Lease Your Roof for the Solar Energy Revolution

By Bruce Allen, Miller-McCune.com. Posted February 2, 2009.

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.

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