2016 solar business opportunity

2016

John Freeborn

FDG Global, LLC.

Solar Business Opportunities


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Table of Contents

Page 3 Industry Overview

Page 4 Specific Industry Sectors to Consider

Page 6 Sample Industry Competitors

Page 10 Basic Industry Terminology/Industry Leaders

Page 14 Next Generation Solar/NREL Update

Page 16 Overview of Angel Investing

0 Attachment-A: Feed in Tariffs

Page 26 Attachment-B: Who Benefits from SRECs

Page 32 Attachment C: Primer in Solar Rooftop Leasing

Page 40 Rooftop Lease Application Example

Page 41 About the Author

Cover photographs are courtesy of the U.S. Department of Energy.

This report was prepared for the general use of public information. Neither FDG Global, LLC., the Author

John Freeborn, the United States government or any agency thereof, nor any of their employees, makes

any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy,

completeness, or usefulness of any information, apparatus, product, or process disclosed, or represents

that its use would not infringe privately owned rights. Reference herein to any specific commercial

product, process, or service by trade name, trademark, manufacturer, or otherwise does not necessarily

constitute or imply its endorsement, recommendation, or favoring the United States government or any

agency thereof. The views and opinions of the author(s) expressed herein do not necessarily state of

reflect those of the United States government or any agency thereof.


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The market for solar products in the US (up 80% over next 18 months), Japan, China,

India, Germany, Italy, UK continue to grow. Worldwide - demand for solar installations was

up more than 9% last year ... and it appears to continue on this path.

A business will only survive if it has customers that want what you provide.

According to various research reports, up to 94% of the people in America like the idea of

solar energy and helping to save the planet – so that means there are a lot of potential

customers.

So – what are people willing to pay for? The answer again seems to be – anything solar.

Business Overview:

For the first time ever, solar beat out natural-gas

capacity additions, with solar supplying 29.5 percent

of all new electric generating capacity in the U.S. in

2015.

Led by California, North Carolina, Nevada,

Massachusetts and New York, the U.S. solar market

experienced a year-over-year growth rate of 17

percent. Geographically, the market continues to

diversify with 13 states installing more than 100

megawatts each in 2015. States that made major

solar strides include Utah, which jumped in the

rankings from 23rd to 7th place, and Georgia, which

moved from 16th to 8th in the nation.

The residential solar market grew 66 percent year-

over-year and, for the first time in history, eclipsed

the 2-gigawatt mark. The residential solar segment

now represents 29 percent of the entire U.S. solar

market -- its largest share since 2009.

For the fourth year in a row, the non-

residential market broke the 1-

gigawatt mark, but remained roughly

flat year-over-year.

The utility-scale sector, the mainstay

of the U.S. solar market, grew 6

percent year-over-year and

represented more than half of all solar

PV installed in 2015.

Cumulative U.S. solar PV installations

have now topped 25 gigawatts, up from just 2 gigawatts in 2010.


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Specific Industry Sectors to Consider:

1. Sell Products – Billions of dollars of solar PV, solar thermal systems, solar attic fans,

solar cooling systems, etc. are sold each year not to mention all the component parts

required to build and operate such installations. Add solar lights, solar gadgets, solar

rechargers, and a growing list of related products and you have a lot to choose from.

2. Be a Distributor – As more and more manufacturers of products emerge – they need

distributors to get the products to the market. A company in Asia that produces technology

that helps solar systems produce more electricity (2 to 5 times), helps reduce electrical

consumption in your home (meaning you won't need to add as many solar panels), the low

cost solar street lights (with 5 day battery backup), solar backup generators and much more

… they will be looking to build a network of distributors to develop customers for their

products.

3. Develop & Own Solar Projects – With Solar Energy – anybody can become a solar

developer. Find a good location, put together a team of experts, develop a good business

plan, raise the money, build your project – use your experience and completed projects to

leverage yourself into other solar projects.

4. Sell After Market Products – There are products that can be sold to people who

already have solar installations to increase their yields, reduce the need for cleaning, etc.

5. Sell 3rd Party Provided Services - Besides selling products, you can also sell

services provided by other companies – such as solar insurance products, solar cleaning,

solar financing, etc.

6. Invent Solar Products – There's a whole bunch of new solar products being

developed. Need an idea? Take a look at any existing product that needs power to

operate. For example solar powered cooling systems.

7. Find Niches – Take what someone is successfully doing in one market – and do it in

your local market, or apply it to a niche market like (e.g., solar for RV vehicles, solar

products for boats, solar products for recreational users, solar powered agricultural

buildings, government, mobile apps for people interested in solar energy, etc.). There are a

lot of opportunities.

8. Produce Informational Products – With everything going on in the solar industry –

there is a strong demand for good quality information. If you are good at research –

consider producing research reports, how to ebooks, instructional videos, solar training

classes, the list of things you can make is limited only by your imagination.

9. Produce Financial Products - Set up a financial company – and offer specific

financing products – such as solar construction financing, long term solar project financing,

joint venture financing, provide angel financing, acquire solar projects, etc. There are a

growing number of private investment groups that do just this.

10. Independent Solar Consultant – A lot of people would like to know if it makes

sense to install solar on their property, and could benefit from a professional opinion that

looks at the various options and guides them through the entire process.

11. Solar Panel Cleaning – Clean solar panels produce more electricity than dirty panels

– and many customers would prefer to hire somebody to keep their solar panels clean

rather than clean them themselves, especially if the panels are located on their roofs.


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Specific Industry Sectors to Consider: Continued

12. Financing Consultant – Solar installations are expensive, and there are a lot of

different government programs out there. Also – some banks will lend money for solar

installations – so why not provide your services to help clients find the money they need to

build their projects. Just as there are mortgage brokers – why not create your own "solar

brokerage service.

13. Solar Appraisal – Just as there are real estate appraisals, a "solar appraisal

business" is needed to assess the value of a solar array on a property for sale … or the

future potential of adding a solar installation on an building.

14. Solar Repairs – Solar systems last a long time – but some maintenance is required

from time to time, especially on older systems that might need to be upgraded with new

inverters, wiring replaced, storm damage repairs, etc.

15. Start a Job Placement Service - On the one hand you have a lot of companies in

the solar industry that need to hire people … and on the other, you have a lot of people who

would like to work in the solar industry. A solar job placement service can offer tips and

advice to employers and job seekers alike.

16. Start a School - Have a skill already – like knowing how to install solar panels or

solar heaters – teach others. There is a big demand for skilled workers – and you can

provide training (either online … or hands on). There is a growing need for skilled

installers.

17. Start a Non-Profit - You don't have to be limited to for profit ideas – there are a

number of non-profit solar business opportunities. For example, you can start a foundation

to help bring solar energy to people in need, advocate the adoption of FIT programs in your

state, promote solar energy awareness in your community, promote greater awareness of

vitamin D to help prevent disease, raise money for installing solar systems in developing

countries, etc.

18. Nutritional Advice - A very high percentage of the population is vitamin D deficient

– and so there is a great need for vitamin D awareness, testing, counseling, vitamin D

supplements, etc.

19. Solar Broker - There is a growing market for companies looking to acquire and

develop portfolios of solar projects (at least in Europe). Typically, they will buy FIT eligible

projects that are connected to the grid – but in some cases you can also sell "shovel ready"

solar projects with permits.

20. Energy Auditor - Another service that is growing in demand is to conduct energy

audits and make recommendations how people can reduce their electrical consumption.


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Following are sample competitors in the solar distribution and private-commercial kits:

http://symtechsolar.com/pv-solutions/

Symtech Solar

Our Company

Symtech Solar is an American renewable energy company that develops, produces, and delivers the world’s most complete and cost-effective photo voltaic solar energy solutions. With an established and proven track-record, and a highly experienced management team Symtech Solar has created multiple product lines designed for specific solar energy installations and applications, including industry leading PV kits. The use of PV kits designed by Symtech Solar yields cost and time savings by offering users an all-in-one product, thus eliminating the need for the customer to deal with multiple manufacturers and suppliers. Our innovative packaging solution (SymPack Technology) offers our clients an easier and faster way to carry out their solar businesses.

Furthermore, our in house engineering and product development team ensure that every PV system is fully compatible for turnkey installations, which are manufactured under Symtech Solar’s quality standards in its assembly facility. Symtech Solar strives to provide leading solar energy solutions by offering install-ready PV system packages that can be drop shipped throughout the world.

