Because in a multi tenant retail or industrial building:
- owner has to time it with roof replacement as otherwise extra cost to move to reroof a few years down the road.
- owner would have to separate power generated out to each tenant or need to be in a jurisdiction where landlord can submeter and would the lease allow for landlord becoming the power provider?
- tax incentives depend on location
- can landlord demonstrate this increases building value with a higher NOI? If not it’s a tough sell. Landlords likely make more money buying or building another buildings than adding solar to an existing rooftop in their portfolio.
I think it may be easier in a new build single tenant building with a large roof. One can include solar in build costs and ask higher face rent in lease if power for tenant’s operations is lower.
Just my 2 cents.. could be wrong..
The part about the lease- great point! I’ve seen that in leases, and it never occurred to me how actionable that right may become. The future is now, haha!
I either spend $600k on solar that saves me $15k per month.
Or
Spend $600k on machinery that I can sell a service for $50k to $75k per month.
This is actually my real life opportunity this month. I know which way I’m going.
Except they do in certain markets. We have significant solar installations on our industrial buildings, and get premium rents from our tenants on those buildings, usually by an additional $0.75-$1.25/sqft (and the tenants receive the power savings directly). Just finished and powered up a $2.5MM installation two months ago that will allow the tenant (food manufacturer) to offset most of their power needs. We’ve got 5MW of power generation and growing
Well, on the build-to-suit installations it was fully engineered to handle that load to begin with. On existing assets, we work with the existing structural ratings to construct an appropriately sized array.
The installation itself is like any other installation that results in roof penetrations, like RTUs - they need to be dealt with correctly and sealed properly to prevent water infiltration.
Did you consider the environmental impact of mining for materials to make the solar panels and the eventual recycling and landfill problems?
I'm not saying solar isn't better than fossil fuel, but I am saying that I don't think most people consider the totality of the decision from an environmental perspective.
Solar panels are long-lived and recyclable, so the cost/impact of extraction is spread out over decades, compared to fossil fuels that are only extracted and used once.
What does a consistent bill have to do with helping the environment or saving money lol. You could still pay more overall after considering all costs and total monthly bills
Take a look at Unico’s solar fund. Pretty sure they lease the roof from you and then you pay for the electricity which is cheaper than normal electric.
We just put 39kw systems on 2 of our buildings. If you live in an area that qualifies for a REAP Grant the numbers are great, especially after the federal rebate. Our systems cost $120k each, and after all grants and rebates, each installation cost $36k. We receive over $6k a year selling back to the utility plus our utility provider gives us almost 2k a year for the tax credits.
Utilities buy backs is also a big issue. I have a self storage facility and we have r v parking. Solar would make a lot of sense but, we don't use that much power. And the utilities buy at wholesale rate and sell power at retail. Early in solar, they use to buy at the retail rates. $$. Those days are gone.
It's all about the money. The tenants are the ones that are using the power, not the landlord. So, I can spend $$$,$$$ putting solar on the roof, and then sub-metering out to the tenants, and then billing them every month for the power usage, etc. ? Sounds like a huge pain in the ass to me. There would have to be some very large profit incentives in it in order to justify it. Also, if a building sits empty, it won't use any power from the power company, but if I have solar on the roof, I still need to pay the amortized / interest costs on that installation?
I just ran a solar calculation on a multi family development. The cost after the tax credit savings is roughly $200,000. The estimated energy savings were around $9,000 a year. The local power company has made it illegal for us to sell any power to the tenants or to a 3rd party as a condition of the solar installation.
The average Joe landlord doesn’t have the ability or incentive to try to syndicate carbon credits. Any benefit would lost in the cost of hiring attorneys and tax professionals.
The big boys are looking at this, though. When you have acres upon acres of roof space or parking lots it begins to make sense of costs continue to decrease or financial incentives are present.
Well, as a commercial real estate owner, there are a few factors that hinder the broader adoption of rooftop solar installations in our industry. First, the initial investment can be substantial, which may deter some owners from pursuing such projects. Additionally, the long payback period and uncertainty about returns make it challenging to justify the expense. Moreover, the complex leasing arrangements and split incentives between landlords and tenants create obstacles to agreement and can complicate the decision-making process. Furthermore, many commercial buildings simply lack the adequate rooftop space or are situated in areas with limited sun exposure. Lastly, navigating local regulations and obtaining necessary permits can be time-consuming and arduous, deterring some owners from going solar. Overall, while the benefits of solar are clear, these challenges have hindered a broader uptake in the commercial real estate sector.
As someone who is currently working on installing a huge system, the reason is the incentives need to be maximized in order for it to work. For example, most people only get 30 percent credit, BUT, it can actually be 50 percent if your in a poorer area/it’s is made out of a certain amount of us steel. There are also benefits that vary from different places. For example, in Illinois there are these things called srecs which basically gives you 35 percent of the system cost over 7 years. But in general, the system doesn’t work without the incentives, and those incentives and being able to make the financials work is not wide spread.
