Upload
greenq-partners
View
2.135
Download
0
Embed Size (px)
DESCRIPTION
Presentation covers the different issues in setting up a rooftop solar photovoltaic project in Ontario. Things that are addressed is what should be included in feasibility study, different levels of involvement in your project, and risks and concerns during the project set-up and construction stage.
Citation preview
Green Intelligence at your side
Rooftop Solar PV projects for landlords and investors
What you should know prior to meeting a solar salesman
Last Updated August, 2012
Agenda
• Ontario FIT2.0 program
• Property requirements for a solar PV project
• Different ownership models – roof lease, system ownership & ownership with development
• An overview of project progression from idea to commissioning
• Aspects of solar PV technology that affect property owner – financing and taxation
Copyright GreenQ Partners Inc 2
FIT Program Overview
• Program started with the Green Energy Act in May 2009. New Rules were introduced in August 2012.
• Established rules under which businesses can sell to the grid electricity produced with renewable energy generation technologies, such as solar PV, wind, bio-energy
• Electricity is bought by the OPA on the basis of a 20-year fixed price contract
3Copyright GreenQ Partners Inc
Ontario FIT Rates for PV
Copyright GreenQ Partners Inc 4
Project Size Rooftop, C$/kWh Ground, C$/kWh
≤10 kW 0.549 0.445
> 10 ≤ 100 kW 0.548 0.388
> 100 ≤ 500 kW 0.539 0.388
> 500 kW 0.487 0.35 (up to 5MW)
0.347 (over 5MW
FIT Program Requirements
To qualify for FIT rates project must:
• Be located in Ontario
• Pass the transmission/distribution availability test
• 60% of implied project cost* should be incurred in Ontario
• Meet OPA’s size requirements per kW
* While determining compliance with domestic content requirement OPA assigns portions of costs to project activities and materials regardless of actual costs.
Copyright GreenQ Partners Inc 5
FIT
Site suitability
Copyright GreenQ Partners Inc 6
RoofElectrical
Room
Location
Suite Suitability - Roof
• Orientation
– South or South-West
• Roof space
– 40,000 sq ft => 250kW system– Other equipment may use up roof space
• Shading
– None or very little
• Roof condition
– Membrane should last at least for 20 years (ideally)
• Structural capacity
– Roof structure must allow for additional 3-7 psf load to accommodate dead and wind load and possible additional snow accumulation
7Copyright GreenQ Partners Inc
How it looks
Copyright GreenQ Partners Inc 8
Ballasted mounting from SolarDock
Ballasted mounting from Unirac
Example of a penetrating mounting system
Costs of Roof Imperfections
• Not true south orientation
– 10o off => 0.2% less energy
– 25o off => 1.5% less energy
• Below optimal tilt (<30o)
– 20o => 2.3% less energy
– 10o => 6.3% less energy
– Flat => 12.1% less energy (may lower costs)
• Dirt & snow on panels
– Higher tilt allows for better self cleaning
Copyright GreenQ Partners Inc 9
Site Suitability - Electrical
• Electrical room
– Space for inverter, connector box,meter, disconnects, etc
– Equipment weight
– Equipment delivery constraints
• Sufficient distribution line to yourbuilding
Images are property of Satcom (top) and Xantrex.
10Copyright GreenQ Partners Inc
Site Suitability - Location
• LDC capacity availability
– Pre-application consultation with LDC is required to determine if project can be connected
• Local weather conditions
– Snow belt area will have higher losses than Toronto
• Air cleanliness & dirt accumulation
– You only harness the sun that gets to the panels
11Copyright GreenQ Partners Inc
How involved do you want to be?
Greater involvement leads to greater:
• Required investment
• Return on investment
• Risks
Develop & Ownthe system
Own the system
Lease roof
12Copyright GreenQ Partners Inc
“Lease” Option
You invite a company to install, own and operate a solar system on your roof and charge them fixed lease payment.
• Investment required– No capital investment
– Legal and organisational costs, pre-application assessments
• Expected revenues: – Around $0.5 per sq ft of used roof per year
• Risks– Roof: Leakage, structural damage, roof traffic, conflicting use during 20 years
of contract,
– Default of your solar tenant
13Copyright GreenQ Partners Inc
“Own” Option
You invite a company to develop and install a system; you collect payments for produced electricity from the OPA.