Our Vision

To simplify the solar energy experience.

Our Mission

To innovate by providing easy to use renewable energy products to an all-sustainable world.

Our Product Lines

Symtech Solar offers more than 5 different PV kits product lines with multiple design configurations and a variety of component characteristics. Symtech’s ability to provide such flexibility creates a clear difference amongst its competitors and has proven to be an attractive and innovative choice within the Solar Industry. Our Solar PV Kits are carefully selected and designed for compatibility, then packaged together for a single shipment. Our added value is created by offering pre-engineered solar energy systems (kits) that reduce the time and money required in the design, purchasing, and logistics of solar energy systems. Our specialized kit packaging allows our Partners to safely and efficiently receive a complete turnkey (ready to install) PV system.

Many of our PV Kits are shipped in an all-in-box configuration. Every Symtech Solar’s product line is offered, designed or engineered with the customer in mind. Optimum flexibility in mounting systems, electrical layouts, and component certifications ensure each and every system delivered meets or exceeds your expectations.

http://symtechsolar.com/pv-solutions/

http://symtechsolar.com/pv-solutions/residential-on-grid/


http://symtechsolar.com/pv-solutions/commercial-on-grid/


http://symtechsolar.com/pv-solutions/hybrid/


http://symtechsolar.com/pv-solutions/off-grid/


http://symtechsolar.com/pv-solutions/solar-carports/


http://symtechsolar.com/pv-solutions/solar-water-pumps/


http://symtechsolar.com/pv-solutions/solar-street-lights/










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Why GoGreenSolar.com?

We're experienced solar veterans, packaging solar kits since 2006. Our work has been featured on

CBS, USA Today, and we've earned a GSA contract with the Federal Government. More than just

supplying parts, we also provide value-added services including designs, permitting, and

interconnection. Choose us for a complete end-to-end experience - we help you every step of the way

until you're generating free energy from the sun!

Purchase Solar Parts & Components

Just looking for parts? No problem. We have the widest selection of parts at the best prices possible.

Click your category below to start browsing.

Micro Inverter Kits String Inverter Kits Solar Permitting

Solar Panels Grid-Tie Inverters Racks & Mounts

http://www.gogreensolar.com/collections/micro-inverter-solar-panel-kits

http://www.gogreensolar.com/collections/string-inverter-solar-panel-kits

http://www.gogreensolar.com/products/solar-permitting-service

http://www.gogreensolar.com/collections/solar-panels

http://www.gogreensolar.com/collections/grid-tie-inverters

http://www.gogreensolar.com/pages/ironridge-racking-roof-mount

http://www.gogreensolar.com/collections/micro-inverter-solar-panel-kits

http://www.gogreensolar.com/collections/string-inverter-solar-panel-kits

http://www.gogreensolar.com/products/solar-permitting-service

http://www.gogreensolar.com/collections/solar-panels

http://www.gogreensolar.com/collections/grid-tie-inverters

http://www.gogreensolar.com/pages/ironridge-racking-roof-mount


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Civic Solar now offers a commercial solar solution for less than $1.00 per Watt.

This is a best-in-class product mix that you can proudly display on every flat

rooftop. The value of this package goes well beyond the quality of products

included and the competitive pricing. CivicSolar has chosen a robust selection of

products and engineered a turnkey solution that will make it easier for you to do

business.

This commercial solution includes:

• Jinko Solar Panels – 315 Watt, 72 Cell Modules

• Huawei Inverters - 25 or 30 kW Three-phase, Grid Tied 1000 VDC 480 / 277

VAC Inverters

• Aerocompact Ballasted Roof-Mounted Racking

• CivicSolar Design & Engineering

We are very excited to offer you this package deal at an unmatched price.

CivicSolar continuously strives to empower our solar installer partners and turn

our strategic position in the market into your success.


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ADDITIONAL LINKS:

http://www.wholesalesolar.com/

http://straightupsolar.com/

http://www.solatube.com/

https://mysolarinstaller.com/

http://www.renvu.com/SKG

http://www.wholesalesolar.com/

http://straightupsolar.com/

http://www.solatube.com/

https://mysolarinstaller.com/

http://www.renvu.com/SKG


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Basic Industry Information: Terminology, Technology & Manufacturing

Before we start discussing the specifics of different technologies used to produce

photovoltaic cells, here are some basic terms to keep in mind:

Solar cell: is a device that converts the energy of sunlight directly into electricity by the

photovoltaic effect.

Solar Panel or Solar Module: Solar cells are wired in series and placed into a frame. The

size of the frame can vary with manufacturers … as a result of the technology used. A

protective coating on the top covers and protects (and sometimes increases the output) of

the solar cells. Any number of cells can be connected in series and most commercial

modules sold today incorporate 72 cells.

First Generation Solar Cells

Traditional solar cells are made from silicon, are currently the most efficient solar cells

available for residential use and account for around 80+ percent of all the solar panels sold

around the world. Generally silicon based solar cells are more efficient and longer lasting

than non silicon based cells. However, they are more at risk to lose some of their efficiency

at higher temperatures (hot sunny days), than thin-film solar cells.

There are currently four types of silicon based cells used in the production of solar panels

for residential use. The types are based on the type of silicon used, specifically:

1. Monocrystalline Silicon Cells

The oldest solar cell technology and still the most popular and efficient are solar cells made

from thin wafers of silicon. These are called monocrystalline solar cells because the cells are

sliced from large single crystals that have been painstakingly grown under carefully

controlled conditions. Typically, the cells are a few inches across, and a number of cells are

laid out in a grid to create a panel.

Relative to the other types of cells, they have a higher efficiency (up to 24.2%), meaning

you will obtain more electricity from a given area of panel. This is useful if you only have a

limited area for mounting your panels, or want to keep the installation small for aesthetic

reasons. However, growing large crystals of pure silicon is a difficult and very energy-

intensive process, so the production costs for this type of panel have historically are the

highest of all the solar panel types.

Production methods have improved though, and prices for raw silicon as well as to build

panels from monocrystalline solar cells have fallen a great deal over the years, partly driven

by competition as other types of panel have been produced.

Another issue to keep in mind about panels made from monocrystalline silicon cells is that

they lose their efficiency as the temperature increases about 25˚C, so they need to be

installed in such a way as to permit the air to circulate over and under the panels to

improve their efficiency.


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The following is a list of the leading companies that produce and offer monocrystalline solar

panels (we are in the process of building this database so please check back periodically.

Suntech Power is the worlds largest producer of crystalline solar panels, with more than

10 million PV panels sold in over 80 different countries.

SunPower produces the most efficient monocrystalline solar panels available. They also

offer all black panels (no visible metal strips), inverters and monitors.

Transform Solar produces a revolutionary new thin monocrystalline panel that is heat

resistant, even produces in conditions of partial shading, and is highly reliable. It also uses

just a fraction of the silicon to produce the same high levels of efficiency.

JA Solar is the largest producer of monocrystalline and polycrystalline solar cells, which it

sells to other solar module manufacturers. It also produces its own PV solar panels that it

sells primarily in China through its own solar development company Yangzhou Engineering.

2. Polycrstalline Silicon Cells

It is cheaper to produce silicon wafers in molds from multiple silicon crystals rather than

from a single crystal as the conditions for growth do not need to be as tightly controlled. In

this form, a number of interlocking silicon crystals grow together. Panels based on these

cells are cheaper per unit area than monocrystalline panels - but they are also slightly less

efficient (up to 19.3%).

Common brands of panels made up of polycrystalline modules include:

SunTech Power

BP SX (formerly Solarex)

Canadian Solar

Jaiwei

Kyocera

Luxor

Mitsubishi Electric

Quantum Solar

Schott, Sharp

Sunenergy

Tenesol

Trina Solar

Yingli

Yohkon

Note: Many of the leading firms make both monocrystalline and polycrystalline solar cells for

their panels.


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3. Amorphous Silicon Cells

You probably never thought about it before, but most solar cells used in calculators and

many small electronic devices are made from amorphous silicon cells.

Instead of growing silicon crystals as is done in making the two previous types of solar cells,

silicon is deposited in a very thin layer on to a backing substrate – such as metal, glass or

even plastic. Sometimes several layers of silicon, doped in slightly different ways to respond

to different wavelengths of light, are laid on top of one another to improve the efficiency.