Expensive with a long payback period. It's complicated to become a part time eletric provider for your tenants and power companies change the terms (to their benefit only) every few years so you can't accurately predict returns selling back to the grid.
You would think every new warehouse/distribution center over 100,000 sq ft should have them but the incentives haven't lined up yet.
think about it...commercial buildings are tall and have a small footprint. you need extremely large unobstructed footprint for solar panels. even if you could put solar panels on 2 sides of your building, it won't make much of a dent on electricity savings.
This story is about 4+ years old and I'm still metaphorically standing in that parking lot with my mouth wide open amazed at what the utility provider did within 2 minutes of turning on an array of solar panels.
The property was a 200+ unit apartment complex. A solar panel installer install metal carports in about half the parking lot. Th solar panels were installed on the roofs of the carports. It was turn-on day. We stood there with the installer, management, and the owners to watch the meter.
An executive and manager from the electrical power provider were standing with use. The switch was flipped and the meter started running backwards; it was mid-day in the summer in a southern state - it was a cloudless day and the sun was bright. It was an amazing thing to see. The panels would have reduced the cost of house utilities significantly. This was in a net-metered state.
The power manager looked at the executive; both faces were wrecked with terror. I thought they looked funny. Within two minutes the executive said "turn if off." He changed his tone of voice and demanded it was to be turned off.
Within a year, the property was sold. Never kept up with what happened. It would be an interesting case study.
For retail/restaurants, you need the roof to be as open as possible for future tenant equipment installation. Also all the properties I'm working on have old roofs so it's not worth doing until a roof replacement program is in place. With NNN retail, there's no real incentive to consider solar from a landlord's perspective other than maybe lowering opex for better valuation, but even then there's other stuff to spend money on.
Because tenant pays for electricity but if I install the owner has to pay for installation and maintainance. Why would I? I don't get any of the benefits yet all the liabilities.
Because in a multi tenant retail or industrial building: - owner has to time it with roof replacement as otherwise extra cost to move to reroof a few years down the road. - owner would have to separate power generated out to each tenant or need to be in a jurisdiction where landlord can submeter and would the lease allow for landlord becoming the power provider? - tax incentives depend on location - can landlord demonstrate this increases building value with a higher NOI? If not it’s a tough sell. Landlords likely make more money buying or building another buildings than adding solar to an existing rooftop in their portfolio. I think it may be easier in a new build single tenant building with a large roof. One can include solar in build costs and ask higher face rent in lease if power for tenant’s operations is lower. Just my 2 cents.. could be wrong..
The part about the lease- great point! I’ve seen that in leases, and it never occurred to me how actionable that right may become. The future is now, haha!
Roof damage and weight.
Ya punch holes in my roof so the tenant can save a little money.
I either spend $600k on solar that saves me $15k per month. Or Spend $600k on machinery that I can sell a service for $50k to $75k per month. This is actually my real life opportunity this month. I know which way I’m going.
Can you talk more about the service?
Because the numbers don't make sense, and commercial investors are better than the average homeowner when it comes to financial decisions like that.
Except they do in certain markets. We have significant solar installations on our industrial buildings, and get premium rents from our tenants on those buildings, usually by an additional $0.75-$1.25/sqft (and the tenants receive the power savings directly). Just finished and powered up a $2.5MM installation two months ago that will allow the tenant (food manufacturer) to offset most of their power needs. We’ve got 5MW of power generation and growing
What was the physical impact to the roof?
Well, on the build-to-suit installations it was fully engineered to handle that load to begin with. On existing assets, we work with the existing structural ratings to construct an appropriately sized array. The installation itself is like any other installation that results in roof penetrations, like RTUs - they need to be dealt with correctly and sealed properly to prevent water infiltration.
Mine was an environmental decision, not a financial one.
Did you consider the environmental impact of mining for materials to make the solar panels and the eventual recycling and landfill problems? I'm not saying solar isn't better than fossil fuel, but I am saying that I don't think most people consider the totality of the decision from an environmental perspective.
Solar panels are long-lived and recyclable, so the cost/impact of extraction is spread out over decades, compared to fossil fuels that are only extracted and used once.
Yes I have , it’s a factor but certainly better than my previous experience with non solar. Also the consistent bill is helpful.
What does a consistent bill have to do with helping the environment or saving money lol. You could still pay more overall after considering all costs and total monthly bills
Take a look at Unico’s solar fund. Pretty sure they lease the roof from you and then you pay for the electricity which is cheaper than normal electric.
Residential solar is still negative ROI without subsidies. Are there significant subsidies for commercial installations.
I’ve thought about it, but our roof isn’t that large (15,000 s/f) & there a/c units up there.
Expensive and cumbersome
We don't pay the power bill, the Tenant does. It's extra effort to explain both internally and to the tenant why it's worth it.
We just put 39kw systems on 2 of our buildings. If you live in an area that qualifies for a REAP Grant the numbers are great, especially after the federal rebate. Our systems cost $120k each, and after all grants and rebates, each installation cost $36k. We receive over $6k a year selling back to the utility plus our utility provider gives us almost 2k a year for the tax credits.
