Because the sun doesn't shine everywhere all the time, the buildings stay connected to the local utility grid. Solar power typically displaces the expensive, peak-time utility power, according to Arno Harris, CEO. He says his company's solar service will typically shave between 5% and 10% from a building's previous electric bill.
"On large buildings, that can be significant," he says, "but the more important benefit is that it makes the building more sustainable. There's a huge explosion of interest in sustainability. Most of the big green initiatives are for new construction. Managers are concerned about older buildings' ability to compete," he suggests. Harris says his company developed the program to "overcome the problem of first cost" to building owners and "get beyond the one roof at a time business model." Neither owners nor tenants pay for the installation and operation, and Recurrent Energy profits from the sale of electricity the installation generates for the building.
While gaining "a green improvement to the building at no capital improvement investment, the service also provides owners with income from leasing the roof," Harris notes. He calls the rental income "the icing on the cake. The biggest interest among owners is improvement to the building's sustainability."
He declines to provide GlobeSt.com with a typical rooftop lease rate but says, "it compares very well with the rate an owner gets for cellular antennas. Generally, it's based not on sf, but on the value of the energy contract for the building. "If the owner wants a high lease rate for the rooftop, we have to charge more for the electricity," he says. "In some cases," he adds, "we can take over the [existing] utility bill, add in our component, and still the bill would be less than prior to the solar system addition." He also notes that incentives for solar installations are available from the federal government and some states, which Recurrent Energy would capture to keep costs down.
Negotiations are underway, Harris says, with industrial REITs, pension fund advisors and corporate facility owners. He declines to identify prospects but says he expects to announce several, which he declines to quantify, by year-end. The business model works, he says, under contracts that encompass 10 to 20 buildings, "but we are primarily talking with owners of several hundred buildings." The building model is low-rise, flat-roofed industrial and distribution facilities. A secondary target, down the road, is retail properties.
Geographically, the focus is on states with a lot of sun and high electricity rates. Among ones Harris names are: Arizona, Nevada and Texas along with California, New Jersey, Hawaii, Oregon and Colorado. Despite its distance from the sunbelt, Pennsylvania is also in the company's sights because of its abundance of suitable buildings and state government incentives for solar conversions.
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