Presentation covers the different issues in setting up a rooftop solar photovoltaic project in Ontario. Things that are addressed is what should be included in feasibility study, different levels of involvement in your project, and risks and concerns during the project set-up and construction stage.

1. Green Intelligence at your side
Rooftop Solar PV projects for
landlords and investors
What you should know
prior to meeting a solar salesman
Last Updated August, 2012

2. Agenda
• Ontario FIT2.0 program
• Property requirements for a solar PV
project
• Different ownership models – roof
lease, system ownership & ownership with
development
• An overview of project progression from
idea to commissioning
• Aspects of solar PV technology that affect
property owner – financing and taxation
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3. FIT Program Overview
• Program started with the Green Energy Act in May 2009. New
Rules were introduced in August 2012.
• Established rules under which businesses can sell to the grid
electricity produced with renewable energy generation
technologies, such as solar PV, wind, bio-energy
• Electricity is bought by the OPA on the basis of a 20-year fixed
price contract
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4. Ontario FIT Rates for PV
Project Size Rooftop, C$/kWh Ground, C$/kWh
≤10 kW 0.549 0.445
> 10 ≤ 100 kW 0.548 0.388
> 100 ≤ 500 kW 0.539 0.388
> 500 kW 0.487 0.35 (up to 5MW)
0.347 (over 5MW
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5. FIT Program Requirements
To qualify for FIT rates project must:
• Be located in Ontario
• Pass the transmission/distribution availability test
• 60% of implied project cost* should be incurred in Ontario
• Meet OPA’s size requirements per kW
* While determining compliance with domestic content requirement OPA assigns
FIT
portions of costs to project activities and materials regardless of actual costs.
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6. Site suitability
Electrical
Roof
Room
Location
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7. Suite Suitability - Roof
• Orientation
– South or South-West
• Roof space
– 40,000 sq ft => 250kW system
– Other equipment may use up roof space
• Shading
– None or very little
• Roof condition
– Membrane should last at least for 20 years (ideally)
• Structural capacity
– Roof structure must allow for additional 3-7 psf load to accommodate dead
and wind load and possible additional snow accumulation
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8. How it looks
Ballasted mounting from Unirac
Example of a penetrating mounting system
Ballasted mounting from SolarDock
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9. Costs of Roof Imperfections
• Not true south orientation
– 10o off => 0.2% less energy
– 25o off => 1.5% less energy
• Below optimal tilt (<30o)
– 20o => 2.3% less energy
– 10o => 6.3% less energy
– Flat => 12.1% less energy (may lower costs)
• Dirt & snow on panels
– Higher tilt allows for better self cleaning
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10. Site Suitability - Electrical
• Electrical room
– Space for inverter, connector box,
meter, disconnects, etc
– Equipment weight
– Equipment delivery constraints
• Sufficient distribution line to your
building
Images are property of Satcom (top) and Xantrex.
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11. Site Suitability - Location
• LDC capacity availability
– Pre-application consultation with LDC is required to determine if
project can be connected
• Local weather conditions
– Snow belt area will have higher losses than Toronto
• Air cleanliness & dirt accumulation
– You only harness the sun that gets to the panels
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12. How involved do you want to be?
Greater involvement
leads to greater: Develop & Own
the system
• Required investment
• Return on investment Own the system
• Risks
Lease
roof
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13. “Lease” Option
You invite a company to install, own and operate a solar
system on your roof and charge them fixed lease payment.
• Investment required
– No capital investment
– Legal and organisational costs, pre-application assessments
• Expected revenues:
– Around $0.5 per sq ft of used roof per year
• Risks
– Roof: Leakage, structural damage, roof traffic, conflicting use during 20 years
of contract,
– Default of your solar tenant
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14. “Own” Option
You invite a company to develop and install a system; you
collect payments for produced electricity from the OPA.
