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— Property Management Quarterly — July 2016
C
ommercial property own-
ers throughout Colorado are
turning to solar photovol-
taic systems to cut electric-
ity costs and hedge against
future utility rate increases. Coupled
with other efforts to increase a prop-
erty’s sustainability profile, solar
installations have the potential to
increase property performance and
value.
Federal and local incentives for
solar, along with recent market
trends, are driving the traditionally
high upfront costs of solar installa-
tions down, making the investment
in behind-the-meter electricity gen-
eration more palatable for commer-
cial property owners and managers.
Behind-the-meter systems are
renewable energy systems that are
custom designed and built for a
single building or facility. These sys-
tems generate electricity on site to
offset utility bills and reduce a facil-
ity’s overall carbon footprint.
In late 2015, Congress extended
the solar investment tax credit,
hailed as the United States’ most
successful public policy for solar.
The 30 percent investment tax credit
helped annual solar installations
grow by over 1,600 percent since the
program’s inception in 2006. Eligible
commercial building owners can
take the tax credit in the first year
after the installation, effectively
reducing the cost of installation by
30 percent.
Additional incentives are available
locally in Colorado. For commercial
properties in Xcel’s utility territory,
monthly incentives are available
at 15 cents per kilowatt-hour for
solar PV systems
between 10.1 kW
and 500 kW in size.
Black Hills Energy
also offers com-
mercial customers
rebates at $2 per
watt, plus renew-
able energy credit
payments of $50
per megawatt per
hour produced
throughout the
year.
Downward
market pressure
on solar panel
prices and balance of system costs
are making solar installation costs
more affordable. According to GTM
Research, a leading renewable
energy market analysis firm, overall
PV system pricing in the U.S. fell by
up to 17 percent over the course of
2015.
Financing Mechanisms
New financing tools are making
it possible for commercial prop-
erty owners to invest in solar and
building-efficiency projects with no
upfront costs. In December, Colorado
launched a statewide commercial
Property Assessed Clean Energy
program. C-PACE financing enables
commercial building owners in eli-
gible counties to finance up to 100
percent of renewable energy and
energy-efficiency project costs.
C-PACE authorizes counties to
work with private capital provid-
ers to finance qualifying property
improvement projects and to collect
payment through a special assess-
ment on a property’s tax bill with
terms up to 20 years. Commercial
loans, by contrast, typically don’t
exceed seven years. With these lon-
ger payback terms, annual energy
savings typically more than offset
assessment payments, meaning
projects generate positive cash flow
immediately with little to no upfront
capital needed. Eligible properties
include office buildings, hotels,
retail, agricultural, nonprofits, indus-
trial buildings and multifamily prop-
erties, with five or more units.
Paul Scharfenberger, director of
finance and operations at the Colo-
rado Energy Office, said that the abil-
ity to finance 100 percent of project
costs makes C-PACE unique among
financing mechanisms. Property
owners can finance soft costs, like
feasibility studies, and hard costs,
such as equipment and construc-
tion. Typically, property owners can
only finance hard costs. The end
result is that commercial property
owners utilizing C-PACE do not need
to bear any out-of-pocket costs for
these projects.
“This is particularly attractive for
small to midsize (Class B and C)
building owners who often lack the
capital budget for capital-intensive
equipment upgrades, yet have pent-
up demand to modernize their
building,” said Scharfenberger.
With better financing terms
through C-PACE and no out-of-pock-
Sustainability
Cynthia
Christensen
Director,
commercial sales,
Namasté Solar,
Boulder
Namasté Solar
Namasté Solar teamed with Unico Properties to design and construct a 496-kilowatt
roof-mounted solar array at Harlequin Plaza. The two roof-mounted arrays were
designed to have a low profile so that the system would not be seen from below.
