Menus Subscribe Search

Follow us


Leasing America’s Rooftops for Solar Energy

• January 27, 2009 • 5:53 PM

Analysis: Massive solar projects are sexy but bring a raft of land-use, technical and distribution headaches with them. Perhaps tapping America’s roofs could provide some cover.

Solar power, always a popular subject but a tiny piece of America’s energy puzzle, could be looking up — literally — as power drawn from America’s roofs could provide juice without the carbon, trade balance and security concerns of fossil fuels and the huge upfront costs and land-use hassles of bigger solar projects.

Permitting delays for large photovoltaic projects (where sunlight hits silicon chips and creates electricity) are likely to disrupt an industry endeavoring to grow at 50 percent a year. Meanwhile, electricity from large solar thermal farms (in which sunlight heats water to turn electrical-generating turbines) need a vastly upgraded power grid to deliver the power they produce in remote areas to the nation’s cities. A solar acreage land rush is now in full swing in the Southwest.

But there’s a partial way around such regulatory and infrastructure bottlenecks. Rooftop solar installations — putting photovoltaic systems on the roof of your workplace or even your home — have few regulatory impediments and drip into the grid from a lot of points instead of gushing in from one massive operation.

Lots of small feeds could result in a big gain: In a 2005 study, Navigant Consulting estimated up to 710,000 megawatts of solar electricity generation capacity in the U.S. (or 75 percent of the nation’s consumption) if every viable residential and commercial rooftop was utilized. (One megawatt is roughly the amount of juice needed for 1,000 U.S. homes.)

“This study shows that the available rooftop area can provide enough space to power a significant portion of U.S. electricity needs,” Navigant’s director Lisa Frantzis was quoted at the time. That’s a best-case scenario, of course. In a 2008 report on market penetration of rooftop solar conducted for the National Renewable Energy Laboratory, Navigant estimated a more modest 2,000 to 4,000 megawatts by 2015. (It also predicts six times that if the right incentives — like the Department of Energy’s Solar America Initiative — were put in place.)

First Obstacle: It’s Expensive
The cost of buying and installing solar cells are, however, a significant barrier to building owners investing in rooftop solar electricity. Still, new financing options are opening up, with solar power purchase agreements, or PPAs, solar leasing and solar financing districts increasing the options available to property owners.

Greentech Media forecast in early 2008 that PPAs — “in which companies pay the upfront costs of solar-power projects in exchange for a contract requiring the customer to buy the resulting electricity” — will drive 75 percent of commercial and industrial solar system sales by 2009, up from 10 percent in 2005. Residential solar lease financing is also beginning to gain traction in the United States.

In California and several other states, cities and counties can create energy finance districts for commercial and residential solar system purchases with loan payments made through 20-year property tax assessments.

Despite not renewing tax credits for renewable energy technology in the 2007 energy bill, tax credits and incentives are still an important component of solar photovoltaic economic viability in the U.S. and most other countries. Congress did pass the Expanded Federal Solar Investment Tax Credit in late 2008.

Some of its incentives for solar electric installations, including rooftop photovoltaic systems, include extending (for eight years) a 30 percent tax credit for residential and commercial solar systems, eliminating the $2,000 limit for residential solar electric installations, and authorizing $800 million for clean energy bonds.

How Much Am I Bid for This Shingled Beauty?
To accelerate solar energy investments, I have proposed creating an auction exchange market connecting solar integrators and building owners, which would be expected to drive market efficiencies and speed adoption of solar rooftop leasing.

Real estate exchange markets have existed for centuries. More recently, auction markets for the buying and selling of CO2 carbon credits are developing in the U.S. and have existed for several years in Europe.

As more buildings are offered up for solar leasing, marketplace liquidity should expand in much the same way as eBay and Alibaba’s exchange liquidity has expanded. Alibaba.com is the world’s largest business-to-business e-commerce company. It connects millions of online business buyers and suppliers around the world every day.

MMA Renewable Ventures is one of the early innovators of solar PPAs, and by the end of 2008, it expects to own and operate more than 40 megawatts of solar PPAs. MMA’s purchase-power-agreement-financed projects include a 14-megawatt Nellis Air Force Base system (until recently, the largest photovoltaic system in the Unites States), and a 2-megawatt project at Denver International Airport.

Rooftop leasing and PPAs solve many of the barriers to a building owners’ decision for committing rooftop square footage to a photovoltaic system. In addition, “solar integrators” — resellers who also act as middlemen between manufacturers, installers, government and property owners — have far better technical expertise, purchasing and installation economies of scale than most building owners and can be expected to find a welcoming niche if rooftop solar takes off.

By installing their wares on some roofs and keeping the energy provided (making it worth the property owner’s while by providing them cut-rate power), rooftop leasers have made the crushing upfront costs bearable for small businesses and residential owners.

Local and state governments are adopting solar electricity PPAs as well.

In California, the city of Santa Barbara (home of Miller-McCune) recently leased city-owned building rooftops for a 330-killowatt photovoltaic system under a 20-year PPA. The project was required to meet the aesthetic standards of Santa Barbara’s historic downtown area while providing power to service the equivalent of 1,040 area homes.

