Lease Your Roof for the Solar Energy Revolution

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

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.

See more stories tagged with: global warming, climate change, renewable energy, clean energy, solar

Liked this story? Get top stories in your inbox each week from Environment! Sign up now »