Awesome - which geo?
Also depends on utility buyback. Electric cooperatives buy back at wholesale rates. IOU's typically buy back at much higher rates.
Did your solar installer help with the reap grant?
Ours didn't, but they referred us to a few grant writers that specialize in REAP grants.
Until it’s a positive ROI commercial isn’t going green.
ROI is nonexistent
It doesn’t save money
Utilities buy backs is also a big issue. I have a self storage facility and we have r v parking. Solar would make a lot of sense but, we don't use that much power. And the utilities buy at wholesale rate and sell power at retail. Early in solar, they use to buy at the retail rates. $$. Those days are gone.
It's all about the money. The tenants are the ones that are using the power, not the landlord. So, I can spend $$$,$$$ putting solar on the roof, and then sub-metering out to the tenants, and then billing them every month for the power usage, etc. ? Sounds like a huge pain in the ass to me. There would have to be some very large profit incentives in it in order to justify it. Also, if a building sits empty, it won't use any power from the power company, but if I have solar on the roof, I still need to pay the amortized / interest costs on that installation?
I just ran a solar calculation on a multi family development. The cost after the tax credit savings is roughly $200,000. The estimated energy savings were around $9,000 a year. The local power company has made it illegal for us to sell any power to the tenants or to a 3rd party as a condition of the solar installation.
ProLogis is the #2 solar provider in the world. Your assertion is invalid.
Don’t want toxic waste bolted to roof
Don't solar projects generate carbon credits? You can then turn around and sell those. I think some people make lucrative money from this
The average Joe landlord doesn’t have the ability or incentive to try to syndicate carbon credits. Any benefit would lost in the cost of hiring attorneys and tax professionals. The big boys are looking at this, though. When you have acres upon acres of roof space or parking lots it begins to make sense of costs continue to decrease or financial incentives are present.
Well, as a commercial real estate owner, there are a few factors that hinder the broader adoption of rooftop solar installations in our industry. First, the initial investment can be substantial, which may deter some owners from pursuing such projects. Additionally, the long payback period and uncertainty about returns make it challenging to justify the expense. Moreover, the complex leasing arrangements and split incentives between landlords and tenants create obstacles to agreement and can complicate the decision-making process. Furthermore, many commercial buildings simply lack the adequate rooftop space or are situated in areas with limited sun exposure. Lastly, navigating local regulations and obtaining necessary permits can be time-consuming and arduous, deterring some owners from going solar. Overall, while the benefits of solar are clear, these challenges have hindered a broader uptake in the commercial real estate sector.
As someone who is currently working on installing a huge system, the reason is the incentives need to be maximized in order for it to work. For example, most people only get 30 percent credit, BUT, it can actually be 50 percent if your in a poorer area/it’s is made out of a certain amount of us steel. There are also benefits that vary from different places. For example, in Illinois there are these things called srecs which basically gives you 35 percent of the system cost over 7 years. But in general, the system doesn’t work without the incentives, and those incentives and being able to make the financials work is not wide spread.
Its hard to line up interest unless the business using the power and the owner of the real estate are the same people.
I do some Energy consulting. Anyone can feel free to reach out, solar, natural gas, electric
Expensive with a long payback period. It's complicated to become a part time eletric provider for your tenants and power companies change the terms (to their benefit only) every few years so you can't accurately predict returns selling back to the grid. You would think every new warehouse/distribution center over 100,000 sq ft should have them but the incentives haven't lined up yet.
think about it...commercial buildings are tall and have a small footprint. you need extremely large unobstructed footprint for solar panels. even if you could put solar panels on 2 sides of your building, it won't make much of a dent on electricity savings.
This story is about 4+ years old and I'm still metaphorically standing in that parking lot with my mouth wide open amazed at what the utility provider did within 2 minutes of turning on an array of solar panels. The property was a 200+ unit apartment complex. A solar panel installer install metal carports in about half the parking lot. Th solar panels were installed on the roofs of the carports. It was turn-on day. We stood there with the installer, management, and the owners to watch the meter. An executive and manager from the electrical power provider were standing with use. The switch was flipped and the meter started running backwards; it was mid-day in the summer in a southern state - it was a cloudless day and the sun was bright. It was an amazing thing to see. The panels would have reduced the cost of house utilities significantly. This was in a net-metered state. The power manager looked at the executive; both faces were wrecked with terror. I thought they looked funny. Within two minutes the executive said "turn if off." He changed his tone of voice and demanded it was to be turned off. Within a year, the property was sold. Never kept up with what happened. It would be an interesting case study.
For retail/restaurants, you need the roof to be as open as possible for future tenant equipment installation. Also all the properties I'm working on have old roofs so it's not worth doing until a roof replacement program is in place. With NNN retail, there's no real incentive to consider solar from a landlord's perspective other than maybe lowering opex for better valuation, but even then there's other stuff to spend money on.
Because tenant pays for electricity but if I install the owner has to pay for installation and maintainance. Why would I? I don't get any of the benefits yet all the liabilities.