According to Mayor Marty Blum, “We are quite pleased with the project’s success and have plans to develop a similar project at the Santa Barbara Airport which will also provide shade for the airport’s long term parking lot.”

The California-based company Solar City, the state’s top residential solar power provider according to California’s Public Utilities Commission, is rapidly growing the leasing approach for homeowners. “Thanks to new financing options, rebates and tax credits, an investment in solar power delivers a better, more predictable return than most other investments available today,” Solar City’s CEO, Lyndon Rive, said in a press release as the Bay Area municipality Foster City earlier this month announced an ambitious residential solar program called 1 Block Off the Grid.

“One of the industry’s greatest challenges,” Rive added, “is making more people aware of these benefits.”

The numbers bear him out. The U.S. has only 40,000 solar electric homes, which have primarily been direct purchases.
Through solar leasing and PPA arrangements, building owners get guaranteed electricity at lower rates and little or no money down while making productive use of otherwise idle rooftop space. Nearly all performance, reliability, maintenance and financial risks shift to the solar integrator.

Rooftop leasing could also significantly increase the number and density of buildings that become electricity generators in urban areas. In addition, higher urban solar-building densities would take the load off generators located outside city limits, making more daytime spare transmission-grid capacity available and, in theory, limiting summertime power grid overloads.

In March 2008, ProLogis, the world’s largest owner of distribution facilities, entered into an agreement to lease roof space to Southern California Edison, the largest electric utility in California, as a part of the utility’s new solar power program. ProLogis owns 180 distribution facilities in SCE’s territory, covering 41 million square feet.

“This project has the potential to become a breakthrough solar energy program,” said Jeffrey H. Schwartz, the chief executive officer of ProLogis.

SCE is planning to complete 50 megawatts of solar panel installations each year in its service area, for a total of 250 megawatts. Individual installations are expected to generate 1 to 2 megawatts per system.

Solar Installation Costs Continue to Decline
Along with decreasing photovoltaic panel costs, installation costs are decreasing rapidly for rooftop systems due both to innovation and scale. These cost reductions will serve to increase the net present value of a building by making the roof photovoltaic systems’ electricity more competitive and increasing the available profit over the lifetime of the leases.

An example of innovation at work in rooftop installation cost reduction is Solyndra Inc. For commercial low slope roofs, Solyndra has developed thin-film CIGS (copper indium gallium (di)selenide) photovoltaic tubular panels that require no roof penetrations, lay completely flat and reduce installation costs by up to 50 percent. And, module installation time is as little as one day. The tubular design makes the panels relatively efficient even when the sun isn’t directly overhead.

In November 2008, Solyndra signed a long-term sales contract with Carlisle Energy Services to supply thin-film panels worth up to $320 million, bringing their total order backlog to more than $1.5 billion.

Other companies are looking to put solar generation directly into building materials.

Ascent Solar for example, is developing thin-film building-integrated photovoltaics that can sheath building exteriors in solar cells using materials like Ascent’s thin-film PV aluminum siding.

There are clouds on the horizon, however, in particular, the boom-and-bust nature of the solar industry.

“Constraints along the PV supply chain (such as the current silicon shortage) could result in higher module prices or constrained supply, thus decreasing market penetration,” Navigant wrote in the 2008 NREL study. “In addition, significant international demand could draw supply away from the U.S. market, thus decreasing U.S. market penetration.” In addition, the base of skilled workers able to install rooftop solar is limited, although how the financial crisis and the federal stimulus and green jobs goals impact that remains to be seen.

Polysilicon prices have recently dropped to $200 per kilogram from $475 earlier in 2008. Jeff Osborne of Thomas Weisel Partners estimates that polysilicon prices will drop below $100 by the end of 2009 and to a range of $50 to $80 in 2010.

By the end of this year, the Chinese firm LDK is set to become the world’s largest solar photovoltaic wafer supplier with a planned capacity of 2 gigawatts, with a 3.2-gigawatt capacity planned for 2010.

Eventually entire sun exposed commercial building exteriors can be leased for solar electricity generation, thereby generating revenue for building owners, minimizing their investment risk and increasing the value of their sun-exposed properties.

As photovoltaic panel and installation costs continue to decline, expect new forms of lease financing and PPAs will contribute significantly to accelerating the shift to solar electricity globally.

Sign up for our free e-newsletter.

Are you on Facebook? Become our fan.

Add our news to your site.

Bruce Allen
Bruce Allen has worked as a physicist, inventor, and project manager over the past 25 years primarily in spacecraft technology development. He also is currently a writer focused on solar, electric vehicle and national energy policies. He lives in Santa Barbara, Calif.

More From Bruce Allen

A weekly roundup of the best of Pacific Standard and PSmag.com, delivered straight to your inbox.

Recent Posts

October 24 • 4:00 PM

We Need to Normalize Drug Use in Our Society

After the disastrous misconceptions of the 20th century, we’re returning to the idea that drugs are an ordinary part of life experience and no more cause addiction than do other behaviors. This is rational and welcome.


