Climate Neutral Campus Report: What would you say to leaders that are interested in solar but may not understand the cost of financing large solar installation?

Reyad Fezzani: Our objective is to get the cost of solar power as low as possible and as competitive with what you can get off the grid.  In order to do that we have been investing in technology and innovation to reduce the cost of the panels, the installation and operation and maintance.  In the end, the business model of solar requires the customer to commit to buying the electricity at a certain price on a long term contract basis. As a seller of electricity our task therfore to produce the electricity for you and generate revenue to offset your consumption.

A critical part of that business model is the financing. Financing enables what is a very large purchase—compare it to a home owner making a large purchase like a new home heating system—to be made, which then paid over a long time frame. The financing also covers the installation costs.

Once the system starts generating electricity and therefore revenue this funds future maintenance and services such as monitoring or insurance. Because this is a long term asset which has a 25 year warranty it always pays for it to be well maintained, and choose a reliable brand from a reliable supplier. BP Solar has taken well maintained panels off roofs 20 years in service and found them to still be operating effectively and better our predictions.

Because of the upfront cost, most people don’t have the cash readily available so they look for a financing offer. A typical home system might cost $25,000 to $35,000 to install. A commercial customer might need to buy some land or put solar panel on a roof top and produce electricity. In the case of Wal-Mart, we supply electricity by installing and operating solar systems on their roof. We do that with a bank providing debt financing for the project and as needed  BP or other investors providing equity into the project. Wal-Mart essentially buys electricity from their own roof at a certain pre-set price. Financial partners get involved because returns on solar projects can be very attractive.

We just did a deal with a large European insurance company and the electic generation profiles and the cash flow are stable because of the predictability of day light and quality products. That means the cash flow from the sale of electricity is relatively stable and therefore attractive for an investor.

An investment like that with a good return and certain cash flows, even if it’s lower than what you get on the stock market, can be a very good portfolio.



CNCR: Are there specific challenges that colleges and universities face when implementing a solar project?

RF: Every institution is different. We find that awareness of available land is the first hurdle. There is also a tendency to hold more land than is neededand is therefore under utilized. For us, land is a very valuable asset because we can use it to generate power and revenues a solar system. Universities and colleges also typically have free roof space on all their buildings. The bigger challenge can be the quality of that roof space. A good roof can carry a very substantial solar system. Then there are practical issues such as the need to connect the solar system to the grid. Depending on what state we are in, the incentives for that
can be poor or nonexistent. Sometimes the local utilities don’t see the value of solar because of the small scale or their priorities are elsewhere— like nuclear plants or coal plants. Most states now have a Renewable Portfolio Standard (RPS) which is a requirement to have a certain proportion of their generation from renewables by a certain time with penalties if they do not comply. This certainly helps and getting the utilities that support the institutions to see the
value of solar and incentivize it is key. And then there is the whole issue of the contracting process—the rules and regulations for how to actually buy solar energy may not be clear in a given state or jurisdiction. And the rules for how
an academic institution can buy electricity from a project or solar development can also be complex or unclear. There is also usually very complex procurement
and government contracting procedures for most institutions and that can mean putting a plan into action can take years. There are also local complexities as well, such as building code, permissions and consents, which have to be resolved. So, in many ways the issues aren’t that much different than for any
customer although we often see every college having its unique set of challenges.



CNCR: Do you see any broad similarities about institutions you’ve worked with, whether it’s the size of university or that they are privately funded? Is their a pattern to the type of higher learning facility that looks to solar?

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