• Investment required
– Around $4,500 per kW of installed system, capital and preparation costs
• Expected revenues
– $450-500 per kW pa on a commercial scale system (100-500kW AC)
– 11% IRR (100% equity financing)
• Risks
– Roof risks, same as in “lease” option
– Performance risks, maintenance risks
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15. Owning a system:
Performance Factors
PV technology Inverter
• c-Si panels produce more kWh/sft of roof • Efficiency, Cooling, Life expectancy
• Thin film panels are more tolerant to high • Reliability, warranty, service
temperatures, but less productive
• “Shadow resistant” panel designs help System design
avoid some losses
• Losses in cables, due to panel
Mounting heating, overshadowing, service
needs, panel mismatch, etc
• Orientation: ideal is true South and 30° tilt • Need for cleaning
• Best performance tilt may be not cost • Downtime
effective due to wind load • Array capacity vs. inverter capacity
• Higher tilt => more roof space
required, lower tilt => lower wind load Local conditions
• Roof warranty and mounting warranty
• Ease of temporary relocation • Local sun access conditions
(shadow, smoke, dust, steam, etc)
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16. “Develop & Own” Option
You develop an in-house team that can procure and install
the system. The rest is the same as in Own Option.
This option is most viable for owners of multiple rooftops.
• Investment required
– Cost to setup in-house facility + per-system costs lower than in “own” option
• Expected revenues
– $450-500 per kW pa on a commercial scale system
– 11% IRR (100% equity financing) on system
• Risks
– Roof risks and Performance risks as in Own option
– Design and procurement (parts) risks
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17. Sample Project
For a 40,000 sq ft, problem-free roof one can expect:
• System size of 250kW DC
• Investments:
– Feasibility & Organizational costs - $10-30K (depending on project
complexity)
– System cost (“own” option) - $1M
• Revenues
– “Lease” revenue - $20,000 pa
– “Own” revenue - $110,000 - $120,000 pa
• Bonus for “own” option – 50% depreciation rate on solar
equipment; can used against other profits
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18. Project Progression
1. Project Assessment
– Evaluation of site suitability
– How involved do you want to be?
2. Project setup
– OPA Contract Highest impact decisions are made
at project assessment stage
– Developer Selection
– Project Financing
3. Construction & Operation
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19. Project Setup - OPA Contract
• The party that owns roof access rights should apply
for OPA contract
– The application fee is 0.5$ per kW (up to $5,000)
– Application security of $20 per kW is also required. Refundable
if project goes into construction
• LDC approval for future system is required
• Contracts are granted based on priority points
• The processing time for an application varies, with
“OPA target” of 60 days
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20. Project Setup - Developer Selection
• Free assessment is never free and never unbiased
• Look at IRR and risks; not just cost or performance
• Warranties: for roof, equipment and performance; is developer worth
the offered warranty? How is warranty going to work?
• Maintenance schedule: who, when, how
The decision you are making
will be binding for at least 20 years
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21. Project Financing
• Debt and equity financing is available from different
sources
• CEPP Funding for Ontario organizations can be used
to cover soft costs
• Bank loans may be obtained only for projects using
bankable equipment
– Banks will typically finance up to 70% of cost for projects that
meet their criteria
– Will require adequate project structure and documentation
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22. Other Aspects of Project Setup
• Internal team set-up
– Technical and technology advisors
– Legal advisor
– Financial advisor
• Establishing project schedule and its impact on other
activities
• DBF or DBFM approach
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23. Construction – Major Concerns
• Who is responsible for damages to roof? To system?
– Cooperation with roofing company
• Permitting and unexpected fees
• Construction financing
• Interference with primary business
– Length of construction
– Scheduling
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24. Operation – Major Concerns
• Roof warranties during operation
– Cooperation with roofer during construction
• Roof repairs
– Contractual provisions
• System repair and maintenance
– Defined maintenance plan
– Problem response – timing & warranties
– Value of monitoring system
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25. Taxation Considerations
• Income tax
– System costs are subject to 50% depreciation
– In some cases depreciation can be used against other
income
• Property taxes
– System should be treated as “equipment”
– Rooftop PV should not affect property taxes
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26. Conclusion
For a landlord a solar PV project should not
differ much from any other investment project:
• All investment rules apply
• No need to be a pro in solar to benefit from it
• To maximize return – stay within core competence and
assign direct solar risks to solar developer, who can
manage them at a lower cost
When done right, solar PV
investment is like bond,
but with 11% IRR
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27. Questions
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