The production methods are complex, but less energy intensive than crystalline panels, and

prices have been coming down as panels are mass-produced using this process.

One advantage of using very thin layers of silicon is that the panels can be made flexible.

The disadvantage of amorphous panels is that they are much less efficient per unit area (up

to 10%) and are generally not suitable for roof installations you would typically need nearly

double the panel area for the same power output. Having said that, for a given power

rating, they do perform better at low light levels than crystalline panels - which is worth

having on a dismal winter's day, and are less likely to lose their efficiency as the

temperature climbs.

However, there flexibility makes them an excellent choice for use in making building

integrated PV (e.g., roofing shingles), for use on curved surfaces, or even attached to a

flexible backing sheet so that they can even be rolled up and used when going camping /

backpacking, or put away when they are not needed!

UNI-SOLAR http://unisolar.com.ua/

SANYO http://panasonic.net/ecosolutions/solar/

SUNDANCE http://store.sundancesolar.com/powerfilm-flexible-thin-film-solar-modules/

POWERFILM http://www.powerfilmsolar.com/

4. Hybrid Silicon Cells

One recent trend in the industry is the emergence of hybrid silicon cells and several

companies are now exploring ways of combining different materials to make solar cells with

better efficiency, longer life, and at reduced costs.

Recently, Sanyo introduced a hybrid HIT cell whereby a layer of amorphous silicon is

deposited on top of single crystal wafers. The result is an efficient solar cell that performs

well in terms of indirect light and is much less likely to lose efficiency as the temperature

climbs.

Second Generation Solar Cells

Second-generation solar cells are usually called thin-film solar cells because when compared

to crystalline silicon based cells they are made from layers of semiconductor materials only

a few micrometers thick. The combination of using less material and lower cost

manufacturing processes allow the manufacturers of solar panels made from this type of

technology to produce and sell panels at a much lower cost.

http://unisolar.com.ua/

http://panasonic.net/ecosolutions/solar/

http://store.sundancesolar.com/powerfilm-flexible-thin-film-solar-modules/

http://www.powerfilmsolar.com/


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There are basically three types of solar cells that are considered in this category, amorphous

silicon (mentioned above), and two that are made from non-silicon materials namely

cadmium telluride (CdTe), and copper indium gallium diselenide (CIGS). Together they

accounted for around 16.8% of the panels sold in 2009.

First Solar, the number one producer and seller of solar panels in the world currently makes

their solar cells using cadmium telluride. The big appeal of these type of solar cells is that

they are inexpensive (currently below $1.00 / watt to produce and heading towards $0.70 /

watt). However, there are some concerns about this technology.

Venture capitalists love CIGS solar cells (or at least used to – as they have invested over

$2.3 billion into companies developing these cells but have yet to see them be a commercial

success) – as they have been able to reach efficiency levels of 20% in the laboratory.

Unfortunately it has turned out to be much more difficult to produce CIGS solar cells in

mass quantities at competitive prices with anywhere near than efficiency level, so the jury is

still out on this technology.

New Recently a Company based in Idaho has come up with a thin-film monocrystalline

solar cell - that uses about 20% of the crystalline silicon in current silicon based cells and

has number of advantages. The company “Transform Solar” is now out of business.

Third Generation Solar Cells

Currently there is a lot of solar research going on in what is being referred to in the in the

industry as Third-generation solar cells. In fact according to the number of patents filed last

year in the United States – solar research ranks second only to research in the area of fuel

cells.

This new generation of solar cells are being made from variety of new materials besides

silicon, including nanotubes, silicon wires, solar inks using conventional printing press

technologies, organic dyes, and conductive plastics. The goal of course is to improve on the

solar cells already commercially available – by making solar energy more efficient over a

wider band of solar energy (e.g., including infrared), less expensive so it can be used by

more and more people, and to develop more and different uses.

Currently, most of the work on third generation solar cells is being done in the laboratory,

and being developed by new companies and for the most part is not commercially available.


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NEXT GENERATION SOLAR

NREL Aims to Reduce Solar Energy Costs to $0.06/kWh

The NREL (National Renewable Energy Laboratory) ]is the U.S. Department of Energy's (DOE) primary national laboratory for renewable energy and energy efficiency research and development. NREL is operated for the DOE by the Alliance for Sustainable Energy, LLC. The National Renewable Energy Laboratory is one of the best sources of R&D financing and information about Solar

Research. Supported by the US Department of Energy, it leads the way in helping meet the growing demand for clean energy and has an impressive track record of 33 years of achievement, The NREL is the only US federal laboratory dedicated to the research, development, commercialization and deployment of renewable energy and energy efficiency technologies. The lab's capabilities include: • Research and Development • Testing and Evaluation • Deployment Solar Technologies Overview The lab is working with the Department of Energy to accelerate the development of solar technologies as energy sources for the USA and world. It does this by supporting the Lab's R&D in two major solar energy technologies — photovoltaic research and solar thermal research, and also by compiling a large database of Solar Radiation information and research. 1. Photoelectric Research The National Center for photovoltaic research is fully dedicated to meet the long-term goal of achieving $0.06/kWh grid-tied distributed systems. It is working to meet this goal by lowering the cost of delivered electricity and improving the efficiency of PV modules and systems. Their PV research contributes to these goals through fundamental research, advanced materials and devices, and technology development. Industry, academia, and the National Renewable Energy Laboratory partner to investigate properties and operating mechanisms of cell materials and devices. This teamed research approach works to identify efficiency-limiting defects in cell materials and analyze their electrical and optical properties.

PV R&D emphasizes innovative research, thin-film development, manufacturing R&D, and systems development and reliability. We conduct this research in collaboration with universities and solar industry through research partnerships and direct support of the Solar Program.


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The goal is to make large-scale solar energy systems cost-competitive with other energy sources by 2020. The NCPV brings together researchers from across the country, including at NREL, the Quantum Energy and Sustainable Solar Technologies (QESST) Center and the Bay Area PV Consortium. Sarah Kurtz and Greg Wilson are.

2. Solar Thermal Research The National Renewable Energy Laboratory plays a leadership role in analyzing cost and performance of concentrating solar power systems, developing parabolic trough technology for solar electricity generation, and developing advanced technologies such as concentrating photovoltaics. Researchers support the development of new designs and manufacturing processes for solar components and systems with an emphasis on improved performance, reliability and service life. The lab is also working with the solar industry to lower the cost of solar water heating systems. Laboratory researchers provide assistance with prototype development of new polymer (plastic) systems through modeling and optimization, characterization of the systems' performance, and accelerated materials durability testing. Solar thermal research is performed in the Electricity, Resources, and Building Systems Integration Center. Solar Radiation Research Optimal siting of renewable energy systems requires knowledge of the resource characteristics at any given location. NREL's solar radiation research and data collection is performed at the Solar Radiation Research Laboratory. This unique research facility continually measures solar radiation and other meteorological data and disseminates the information to government, industry, academia, and international laboratories and agencies. These data are used for climate change studies, atmospheric research, renewable energy conversion system testing, and more.

http://www.nrel.gov/pv/research_staff.html

https://qesst.asu.edu/

https://bapvc.stanford.edu/

http://www.nrel.gov/about/kurtz.html


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Overview of Angel Investing in Solar Projects & Companies

The term "angel investing" came from the practice in the early 1900's when wealthy

businessmen invested in Broadway productions.

Today "angels" (called Business Angels in Europe) participate in all types of businesses

and typically offer expertise, experience and contacts in addition to money.

In this section we are going to look at some of the issues and opportunities related to

investing in Solar Projects and Solar Companies.

Market Size

The USA Small Business Administration estimates there are about two million people in the

United States with the discretionary net worth to make angel investments. And at least

250,000 angels are active in the USA, funding about 30,000 small companies a year.

The total investment from angels has been estimated at anywhere from $20 billion to $50

billion per year – which is substantially more than is invested by Venture Capital companies.

The practice of Angel investing is one of the reasons for the success of many new

companies in the USA and there are now angel investment groups in many countries.

Growth Financing

Two types of solar related financing exist. The first type is referred to as growth financing –

or, as it is sometimes called - startup-financing.

Startup financing refers to the amount of money required to take the business from a proof

of concept stage to prototype / manufacturing feasibility and sales.

