Four Ways Owners Are Reaping Financial Benefits from Solar

With expenses on track to exceed revenue growth, commercial real estate owners are seeking creative strategies to improve net operating income (NOI). Fitch ratings predicts s

According to Coast Energy CEO Blair Herbert, solar is a great tool to increase NOI and can also be used to bolster capital liquidity, including financing capital improvements and gaining additional cash flow. Solar’s financial advantages aren’t limited to energy savings. Real estate owners may also tap solar as part of an innovative strategy to maintain a healthy NOI and meet business goals, which may also fulfill regulatory obligations or other requirements.

Here are four ways owners and developers reap financial benefits from solar and energy storage.

1. Solar rooftop lease for real estate owners

Leasing space inside a building is commonplace, but what’s emerging as a creative way to increase revenue is leasing space outside the building. Evolving legislation enables rooftop leases in many states, which allows Coast Energy to install solar on the rooftop of a building and lease the roof from the building owner.

“Real estate owners can take an unused portion of their buildings and monetize it through this type of lease,” Herbert says. “It’s structured like a traditional landlord-tenant relationship, and instead of Coast Energy being a conventional tenant in their building, we’re simply leasing their roof.”

2. Using solar to fund capital improvements

Owners may need to complete building improvements to bring in new tenants, such as building out an office, replacing a roof, replacing an HVAC system, or meeting other building needs. Capital improvements may also be required to meet certain ESG or renewable energy goals. However, the owner might want to preserve cash on hand or limit their borrowing capacity. Solar can be leveraged to raise capital through a partnership agreement to meet these capital needs.

“Many institutional real estate owners are required to meet certain ESG obligations or reporting mandates,” Herbert says. “And so, one of the things we try to talk through with folks is how we can help you meet ESG goals and how to leverage solar in a way that provides financial benefits as well.”

3. Integrating solar systems with covered parking structures

A real estate developer might be entertaining the idea of building a new medical office or apartment project and realize that government regulations require them to install solar or have covered parking as part of that development. That expense wasn’t included in the budget.

Coast Energy can provide all the energy, infrastructure, and covered parking at no additional cost to the owner, removing the unexpected line item from the budget while also providing meaningful electricity cost savings. Also, covered parking can create a potential revenue source for owners if they decide to charge for it.

4. Leveraging Coast Energy to meet code requirements

In many jurisdictions, real estate developers are forced to include solar and energy storage in new buildings.  This can be an unexpected requirement that may also be a large-budget item.  Under Coast Energy’s structure, the building owner simply agrees to purchase electricity from the solar System and Coast Energy covers the costs to implement the solar and energy storage during the construction.  The property owner has no CapEx outlay and enjoys long-term NOI increase through lower electricity rates.

Solar has become a more cost-effective electricity source in most states and property owners are able to utilize Coast Energy’s unique energy solutions to drive untapped NOI opportunities and long-term value creation for their buildings.

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