In the realm of renewable energy, Community Solar is emerging as a beacon of sustainability and accessibility. This model democratizes solar power, extending its benefits to renters, homeowners, businesses, and communities at large. From the vantage point of a commercial real estate owner, Community Solar presents a unique opportunity to bolster property value by increasing net operating income, and contribute positively to the environment.
Community Solar, also known as shared solar or a solar garden, enables multiple participants to benefit from a single solar array. Participants subscribe to a portion of the solar project's output and receive credits on their electric bills. Commercial real estate owners receive roof lease revenue from solar developers who own, operate, and maintain the system. This non-CapEx solution for real estate owners is a win for all parties involved.
1. Diversification of Revenue Streams
For commercial real estate owners, integrating Community Solar into properties introduces a new revenue stream. By leasing portions of their land or rooftops to solar developers, landlords can earn consistent income without the responsibilities associated with managing solar installations themselves. This diversification can enhance financial stability and offset operational costs.
2. Tenant Attraction and Retention
Access to clean energy through Community Solar can be an attractive feature for tenants. In an era where sustainability is increasingly prioritized, properties equipped with renewable energy solutions stand out in the market. Solar demonstrates a landlord’s commitment to environmental stewardship, potentially attracting environmentally conscious tenants and fostering tenant loyalty. In certain markets, tenants can even purchase some of the power if they’re interested in doing so.
3. Property Value Enhancement
Investing in Community Solar can add significant value to your property. (See our “Could Solar Be the Valuation Game-Changer You Need” blog.) Studies have shown that solar-equipped properties tend to command higher resale values and attract a wider pool of prospective buyers or renters. The presence of Community Solar infrastructure enhances the property's appeal, contributing positively to its marketability and long-term appreciation.
4. Environmental Responsibility: ESG Goals
Participating in Community Solar aligns with the growing emphasis on corporate social responsibility and environmental sustainability. Commercial real estate owners can showcase their commitment to reducing carbon footprints and mitigating climate change by facilitating access to clean energy for their tenants. This not only resonates with environmentally conscious individuals but also enhances the property's reputation within the community.
While the benefits of Community Solar for commercial real estate owners are compelling, certain challenges must be navigated, and this is where SolarKal’s expertise saves time and money and ultimately leads to more successful projects.
SolarKal recently secured 12 MW of New Jersey Community Solar for our clients. Considering how competitive the New Jersey program is, this is no small feat. With over 100 MW of Community Solar projects being developed, SolarKal is truly an expert in the field. Let’s look at where our experience makes an impact.
Regulatory Hurdles: Navigating regulatory frameworks and utility policies governing Community Solar projects can be complex. SolarKal’s experienced advisors can help landlords navigate these intricacies effectively.
Financial Considerations: Assessing the commercial viability of Community Solar projects, including key contractual terms, project timeline, and property-specific nuances is crucial. Your SolarKal advisor will analyze these factors to ensure that the project aligns with your objectives and yields satisfactory returns.
Building Operations: Ensuring the solar installation does not impact the building’s operations is key to a successful project. Educating tenants under the roof on the project is key, as is coordinating with the installer on the on-site mobilization. SolarKal regularly assists with this process.
Evolving Policy: State regulatory policies have a major impact on the growth of Community Solar. These policies lead to local Community Solar programs that vary by state and often include complex rules. They’re also competitive due to limited capacity. SolarKal is an expert in navigating these programs and securing program allocations. We keep up to date on evolving policy, monitoring developments as they pertain to our national commercial real estate clients’ needs.
New York, New Jersey, Illinois, Massachusetts, Maryland, Connecticut and Rhode Island offer the best roof lease rates per square foot. Roofs 100,000 square feet and greater have the most potential, but every market is unique, so SolarKal analyzes each property closely to determine its possibilities.
States to watch include: California, Pennsylvania, and Virginia, with all eyes focused on the California Public Utilities Commission’s upcoming Community Solar program rulemaking. Pennsylvania’s Community Solar bill was recently approved by the House of Representatives. If the bill passes the Senate and gets signed into law, it could open up a massive opportunity for Community Solar.
1. Know the deadlines. Every state has different application deadlines and may even hit capacity before deadlines. It’s important to start the process early.
2. Be conscious of interconnection requirements. Some programs require utility interconnection approval. These approvals can take months.
3. Understand your lease agreement. Take the time to understand the commercial terms of your lease agreement. Make sure you’re getting market terms and a fair lease payment.
From a commercial real estate owner's perspective, Community Solar represents more than just a renewable energy solution—it's a strategic investment in the sustainability, profitability, and resilience of their properties. By embracing Community Solar initiatives, commercial real estate owners can position themselves as leaders in the transition to a clean energy future while reaping tangible economic and environmental rewards. As the renewable energy landscape continues to evolve, proactive engagement with Community Solar presents a pathway toward a brighter, more sustainable tomorrow for commercial real estate owners and their tenants alike.