Angel investors who provide start-up capital do so with the goal of helping the company

reach certain milestones so that the company can qualify for government grants / loan

guarantees, bank and/or supplier lines of credit, Venture, Public or other forms of financing

to continue to grow their business until it is self-sustaining.

This type of financing is high risk / high reward. High risk – because there can be a number

of issues related to the performance of the underlying product, manufacturing risk

associated with being able to mass produce products economically that perform as well or

better than the prototypes, and market risk (i.e., the ability to find customers in a highly

competitive international market).


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Investors who are exposed to good companies and/or choose wisely can make excellent

returns … but for most they could be looking at delays, requirements for additional capital,

and uncertain outcomes.

The mechanics of startup investing really isn't too complicated. You give a startup money

and they give you stock. You'll probably get either preferred stock, which means stock with

extra rights like getting your money back first in a sale, or convertible debt, which means

(on paper) you're lending the company money, and the debt converts to stock at the next

sufficiently big funding round.

When you negotiate terms with a startup, there are two numbers you care about: how

much money you're putting in, and the valuation of the company. The valuation determines

how much stock you get. If you put $50,000 into a company at a pre-money valuation of $1

million, then the post-money valuation is $1.05 million, and you get .05/1.05, or 4.76% of

the company's stock.

If the company raises more money later, the new investor will take a chunk of the company

away from all the existing shareholders just as you did. If in the next round they sell 10% of

the company to a new investor, your 4.76% will be reduced to 4.28%.

The secret to making it big is not getting the biggest chunk of shares – but rather getting in

on the "ground floor" of the next Microsoft, Google, Facebook, First Solar, Trina Solar, etc.

A venture capitalist once said “he is happy when out of 10 investments, 1 makes it big, 4

make some profit and 5 fail”.

He also stated that when he looks at a new company he uses the following selection criteria:

1) 50% Strength / experience of management team (he prefers if they invested!)

2) 25% Technology (what are its advantages over what is out there now)

3) 25% Market Potential (what is the market potential, how fast is it growing)

A lot of successful entrepreneurs like this type of Angel Financing because its potential high

rewards and opportunity to make a difference (e.g., see the movie The Social Network) and

usually they can bring in valuable experience and contacts to help realize the high rates of

return.


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Project Financing

There is however, another – less risky but also very rewarding type of early stage financing

– that is currently available for solar projects that appeals to a more conservative type of

investor – namely financing of specific solar projects.

For example with the current level of accuracy in predicting how much electricity a

particular solar panel installation will produce and with Feed in Tariffs (FITs) [see

attachment-A] the amount that electricity can be sold for makes solar projects "bankable" –

providing there is an equity component typically of 15% to 20% of the total project costs.

Solar Renewable Credits (SRECs) [see Attachment-B] are popular with politicians, but less

popular with solar developers and owners due to their uncertain value.

Using bank leverage – the cash flow returns to the equity investor can be quite attractive

(i.e., over 15% per year). But keep in mind on a solar project – this income can last 20

years or longer.

However, by including bankable and FIT qualifying co-generation units - and using an even

higher amount of leverage – it's possible to boost these returns to 60%+ per year. Typically

these deals are set up as either loans, partnerships or sometimes both. In some cases (such

as the one mentioned above) it's possible for the investor's funds to be returned in a

relatively short period of time (i.e., 3 to 5 years) … but continue to receive ongoing

participation in the solar project for the life of the project (FIT are typically specified for 20

years … but projects continue past that since the life of the panels is usually much longer).

Getting Started

The easiest way to get started in angel investing is to find a friend who already does it, and

try to get included in his syndicates. Then all you have to do is write checks. It is

recommended to participate with others – especially if you are considering startup investing

– because of the need for detailed due diligence, hands on involvement in the company, and

the most likely requirement to provide additional funding before the company can stand on

its own.

However, project financing having much less risk – is a more precise type of investment.

The project budget is very predictable up front, the technology is well known … and you can

rely on the lending bank to verify everything for you.

Additionally, with solar projects the solar panel manufacturer guarantees the performance of

the panels, and the government guarantees the price (FIT) you'll get for the electricity – so

http://www.solar-facts-and-advice.com/feed-in-tariffs.html


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you're major risk is really the weather, and there are detailed insulation maps which the

banks rely on for estimating the amount of electricity that will be produced annually that are

quite accurate.

Another revenue generating concept that is gaining momentum is Solar Rooftop Leasing.

This industry is expected to see continued growth over the next decade. [See Attachment-C

for more information on this program].

Match Making

The biggest problem is for private investors to find out about the opportunities that are

available and vice versa for the entrepreneurs to be introduced to Angel Investors – since

by their very nature, startup companies are not very well known … and most private

investors prefer not to promote themselves.

That is why angel investment clubs, syndicates, forums, and other networking sites are

helpful in bringing both groups together – as they make investors aware of the

opportunities.

By their nature and personal involvement Angel Investment groups focus on local

opportunities – and usually cover the full spectrum of investment opportunities.

One goal may be to develop an investment platform specifically designed to identify solar

energy opportunities and to attract the investors who are most interested in these

opportunities.

http://www.solar-facts-and-advice.com/insolation.html


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ATTACHMENT-A: Feed In Tariffs – An Overview

The concept of Feed In Tariffs was part of the of the original renewable energy friendly

policies in the USA in the 1970's and then expanded and successfully implemented in

Germany in 1990,

Governments the world over are now coming to see the wisdom of enabling everybody in

their country to produce and sell electricity using renewable technologies, and setting prices

that will attract new developments.

This policy mechanism is commonly known as "Feed In Tariffs" (FIT). In North America this

simple idea is known by many different names: Electricity Feed Laws, Feed-in Laws,

Advanced Renewable Tariffs (ARTs), Renewable Tariffs, and more recently Renewable

Energy Payments. Regardless of the name, they are the world's most successful policy

mechanism for stimulating the rapid development of renewable energy, and secondarily for

creating a large and growing base of jobs and income for the people involved.

What are Feed-in Tariffs?

Feed In Tariff policies typically include three key provisions:

1) Guaranteed grid access to all producers of electricity from approved renewable sources;

2) Long-term contracts (typically 20 years) to purchase the electricity produced at a set

fixed price per killowat hour (kWh) produced; and

3) Published prices for the electricity sold, which are set to provide an attractive rate of

return at the time the project is built. These prices are periodically adjusted to reflect

changing market and policy conditions.

Feed In Tariffs are the most egalitarian method for determining where, when, and how

much renewable generating capacity will be installed. Renewable Tariffs enable

homeowners, farmers, cooperatives, and independent producers to participate on an equal

footing with large commercial developers of renewable energy.

FIT permits the interconnection of renewable sources of electricity with the electric-utility

network and at the same time specify how much the renewable generator is paid for their

electricity and over how long a period.


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ATTACHMENT-A: Feed In Tariffs – An Overview [Continued]

Advance Renewable Tariffs

Advanced Renewable Tariffs (ARTs) are the most modern version of Feed In Tariffs. ARTs

differ from the simpler feed in tariffs in several important ways. Most importantly, FIT are

differentiated by technology. There is one price for wind energy, another price for solar, and

so on. Tariffs within each technology can also be differentiated by project size or, in the

case of wind and solar energy, by the productivity of the resource.

Additionally, in the case of solar they can be further differentiated between tariffs for roof-

top based; referred to as retrofit in the UK installations, which generally receive a higher

price for the electricity; and ground-based installations that usually receive a slightly lower

tariff rate.

Tariffs rate are subject to periodic review to determine if the tariff rates are sufficiently

robust or appropriate to meet the targets desired in the time allotted, and reflective of

current technologies, costs, and market conditions.

For purposes of this discussion when we use the term Feed In Tariffs or FIT, we are using

the term synonymously with Advanced Renewable Tariff / ART.

How are Feed In Tariff Rates Calculated?

In theory, FIT prices i.e., the price paid for electricity produced from renewable energy

sources, are determined by the cost of producing the electricity, plus a reasonable profit to

justify the expenditure. The cost-based prices therefore enable a diversity of projects (wind,

solar, etc.) to be developed, and for investors to obtain a reasonable return on renewable

energy investments. This principle was first explained in Germany's 2000 RES Act:

“The compensation rates…have been determined by means of scientific studies, subject to

the provision that the rates identified should make it possible for an installation – when

managed efficiently – to be operated cost-effectively, based on the use of state-of-the-art

technology and depending on the renewable energy sources naturally available in a given

geographical environment.” (RES Act 2000, Explanatory Memorandum A)

Not only do the costs of the equipment have to be considered – so does the availability of

the natural resource (e.g., solar irradiation levels, wind measurements, labor costs, etc.).

