another option to offer its potential customers.
Essentially, PACE programs allow commercial real-estate owners to avoid the upfront costs of installing PV systems on or making energy efficiency upgrades by financing them through property taxes. The calculation is that business owners will be able to pay the increase in property taxes using the energy savings gained from the renovations.
“Our goal is to broadly open the U.S. commercial real estate sector for solar deployment, and the PACE PPA is a valuable tool to allow that progress to happen,” said Mike Mendelsohn, SEIA’s senior director of project finance & capital markets.
Secondly, SEIA released an educational leave-behind, 8-page white paper that breaks down the advantages of installing solar on commercial property. titled Solar Energy & Commercial Real Estate (CRE): Insights for Your Investment Property, the document suggests solar installations allow commercial property owners to raise rents, lower operating expenses, negotiate lease extensions, and increase the net present value, or NPV, of their buildings.
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