• Investment required– Around $4,500 per kW of installed system, capital and preparation costs
• Expected revenues
– $450-500 per kW pa on a commercial scale system (100-500kW AC)
– 11% IRR (100% equity financing)
• Risks
– Roof risks, same as in “lease” option
– Performance risks, maintenance risks
14Copyright GreenQ Partners Inc
Owning a system:Performance Factors
PV technology
• c-Si panels produce more kWh/sft of roof
• Thin film panels are more tolerant to high temperatures, but less productive
• “Shadow resistant” panel designs help avoid some losses
Mounting
• Orientation: ideal is true South and 30° tilt
• Best performance tilt may be not cost effective due to wind load
• Higher tilt => more roof space required, lower tilt => lower wind load
• Roof warranty and mounting warranty
• Ease of temporary relocation
Inverter
• Efficiency, Cooling, Life expectancy
• Reliability, warranty, service
System design
• Losses in cables, due to panel heating, overshadowing, service needs, panel mismatch, etc
• Need for cleaning
• Downtime
• Array capacity vs. inverter capacity
Local conditions
• Local sun access conditions (shadow, smoke, dust, steam, etc)
15Copyright GreenQ Partners Inc
“Develop & Own” Option
You develop an in-house team that can procure and install the system. The rest is the same as in Own Option. This option is most viable for owners of multiple rooftops.
• Investment required– Cost to setup in-house facility + per-system costs lower than in “own” option
• Expected revenues– $450-500 per kW pa on a commercial scale system
– 11% IRR (100% equity financing) on system
• Risks– Roof risks and Performance risks as in Own option
– Design and procurement (parts) risks
16Copyright GreenQ Partners Inc
Sample Project
For a 40,000 sq ft, problem-free roof one can expect:
• System size of 250kW DC
• Investments:– Feasibility & Organizational costs - $10-30K (depending on project
complexity)– System cost (“own” option) - $1M
• Revenues– “Lease” revenue - $20,000 pa– “Own” revenue - $110,000 - $120,000 pa
• Bonus for “own” option – 50% depreciation rate on solar equipment; can used against other profits
Copyright GreenQ Partners Inc 17
Project Progression
1. Project Assessment
– Evaluation of site suitability
– How involved do you want to be?
2. Project setup
– OPA Contract
– Developer Selection
– Project Financing
3. Construction & Operation
Highest impact decisions are made at project assessment stage
18Copyright GreenQ Partners Inc
Project Setup - OPA Contract
• The party that owns roof access rights should apply for OPA contract
– The application fee is 0.5$ per kW (up to $5,000)
– Application security of $20 per kW is also required. Refundable if project goes into construction
• LDC approval for future system is required
• Contracts are granted based on priority points
• The processing time for an application varies, with “OPA target” of 60 days
19Copyright GreenQ Partners Inc
Project Setup - Developer Selection
• Free assessment is never free and never unbiased
• Look at IRR and risks; not just cost or performance
• Warranties: for roof, equipment and performance; is developer worth the offered warranty? How is warranty going to work?
• Maintenance schedule: who, when, how
20Copyright GreenQ Partners Inc
The decision you are making will be binding for at least 20 years
Project Financing
• Debt and equity financing is available from different sources
• CEPP Funding for Ontario organizations can be used to cover soft costs
• Bank loans may be obtained only for projects using bankable equipment
– Banks will typically finance up to 70% of cost for projects that meet their criteria
– Will require adequate project structure and documentation
21Copyright GreenQ Partners Inc
Other Aspects of Project Setup
• Internal team set-up
– Technical and technology advisors
– Legal advisor
– Financial advisor
• Establishing project schedule and its impact on other activities
• DBF or DBFM approach
22Copyright GreenQ Partners Inc
Construction – Major Concerns
• Who is responsible for damages to roof? To system?
– Cooperation with roofing company
• Permitting and unexpected fees
• Construction financing
• Interference with primary business
– Length of construction
– Scheduling
23Copyright GreenQ Partners Inc
Operation – Major Concerns
• Roof warranties during operation
– Cooperation with roofer during construction
• Roof repairs
– Contractual provisions
• System repair and maintenance
– Defined maintenance plan
– Problem response – timing & warranties
– Value of monitoring system
Copyright GreenQ Partners Inc 24
Taxation Considerations
• Income tax
– System costs are subject to 50% depreciation
– In some cases depreciation can be used against other income
• Property taxes
– System should be treated as “equipment”
– Rooftop PV should not affect property taxes
Copyright GreenQ Partners Inc 25
Conclusion
For a landlord a solar PV project should not differ much from any other investment project:
• All investment rules apply
• No need to be a pro in solar to benefit from it
• To maximize return – stay within core competence and
assign direct solar risks to solar developer, who can
manage them at a lower cost
Copyright GreenQ Partners Inc 26
When done right, solar PV investment is like bond,
but with 11% IRR
Copyright GreenQ Partners Inc 27
Questions