No upfront costs for installing rooftop system.
Through a third-party financing model called a Power Purchase Agreement, or PPA, GeoGenix and its PPA partner will cover 100 percent of the cost of installing a rooftop solar system, as wells as install, operate and maintain the system.
The clean energy generated from the system is sold back to the tenants of the facility at a discount of up to 40 percent off retail electricity rates. Rates are protected with a 2 to 3 percent fixed escalator clause, or scheduled increase in rates over a period of time. After 15 years, customers will assume ownership of the system, thus receiving free electricity for the remainder of the system's life, which is more than 25 years.
"This is a great way for commercial property owners to enjoy the benefits of solar without any upfront cost or risk," said Gaurav Naik, principal of GeoGenix.
"Because electricity prices are locked in, customers know exactly what they have to pay and don't have to worry about utility rate hikes. Also, since the PPA provider handles the SRECs [Solar Renewable Energy Certificates] there is no uncertainty about fluctuating SREC prices." SRECs are a performance-based financial incentive representing the environmental benefits of solar, each of which is the equivalent of 1,000 kilowatt-hours of electricity. SRECs are financial instruments that are purchased by utilities from solar producers such as homeowners and businesses in order to meet a state-mandated requirement for the generation of electricity from solar sources.
Due to a current surplus in the New Jersey SREC marketplace, the prices of SRECs have recently declined, which has made it difficult for system owners to calculate the payback periods for systems and to finance projects, Naik said.
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|Comment:||No upfront costs for installing rooftop system.|
|Publication:||Real Estate Weekly|
|Date:||Apr 25, 2012|
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