The Future of Energy and Commercial Solar
Commercial Solar’s Untapped Potential
The U.S. potential for commercial solar is over 375,000 MW on rooftops alone. This represents a $500 billion investment opportunity with the potential to generate 15% of the nation’s electricity – and much more when you include parking lots and underutilized land adjacent to buildings. Unleashing the power of commercial solar will create over 500,000 solar jobs, reduce carbon emissions by over 7,500 million metric tons, and cut local energy costs by $400 billion.
America’s largest companies recognize this opportunity, and they are investing in solar in record amounts (SEIA Solar Means Business 2017 Report, April 2018). Target, Walmart and Costco are seeing the benefits of renewable energy investment on the environment – and on their bottom lines as well.
But what about the rest of us?
Despite gains at the top of the market, small to mid-size energy customers have a hard time accessing the benefits of solar energy. To unlock the potential of these markets, we need to approach them with a new lens – one that uses experience, standardization and innovation to create a new model for solar investment.
Yesterday’s Model: High Transaction Costs
Ten years ago, I did my first commercial solar power purchase agreement (PPA) deal. The General Counsel for the organization that was hosting and buying power from the proposed solar project asked me how many PPA’s had I done. When I admitted this was my first, he nodded and said that it was his first as well – a sign of how early we were in the commercial solar market.
He asked who our law firm was. I responded with the name of our Boston law firm and he said, “Good, you are going to need them.”
This early deal faced a gauntlet of issues and associated transaction costs:
1. Transactional: Deal documents all reached version 10 or higher before finalization.
2. Technology: At this time, there were less than 10 solar projects greater than 100 kW in Massachusetts. And PanelClaw, the company that made the roof mounting system for the solar project was about 1 year old. Figuring out how to preserve the roof warranty was time consuming.
3. Design: A manual process, with many revisions.
4. Workforce: An experienced solar installer, developer, engineer, or lawyer was anyone who had done a couple of projects.
5. Policy: The federal investment tax credit was only a few years old and states were mostly incrementally unveiling short-term solar policies.
6. Financing: Solar investing was new and underwriting criteria were nascent. Funding this deal was challenging.
These challenges led to high transaction costs – and kept many projects that could create value for investors and communities from getting across the plate.
Today’s Model: Experience, Standardization, and Innovation: Low Transaction Costs
Welcome back to 2018. Sunwealth recently did another solar PPA deal with that same company on a new building. This deal benefited from experience, standardization, and innovation:
1. Transactional: Sunwealth uses standardized deal documents and processes across development, financing, construction, and operations, including the open source SEIA commercial solar PPA.
2. Technology: Solar now has a reliable track record with bankable technology and equipment providers. For example, PanelClaw celebrated 10 years, has installed over 2 GW of product and is the go-to mounting system for major building owners.
3. Design: Software-driven.
4. Workforce. The national solar workforce is over 250,000 strong. Most everyone I know who joined the solar industry is still in the industry. That’s deep experience and I am proud that the Sunwealth team and our solar partners comprise the best and brightest.
5. Policy. The federal Investment Tax Credit has solid bipartisan support and many states have been stalwarts in policy to advance solar and clean energy, especially for commercial energy customers. In many markets, solar is on track to be economically viable without any incentive.
6. Financing. Sunwealth’s platform is responsibly underwriting commercial solar projects and enabling individuals, foundations, and institutions to simply invest directly in high impact solar projects. Our investor community funded 33 commercial solar projects across 7 states in 2017.
Investing in the Future of Energy
Sunwealth sees the future of energy as clean and inclusive. Through our platform and experienced team, Sunwealth and our growing community of investors are financing solar projects that meet our mission to benefit a diverse range of communities and energy customers through clean power, carbon reduction, energy savings, and job creation.
We’re proud that our collective actions have brought -- or will soon bring – solar and its benefits to a range of outstanding communities.
As my nieces might say, “Sunwealth is living in the future.” We welcome you to join us as we invest in the future of energy and unleash the power of commercial solar for all.