July 2021 - Quarterly Market Letter
On behalf of the team at 5, I am pleased to forward our market letter for the second quarter of...
Solar power sales reps have been knocking on doors and cold-calling businesses to spread the good news about the free power waiting on everybody’s rooftops. The sales pitch is so basic and appealing, harvest the sun’s energy, and save money. It all seems like a no-brainer. Unfortunately, solar power options for commercial clients are not that simple and a bad decision can be costly for many years to come.
The ability for businesses to install and benefit from a rooftop solar array varies greatly from one utility to the next. There are specific constructs within each utility’s tariffs and infrastructure that may cause on-site solar options to be more or less attractive. In addition, retail electricity suppliers often have clauses in their agreements that penalize on-site solar users because the on-site source of power reduces the supplier's ability to deliver the contracted quantity of energy. Retail energy products need to be structured with potential on-site solar needs in mind, while also accounting for the net-metering necessary to allow the client to benefit from any excess power produced by the solar array. Clients must also decide if they will finance or purchase their new solar panels and need to consider ongoing maintenance and service costs as well. Purchase Power Agreements (PPAs) are also a major consideration when evaluating the cost/benefit of a client-owned solar asset.
5 takes the time to understand the opportunities and constraints for each client as they consider potential solar power options and then builds the financial modeling necessary to guide their decisions. This process considers federal and regional incentives, upfront and ongoing costs, current and future energy market conditions, and the client’s sustainability goals. Some clients elect to add on-site solar (rooftop, parking awnings, stand-alone units) while others decide to participate in community solar programs or purchase Renewable Energy Credits, Virtual Purchase Power Agreements (VPPAs), or Renewable Retail Contracts to meet their company’s ESG goals. 5 assists the client during every step of the process and holds solar developers and their sales reps accountable for the critical details of each offer.
A community solar project is one where the output and benefits of an off-site solar array are shared among multiple parties. These solar customers invest in remote solar projects and make solar power purchases even though the physical array is not onsite. In some systems, individual panels can be purchased and in others, a specific amount of solar output, in kW or kWh, can be bought. Community solar customers benefit from the electricity generated from the array in addition to the tax credits and renewable attributes, in proportion to the amount they invested in that community solar project. Community solar is a good option in situations where it is not possible to install panels on a roof or other parts of a property. This can also be an attractive option for those who do not own their own building and circumstances where there is not enough direct sunlight on the customer's property.
Contact Us to learn how 5 can assist with your company’s solar power evaluation process.