As a result, feed in tariff rates typically differ among various source of power generation,

installation place (e.g. rooftop or ground-mounted), projects of different sizes and,

sometime, by technology employed (solar, wind, geothermal, etc.), and by country.


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Feed In Tariff rates are expected to decrease over time. This is consistent with keeping the

payment levels in line with actual generation costs. As a result of changing rates, there is

usually a big surge in projects prior to rate changes as developers push to get their projects

accepted at the higher rates to lock in better pricing.

Governments continually review these rates to determine what changes to make and when

they will implement the changes. Earlier this year, CDU politician Tanja Gönner, who is

"tipped to become federal environment minister," made the following statement about the

future of solar rates in Germany (which were set to change in April 2010 – but were

postponed to July) in an interview:

"Any sudden change would be wrong. It is true that solar arrays have become much

cheaper because the market collapsed. So we do have some leeway to reduce rates. But we

have to be prudent about it - it has to be based on a market analysis. We cannot chase

after the market by ramping rates up and down every six months. The solar market still

needs proper incentives for people to want to install the systems."

In reality, as can be seen by the Feed In Tariffs adopted in different countries, government

officials may set rates that are not completely cost-based depending on other objectives,

such as their desire to create new jobs in their country (e.g., France & Italy), attracting

outside investment to build up new electrical capacity (e.g., Czech Republic, Romania, etc.)

or to encourage existing property owners to install solar and to reduce the risk from

overbuilding ground based installations (e.g., Spain & Germany).

Typically, developers of medium and large sized projects monitor news about feed in rates

continuously. When possible, most developers will choose to build new projects in countries

with the highest Feed In Tariffs as this will allow them to achieve the highest rates of

returns by so doing.

Who Pays For the Feed In Tariffs?

Feed In Tariffs are not subsidies. They do not subsidize the cost of the equipment used to

produce renewably-generated electricity, like solar panels or wind turbines, nor do the

payments come from taxpayers. Instead, Feed In Tariffs are simply payment for the

generation of electricity.

The extra cost for the Feed In Tariffs is shared among all energy users, thereby spreading

the costs. In Germany in the average household pays about €1.01 per month for the Feed

In Tariff program.


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A number of analyses have shown that these price increases, however, can be offset by the

price-dampening effect that large amounts of lower cost renewable energy sources (such as

wind power) can have on spot market prices. This has led to electricity price reductions in

Spain, Denmark, and Germany.

The German government estimates the actual cost is near zero, because the benefits of

reducing carbon emissions and other air pollutants as well as reducing the cost of expensive

fossil-fired generation (and social health costs), offsets the cost of the renewable energy.

Who Benefits From Feed In Tariffs?

Property Owners & Project Developers benefit. Anyone who installs Renewable Energy (RE)

can profit, spreading out the value among citizens and not just owners of large-scale power

stations. They are more equitable than Renewable Portfolio Standards (RPSs) because

homeowners, farmers, small and large businesses and cooperatives can all participate. To

date more than 400,000 German households have installed solar PV.

The government benefits. Feed-in tariffs are designed to provide sufficient financial

incentives without capital grants, rebates, or tax subsidies. Additionally, it's a very easy

system to implement. Feed In Tariff policies are easy to implement: there is no monitoring,

no penalties and no caps.

It's estimated by the end of 2010, more than €53 billion will have been invested in Germany

on renewable energy projects. Germany has benefited from taxes it has collected on the

income generated from the sale of the electricity.

Additionally studies have shown that money spent locally (e.g., for building new solar

energy projects) re-circulates 300-600% more than money sent out-of-country for oil or

gas, etc. This secondary affect also helps the economy grow.

Universities Benefit: Good FIT rates for renewable technologies increase the drive for

innovation, and encourage investment in technologies such as wind, photovoltaic solar

energy, or Concentrating Solar Power (CSP) that all have huge potential.

Businesses Benefit: In order to meet the demand, new companies have emerged, existing

companies have expanded, and opportunities abound. In fact, this is one of the fastest

growing industries in the world right now and most analysts say it is still only getting

started.


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Workers benefit. In Germany, for example, the renewable energy industry now employs

about 234,000 people – almost 60% of whom were employed as a direct result of the

German FIT law. It is expected that by 2020 the renewable energy industry will employ

500,000 people.

Banks benefit: Unlike lending money on real estate, which can change in value or be subject

to defaults if the owners economic situation changes, the banks can accurately predict

based on FIT rates and the performance of the specific solar module how much cash will be

generated to repay any loans the bank makes. In other words, FITs make renewable energy

projects bankable.

Everybody benefits: Feed In Tariffs have contributed significantly to Germany's ability to

meet the targets set per the Kyoto accord. The greatest success in the efforts to reduce

greenhouse gas emissions has come from the energy industry. Development of renewable

energies has left positive traces. In 2008, some 20 million tons less CO2 than in the prior

year were emitted to the atmosphere in the energy production process. This amounts to 66

million tons less CO2 over 1990 volumes.

Additionally, FITs have spurred competition and innovation in the renewables energy field.

For example, within 20 years the cost of electricity produced from wind turbines is now less

than the cost of electricity produced from lignite, especially if the environmental costs are

factored in.

Benefits for Solar Energy Park Developers and Investors

The biggest benefit of Feed In Tariffs for developers and investors is that they can reliably

predict (at least for the term of the Feed In Tariff) the projected cash flows that will be

produced by each new Solar Energy Project and the financial risks associated with a such an

investment are dramatically reduced.

For anybody considering investing in a Solar Energy Project, knowing that Feed In Tariffs

are likely to decrease over time encourages people to move quickly to lock in the higher

rates/rates of returns for new projects.

Since Feed In Tariff rates can change over time, it is important to understand that

in most countries the Feed In Tariff rate applicable to a specific project is based on

the Feed In Tariff rate as of the day the first electricity is delivered to the grid.


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Consequently, as more countries adopt Feed In Tariff policies, the demand for renewable

energy systems has risen dramatically and the installation costs are coming down fast. This

financing model has now been taken up widely around the world.

The Success of the FIT Policy

Feed in Tariffs has proven to be one of the most effective policy instruments in overcoming

the cost barriers to introducing renewable energy and making it economically viable. The

simple guarantees that FITs provide – including access to the grid, a set price per Kilowatt

Hour (kWh) that will cover the costs associated with electricity production, and a

guaranteed term for which they will receive that rate has turned several European countries

into world leaders in the renewables sector. This is the case for Denmark on wind energy

and for Germany on solar energy.

FITs have been empirically proven to generate the fastest, lowest-cost deployment of

renewable energy, and with this as a priority for climate protection and security of energy

supply. FITs are the best vehicle for delivering these benefits, plus the highly desirable

added benefits of new job creation and as a significant contributor to economic growth and

prosperity. This conclusion has been supported by a number of recent analyses, including by

the International Energy Agency, the European Federation for Renewable Energy, as well as

by Deutsche Bank.

As of April 2010, feed in tariff policies have been enacted in 63 jurisdictions around the

world, including in Australia, Austria, Belgium, Brazil, Canada, China, Cyprus, the Czech

Republic, Denmark, Estonia, France, Germany, Greece, Hungary, Iran, Republic of Ireland,

Israel, Italy, the Republic of Korea, Lithuania, Luxembourg, the Netherlands, Portugal,

Singapore, South Africa, Spain, Sweden, Switzerland, and in some (nowadays, a dozen)

states in the United States, and is gaining momentum in other ones as China, India and

Mongolia.


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ATTACHMENT-B: Who Benefits from SRECs? - Continued

Solar Renewable Energy Credits (SRECs) are popular with politicians of several states but

much less popular with solar developers and solar owners – due to their uncertain value. So

who actually benefits from them?

Brief History

The idea for an SREC-only market was born in New Jersey in 2004-2005, when the state

started running out of money for rebates. Due to continued problems funding the popular

program, the state phased out rebates for all but a limited number of residential projects.

During the transition, the state looked at both Feed in Tariffs and SRECs, but eventually

decided that SRECs were a more suitable way to create a market.