October 24 • 2:00 PM

A Letter to the Next Attorney General: Fix Presidential Pardons

More than two years ago, a series showed that white applicants were far more likely to receive clemency than comparable applicants who were black. Since then, the government has spent hundreds of thousands of dollars on a study, but the pardons system remains unchanged.


October 24 • 12:00 PM

What Makes You So Smart, Middle School Math Teacher?

Noah Davis talks to Vern Williams about what makes middle school—yes, middle school—so great.


October 24 • 10:00 AM

Why DNA Is One of Humanity’s Greatest Inventions

How we’ve co-opted our genetic material to change our world.


October 24 • 8:00 AM

What Do Clowns Think of Clowns?

Three major players weigh in on the current state of the clown.


October 24 • 7:13 AM

There Is No Surge in Illegal Immigration

The overall rate of illegal immigration has actually decreased significantly in the last 10 years. The time is ripe for immigration reform.


October 24 • 6:15 AM

Politicians Really Aren’t Better Decision Makers

Politicians took part in a classic choice experiment but failed to do better than the rest of us.


October 24 • 5:00 AM

Why We Gossip: It’s Really All About Ourselves

New research from the Netherlands finds stories we hear about others help us determine how we’re doing.


October 24 • 2:00 AM

Congratulations, Your City Is Dying!

Don’t take population numbers at face value.


October 23 • 4:00 PM

Of Course Marijuana Addiction Exists

The polarized legalization debate leads to exaggerated claims and denials about pot’s potential harms. The truth lies somewhere in between.


October 23 • 2:00 PM

American Companies Are Getting Way Too Cozy With the National Security Agency

Newly released documents describe “contractual relationships” between the NSA and U.S. companies, as well as undercover operatives.


October 23 • 12:00 PM

The Man Who’s Quantifying New York City

Noah Davis talks to the proprietor of I Quant NY. His methodology: a little something called “addition.”


October 23 • 11:02 AM

Earliest High-Altitude Settlements Found in Peru

Discovery suggests humans adapted to high altitude faster than previously thought.


October 23 • 10:00 AM

The Psychology of Bribery and Corruption

An FBI agent offered up confidential information about a political operative’s enemy in exchange for cash—and they both got caught. What were they thinking?


October 23 • 8:00 AM

Ebola News Gives Me a Guilty Thrill. Am I Crazy?

What it means to feel a little excited about the prospect of a horrific event.


October 23 • 7:04 AM

Why Don’t Men Read Romance Novels?

A lot of men just don’t read fiction, and if they do, structural misogyny drives them away from the genre.


October 23 • 6:00 AM

Why Do Americans Pray?

It depends on how you ask.


October 23 • 4:00 AM

Musicians Are Better Multitaskers

New research from Canada finds trained musicians more efficiently switch from one mental task to another.


October 22 • 4:00 PM

The Last Thing the Women’s Movement Needs Is a Heroic Male Takeover

Is the United Nations’ #HeForShe campaign helping feminism?


October 22 • 2:00 PM

Turning Public Education Into Private Profits

Baker Mitchell is a politically connected North Carolina businessman who celebrates the power of the free market. Every year, millions of public education dollars flow through Mitchell’s chain of four non-profit charter schools to for-profit companies he controls.


October 22 • 12:00 PM

Will the End of a Tax Loophole Kill Off Irish Business and Force Google and Apple to Pay Up?

U.S. technology giants have constructed international offices in Dublin in order to take advantage of favorable tax policies that are now changing. But Ireland might have enough other draws to keep them there even when costs climb.


October 22 • 10:00 AM

Veterans in the Ivory Tower

Why there aren’t enough veterans at America’s top schools—and what some people are trying to do to change that.


October 22 • 8:00 AM

Our Language Prejudices Don’t Make No Sense

We should embrace the fact that there’s no single recipe for English. Making fun of people for replacing “ask” with “aks,” or for frequently using double negatives just makes you look like the unsophisticated one.


October 22 • 7:04 AM

My Politicians Are Better Looking Than Yours

A new study finds we judge the cover by the book—or at least the party.


October 22 • 6:00 AM

How We Form Our Routines

Whether it’s a morning cup of coffee or a glass of warm milk before bed, we all have our habitual processions. The way they become engrained, though, varies from person to person.


Follow us


Politicians Really Aren’t Better Decision Makers

Politicians took part in a classic choice experiment but failed to do better than the rest of us.

Earliest High-Altitude Settlements Found in Peru

Discovery suggests humans adapted to high altitude faster than previously thought.

My Politicians Are Better Looking Than Yours

A new study finds we judge the cover by the book—or at least the party.

That Cigarette Would Make a Great Water Filter

Clean out the ashtray, add some aluminum oxide, and you've (almost) got yourself a low-cost way to remove arsenic from drinking water.

Love and Hate in Israel and Palestine

Psychologists find that parties to a conflict think they're motivated by love while their enemies are motivated by hate.

The Big One

One company, Amazon, controls 67 percent of the e-book market in the United States—down from 90 percent five years ago. September/October 2014 new-big-one-5

Copyright © 2014 by Pacific Standard and The Miller-McCune Center for Research, Media, and Public Policy. All Rights Reserved.