No surprise there – they don't cost the state anything and give the impression of promoting

solar energy … but do they work as well as Feed in Tariffs? Let's take a look.

States Offering SRECs

The "blue" states do not have SREC programs – but the rest of the states do so obviously

the idea has spread from New Jersey – especially through the Midwest.


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In states like Delaware, Massachusetts, Maryland, New Jersey, Ohio and Pennsylvania,

energy suppliers are required to accumulate a certain number of SRECs to meet a mandated

generation target. Power providers can generate the credits themselves by investing directly

in projects, or purchase the credits from project owners, brokers or aggregators.

Many states will certify solar electric systems from out-of-state and allow the SRECs from

those facilities to count towards the RPS. The map above shows what state individuals can

sell their SRECs into.

What are SRECs?

In SREC states, the Renewable Portfolio Standard (RPS) requires electricity suppliers to

secure a portion of their electricity from solar generators. The SREC program provides a

means for Solar Renewable Energy Certificates (SRECs) to be created for every megawatt-

hour of solar electricity created.

Once the installation of a solar system is complete, the system must then be certified by the

state(s) in which it is eligible to sell SRECs and then must create an account with the

tracking platform used by that state. Once registered, every month, the tracking platform

will issue SRECs based on the generation of your system.

In some states, estimated generation is used for systems under 10kW, while all other

systems are required to submit generation on a monthly basis.

1 SREC = 1,000 kWh of solar electricity = 1 MWh of solar electricity produced

10 kWp solar capacity = approximately 12 SRECs per year.

The SREC is sold separately from the electricity and represents the "solar" aspect of the

electricity that was produced.

How Much are SRECs Worth?

There is no assigned value to an SREC.

Prices are influenced by supply and demand. The supply is determined by the number of

solar installations producing SRECs and trading them.

http://www.solar-facts-and-advice.com/kWh.html

http://www.solar-facts-and-advice.com/kWp.html


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The demand is determined by individual state RPS solar requirements and the Solar

Alternative Compliance Penalty (SACP) set by the state.

The RPS solar requirement represents the number of SRECs the electric suppliers are

required to collect each year. The SACP is the penalty amount per SREC paid by the electric

suppliers if they do not collect enough SRECs.

In general the price that SRECs trade at is typically less than the SACP charged by the

states if the electric company does not reach it's quota. For example - in New Jersey, where

the SACP in 2010 is $693 SRECs are trading at around $570 … or approximately 82% of the

SACP rate.

Since the SACP rates can vary by state and even over time … the future value of the SRECs

is difficult to estimate … and therefore the long term benefit for the developer / solar project

owner makes it difficult for them to forecast their net revenues and therefore obtain long-

term financing.

Who Benefits?

In theory - the sale of SRECs is intended to promote the growth of distributed solar by

shortening the time it takes to earn a return on the investment. This is more easily

accomplished if the SRECs can be sold on a long-term basis, which larger projects require in

order to obtain project financing or solar energy investors require to produce predictable

yields … but much less so when sold into a fluctuating spot market (the typical situation for

residential and small commercial rooftop projects).

However, in practice while it is generally possible to fairly accurately predict the amount of

electricity a specific solar installation will produce over time the variability of SRECs in a

free-market economy – especially factoring the likelihood that SECP rates will change from

year to year for political and market reasons – estimating the potential economic values of

SRECs over the life of a project and newness of this incentive program and instability in the

pricing make it difficult to obtain the long term financing needed by most developers to

build mid-sized to larger solar energy projects.


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Is There a Market for the Buying and Selling of SRECs?

Yes there is … and its growing, but the market is dividing into two tiers:

Tier 1: Large project developers, who may be generating thousands of SRECs each year,

are able to negotiate contracts directly with energy suppliers, securing far more favorable

terms and pricing than smaller players. Some are worried that this could limit diversity in

the market.

Residential and small sized solar installations. To address this market, financing and

aggregation companies like Sol Systems, SRECTrade and Flett Exchange have emerged to

help residential and small commercial project owners register, track and sell their SRECs to

energy suppliers. They have seen business explode as SREC markets have expanded.

How do you Sell your SRECs?

Since it is very costly for electric suppliers to buy direct from individuals, solar owners have

limited options for selling their SRECs. Most suppliers will either issue cumbersome requests

for proposals (RFPs) or work directly with third-party aggregators and brokers – such as the

three listed in the previous section.

Prior to these brokerage services, individual solar generators had little visibility into actual

SREC market prices as well as markups charged by middlemen. In many cases, an SREC is

traded several times before reaching the electric supplier.

Even with the emergence of aggregators / brokerage services it will typically take a few

months before you begin receiving payments. For example, if your system goes online on

January 1st, your January generation will be recorded on February 1st. Your first SREC(s)

will be actually credited to your account on March 1st. They would then be sold in the March

auction, so your first payment would come in late March. After that, payments will come as

SRECs are generated. Also note: some states operate on a quarterly basis, rather than

monthly.

Who Pays?

The primary buyers of SRECs are utility companies – who are looking to avoid paying the

legislated SEPC penalties. There are some private buyers too – but they appear to be in the

minority.

http://www.solsystemscompany.com/

http://www.srectrade.com/

http://www.flettexchange.com/


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As always – the utility companies pass along the cost the SRECs to their customers … in

much the same way that the costs for Feed In Tariffs are passed back to the customers.

Which is Better – Feed in Tariffs or SRECs?

While more than 63 countries and several states and provinces have implemented Feed In

Tariff systems - they have yet to make major headway in America. This is ironic, since the

original Feed In Tariff system was developed in the USA – although it took the Germans to

really make it work well – so well in fact that with much less sun than in most of the USA –

they lead the world in the installation of solar energy systems.

Speaking as a developer of solar energy projects – the appeal of a Feed In Tariff System is

simple. Under the Feed In Tariff system you know before you build your system and connect

it to the grid exactly how much you will be receiving for each kWh of electricity produced –

for the next 20 years. This stability in income means that homeowners, investors and

bankers can trust in the projections and provide the money to build new systems.

The appeal of the Feed In Tariff systems in the EU makes sense – because they have a lack

of fossil fuels and a ground swelling of support for renewable energy solutions to make them

energy independent. However, according to studies in the USA more than 90% of people

surveyed favor solar energy.

So why are SREC programs so popular? Is it because the states don't have to pay? Is it

because it favors big utility companies, who spend a lot of money on political lobbying?

The two policies are often compared side-by-side because they represent different ends of

the philosophical (and perhaps ideological) spectrum over how best to incentivize solar.

Because these programs are still so new, their effectiveness over the long term is unclear.

Some installers – many of whom are advocates of FITs – believe SREC programs create too

much volatility and favor larger commercial and industrial-scale project developers.

All the major emerging SREC markets are in deregulated states. Under deregulation, energy

suppliers are short-term players in the market. Thus, they have been unwilling to sign

contracts for longer than five years in states like New Jersey and Maryland. (In Maryland's

case, there is a requirement that SREC generators bid for 15-year contracts, but energy

suppliers have been more willing to pay the penalty than enter into such long agreements).

Thus, a number of installers have found it difficult to finance projects with a 30-year lifetime

based upon contracts for five years or less.

http://solar-energy-news-and-views.blogspot.com/2010/12/top-25-us-energy-lobbyists-of-2010.html


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New Jersey is the only state with enough experience to gauge success of SRECs. After a

couple years of missing solar targets during the program transition, the industry is finally

catching up – driven by the high prices of SRECs due to limited supply. The average market

price for an SREC has been about $570, or $0.57 per kilowatt-hour. That's well above the

cost of generating solar electricity.

The high SREC prices have driven a flurry of new development in the state. However, if the

industry overshoots its targets for 2011 and there's an oversupply of SRECs in the market,

prices could drop substantially and hurt the financial viability of projects. Some are worried

that it could put some installers out of business.

A number of fixes to these issues have been proposed: Some want to see required long-

term contracts to provide security; some are hoping to create a hybrid structure where FITs

target the smaller end of the market and SRECs are used for large projects; and a few

people are even proposing that states with SREC markets start from scratch and implement

pure-play FITs. (The likelihood of that is very slim).

While SRECs are certainly gaining traction and will likely be an important part of American

solar policy, it may be another year or two before we know how effective they are.

Depending on how these emerging markets perform, there may be a lot more

experimentation ahead.

So which program is best? I think it's pretty easy to determine in a "free economy" – just

look at how many GW of solar projects are being installed in countries with FIT programs …

and how many are being installed in areas that offer SRECs … FIT wins by a large margin.


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Attachment C: Primer in Solar Rooftop Leasing

Solar rooftop leasing is one of the three basic ways you can make money from your rooftop

with solar energy. The other two involve owning and operating solar panels on your own

roof and joint venturing with a developer who will install the solar panels and share the

income with you.

While a property owner might not have the resources to invest in a rooftop solar today …

they still might be interested in realizing some income from solar energy through leasing

their rooftop space to a developer – and make money while they learn more about the

benefits of installing solar energy on their building.

In this section we will focus primarily on what you need to know if you are considering solar

rooftop leasing.

Solar Energy is Creating a Demand for Rooftop Space

As the solar energy movement continues to grow in both size and stature, governments,

property owners and power providers are all seeking ways to access and leverage solar

energy resources to their best advantage.

Obviously, in order to produce electricity from the sun – you need someplace to install your

solar panels. In Europe, the Feed In Tariffs are generally structured in such a way as to pay

a higher amount per kWh of power produced. This not only encouraged homeowners to

install solar panels on their roofs – but also the owners of large buildings, Churches,

governments and even the military are installing solar panels on their property.

While a growing number of property owners are investing in the installation of solar panels

on their roofs – a new group of small to independent developers began exploring the

feasibility of leasing rooftops, attracting investors and raising the money to pay for the solar

installations.

Because of this growing demand – property owners are seeing interest from developers

willing to pay to lease the space.

Rooftops Can Generate Income

Many commercial, industrial and retail buildings can provide the real estate needed for

these systems, and are subsequently viewed as excellent candidates for roof rental.

In Germany – the optimum size installation is 250 kWh and above. These large PV systems

typically require large amounts of rooftop space – with the exact amount

http://www.solar-facts-and-advice.com/kWh.html


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Attachment C: Primer in Solar Rooftop Leasing - Continued

depending on the type of solar panels used (i.e., solar panels with higher kWp require less

space.

A growing number of third-party solar power providers are looking to rent roof surfaces

from building owners in a designated area, install PV systems and sell the power generated

to the local utility companies through pre-negotiated agreements.

Building owners don’t have to get involved in marketing the power generated on their roofs,

and the lease agreements frequently guarantee at least 20 years of dependable rental

income.

In Germany – you are able to find roofs on large apartment complexes in East Germany for

about €1.00 / sqm / year. However, by offering to prepay the full 20 year lease in advance

we can usually negotiate an even lower lease cost.

Note: Roof lease rates are directly related to the prevailing FIT rates in Europe. As FIT rates

drop … the amount a developer is willing to pay to lease the rooftop also declines roughly

the same amount.

In the USA – the lease rate will depend on the price that the developer can realize from the

sale of the electricity produced.

Is Your Structure Suitable for a PV Array?

Not every rooftop will be suitable for a rooftop installation … and some are more suitable

than others. Your suitability will impact directly on what income you might be offered for

your rooftop.

In addition to being flat or angled to get good sun exposure and relatively free of

obstructions in order to permit PV installation, the ideal rooftop needs to be exposed to the

sun (not shaded by mountains, trees, other structures or potential future structures on the

building site or on neighboring properties) and physically capable of supporting the weight

of a PV array.

Size also matters, with the ideal size for a solar PV rooftop installation being in the range of

30,000 to 100,000 square feet.

A new or recently rebuilt roof is preferred, because it is less likely to require additional

structural support to accommodate the array, and because it will probably not require

http://www.solar-facts-and-advice.com/kWp.html


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significant repair or replacement during the operating period of the solar project, which

might necessitate the temporary removal or relocation of the solar array.

Understanding Lease Agreements

Many rooftop rental agreements can look lucrative at first glance. There are, however,

several important facts that building owners must be aware of before signing on the dotted

line and making a multi-decade commitment. Ignoring these realities could turn a potential

cash cow into a fire-breathing dragon that could do serious damage to the bottom line.

One of the first questions the solar developer will want to know is if the owner has full legal

control over the rooftop ... and if these legal rights can be split off from the underlying

property. That is, the rooftop must not be subject to existing liens, mortgages or other legal

restrictions, which may prevent the landlord from being able to grant exclusive rights to the

solar developer / operator.

Building owners need to be aware of is that most roof-mounted PV systems can easily last

up to 40 years, while the commercial roofing systems they are attached to typically have life

spans of between 10 and 13 years. With a 20-year roof rental in place for a PV system, it’s

highly likely that roof repairs — or even replacement — will be needed at some point over

the course of the rental period.

For example … one property owner needed a new roof but didn't have the money to pay for

it. His existing roof also contained asbestos (common in Italy and other countries). So what

he decided to do was to find somebody willing to sign a solar rooftop leasing agreement –

and then pledged that to his bank to get the money to repair his roofs – in essence getting

a new roof for free.

While a roof lease can provide secondary monthly income from space that previously

generated no income or was even classified as a liability, the attractiveness of the deal can

disappear quickly if roof maintenance is not factored into the lease agreement.

Any failure in the roof surface that causes leaks can disrupt day-to-day operations, drive

away customers and do serious damage to the financial stability of a business. Fixing the

problems with the roof surface once a PV system is in place will also take much longer and

cost much more than a typical roof repair.

If it takes days or weeks to fix a leaking roof surface, any financial benefits generated by

the roof rental can quickly be replaced with enormous losses that could potentially eliminate


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several years of rental income. As a result, in any rooftop lease agreement, you need to

know who is going to pay if roof repairs are needed, especially if PV system removal is

required.

In simple terms, if maintenance is not an integral part of the lease agreement, roof rental is

not likely to be a lucrative deal in the long run.

NOTE: In Italy they came up with a concept called "Innovative Roof". Basically, instead of

mounting PV panels attached to the roof the developer removes the old rooftop and uses

special mounting brackets to create a brand new roof made up of solar panels. To

compensate for the added costs - the Italian government offers a much higher Feed-In-

Tariff for these type of solar installations. But there is also the advantage of a longer lease

for the owner / operator of the PV installation as well as the property because new roof has

a much longer life span ... and makes money over that time period. Expect this idea to

become more and more popular in the future.

Before you become involved in a rooftop rental agreement for a solar PV system, keep the

following four facts in mind:

• Rooftop rental can provide extra income each month, but can also open you up to

significant liabilities.

• The building, roofing systems and the operations conducted in your facility are your

primary concerns, not the PV system.

• Maintenance and troubleshooting must be part of any comprehensive rooftop lease

agreement.

• Know who is financially responsible for repairs and lost production so you don’t end up

holding the bag for costs and penalties.

Without a doubt, an FIT can be an excellent way to put your unused roof space to good use

and to collect rent at the same time. By doing your homework and reviewing lease

agreements carefully, you can benefit from green solar power generation while knowing that

all your financial bases are covered.

The following are some of the typical clauses you might see in a solar rooftop leasing

agreement – and the issues you might want to consider.


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Given the nature of such leases it is recommended to ask your solar consultant or a real

estate lawyer (with solar leasing experience) to review the agreement before signing.

Option Agreement

Most rooftop solar developers require an option to lease the rooftop.

The option will permit the operator to have access to inspect and test the rooftop and do

such other investigations as it deems necessary to satisfy itself that the location is suitable

for a solar PV array and that the building owner is in a position to grant a lease to it.

The option will be open for exercise by the operator for a period sufficient to enable the

operator to conduct such inspections and investigations and to apply for and obtain a Feed

In Tariff (“FIT”) program approval or enter into a Power Purchase Agreement (“PPA”) with

the local electrical utility.

The option agreement will provide that if the developer exercises its option, the parties will

enter into a lease of the rooftop area on the terms set out in the option agreement.

Tenant Covenant

As with any lease, it is advisable for the landlord to consider the financial strength and

“track record” of the tenant, and to determine whether a deposit or other form of financial

security should be sought to protect the landlord from the consequences of a tenant default.

Term and Rent

The term of the lease must be at least 20 years (to match the term of the FIT or PPA ) and

the tenant will most likely ask for the exclusive option to renew the lease.

Renewal rights are potentially important, as it is anticipated that the productive life of the

solar photovoltaic (“PV”) array equipment may be substantially longer than 20 years.

Rent can be structured in several ways. Usually, it will be a fixed, all-inclusive “gross” rent,

but it may be calculated based on the size of the roof area or the portion of the rooftop

utilized, the wattage produced by the facility, a percentage of the revenues received by the

tenant, or on some other basis.

In addition, the lease may provide for the tenant to pay for its electricity consumption and

for any realty taxes associated with the solar PV array.


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As mentioned above – how you receive your payment can also affect the rate, which is why

we prefer to prepare the lease and capitalize it – this way it qualifies for bank financing (at

least in Germany).

Access

The tenant will require access 24/7 to install, clean, maintain, repair and replace its

equipment – and issues of security access may need to be addressed in the lease depending

if the access has to be from within the building or not.

Roof Repair

The lease will need to address the necessity for installation, roof repairs and replacement.

Issues such as notice to the tenant, the period to do the work, relocation of the solar PV

equipment while the repairs or replacement are undertaken, and compensation to the

tenant for lost revenue during repair/replacement will be of concern.

Plans and Specifications

The landlord will want approval rights over the tenant’s plans and specification for the

original installation and for any subsequent alterations, repairs and replacements. The

tenant will want to ensure that such approval is not unreasonably withheld or delayed.

Ownership

It will be critically important to the tenant, for financing purposes, that its facilities are

never treated as building fixtures (i.e. they will not be part of the building and therefore will

not be the landlord’s property) but instead are always the sole property of the tenant.

The tenant will also require that the landlord waive any rights of distress or other rights to

claim a lien or other interest in the tenant’s equipment, in order to facilitate such tenant

financing.

The issue of ownership and transfer of title to the installation (e.g., at the termination of the

lease if not renewed) is also important at the term of the lease … specifically, if the

installation is no longer economically viable or if there are materials containing toxic

materials (such as solar panels that contain cadmium or other materials that or might be

deemed toxic materials in certain locations).

http://www.solar-facts-and-advice.com/cadmium-telluride.html


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Financing

In order to obtain financing for its equipment, the tenant may need to assign the lease as

collateral security to its lender, and will need the landlord to agree to enter into an

agreement with the tenant’s lender enabling the lender to cure any default by the tenant

under the lease and to obtain a new lease on the same terms if the lease is terminated

without the lender’s consent (e.g. as a result of the bankruptcy of the tenant). The landlord

will want the lender to agree that any monetary or other curable default must be cured prior

to the new lease being granted.

Insurance

The landlord will want the tenant to obtain and maintain insurance on its facilities, and

adequate liability insurance, and the tenant will similarly want the landlord to obtain and

maintain insurance on its building as well as public liability insurance. Appropriate releases,

waivers and indemnities will also be important to both parties.

Interference

As noted above, it will be extremely important to the tenant that nothing happens that

blocks or otherwise interferes with sunlight reaching its solar PV array. Consequently, it will

require covenants from the landlord that it will not take or permit any action, which would

have such effect.

In addition to the normal termination for damage and destruction provisions found in a

typical lease, if at some point something happens (such as the construction of a building in

the vicinity) that impairs the availability of sunlight or otherwise prevents the tenant from

operating its facility, the lease will need to address the tenant’s rights to terminate the lease

in such circumstances.

Non-Disturbance

As would be the case for any lease, the tenant may require that the landlord obtain

agreements from each of its mortgage lenders to the effect that the lender will permit the

tenant to remain in possession of the leased rooftop, etc. notwithstanding any default by

the landlord under the mortgage, and will agree to recognize the lease and the tenant’s

rights.


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Repair and Maintenance

Each party will want to ensure that proper repair and maintenance obligations are included

in the lease.

The landlord will want the tenant to properly maintain and repair its equipment to ensure it

is kept safe and in compliance with laws and regulations, and the tenant will want the

landlord to take adequate care of the building, especially the roof, to avoid any impairment

of the tenant’s ability to properly operate its solar facility.

Regular cleaning of the panels including snow removal, and disposal may also need to be

addressed depending on the location of the building and normal weather patterns.

Registration on Title

In order to obtain financing and to protect its interest in the event of a subsequent sale,

mortgage or other disposition of the landlord’s interest in the building, the tenant will want

the right to be able to register a notice of its lease on title to the landlord’s property.

The landlord will want the tenant to agree that it will “attorn to” (recognize as the landlord

under the lease) its mortgagee (if it goes into possession due to a mortgage default) and

any purchaser of the property.

Conclusions

Rooftop solar PV arrays are soon going to become very common, and while not all rooftops

will be suitable and not all building owners will be willing to commit to lease their roofs for a

twenty year period, with a little forethought and careful attention, rooftop solar leasing can

potentially be a win-win for both building owners and solar project developers.

[See Sample Rooftop Lease Application Example Next Page]


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Rooftop Lease Application Example

Address:______________________________________________________________________

Owner / Property Manager:_______________________________________________________

Broker / Telephone:_____________________________________________________________

Slope of the roof to the sun: ________________________

or Googlemap coordinates: ________________________

Type of Roof:_____________________________________________ Roof pitch:____ degrees

Building type use:_______________________________________________________________

Age of building:____________ Age of Roof: __________ Last development date:____________

Is building still in use: ___ yes ___ no Does the roof contain asbestos: ___ yes ___ no Type of

roof membrane: _________________ Can roof support an additional 15kg / m2 : __ yes __ no

Height of the roof (from ground to roof):_____________________________________________

Does building have independent source of power: __ yes __ no

Type: _______________________________

If no – name & address of power supplier:__________________________________________

Is there a company owned transformer?: __ yes __ no Is a transformer close by: __ yes __ no

Building dimensions: width :____________________ length: ________________

Do any shadows fall on the roof: __ yes __ no Source of shadows:

__________________________________________________________________________

Is there a lightning protection system on the roof: __ yes __ no

Further information regarding the location: __________________________________________

______________________________________________________________________________

Please enclose the the following (digital format preferred): 1. Site plan w/layout of the building

2. Photos of the complete building (all sides + roof if possible) 3. Photo of ground near sides of

building (for purposes of erecting scaffolding / use of a crane) 4. Photos showing any sources of

shading on the roof + measurements (e.g., height of object, location) 5. Detailed photos of the

roof / roof membrane 6. If possible, photo of the underbody of the roof (for structural review)


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About the Author:

Mr. Freeborn is an Advocate & Supporting Board Member for Education,

Employment, Entrepreneurship and Empowerment. He is experienced in

working with Government and Private agencies for Economic Development &

International Trade. He serves as an adviser for Business Contacts, Contracts

& Capital Consultant for Domestic and Foreign Direct Investment, Economic

Development, Education, and Business Development. He also serves as a

Small Business Project Mentor and Internship Adviser.

Mr. Freeborn is connected in 192 countries professionally and has worked with more than 40 different

industries worldwide. He has accepted numerous international awards on behalf of his international

development for companies he has represented. On LinkedIn he has over 60,000 connections, more

than 55,000 endorsements and over a dozen written recommendations.

Mr. Freeborn has authored books on international business, small business management, international

college internship handbooks and an internship guide for small business.

► PROFESSIONAL EXPERIENCE:

● Export/Import Business Development

● International and U.S. Business Funding

● Foreign Direct Investment

● Int'l and U.S. JV & Partnership Development

● Small Business Development & Funding

● Commercial & Industrial Project Funding

● M&As, Project Management & Development

● Project Due Diligence, Business Plan Analysis

● Business Acquisitions & Sales

● Initial Public Offerings

● Corporate Restructuring

● E&C Level Consulting & Management

► INDUSTRY EXPERIENCE:

● Agriculture,● Automotive ● Aviation ● Bio-Technology ● Chemical Production ● Commercial R.E.

Assessment and Development ● Diesel Power ● Education: Internship Development ● IT ● Energy

Production ● Environmental Planning & Assessment ● Hospitality ● Marinas ● Mass Transit ● Medical

● Mining ● Railroads ● Renewable Energy ● GSA & Military ● International Contracting - Finance -

Bidding - Proposal & Development.


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2016

FDG Global, LLC.


Disclaimer: The views and opinions expressed in this publication are

those of the author and do not necessarily reflect the official policy or

position of any government agency. Information provided within this

publication is offered as only example. They should not be utilized in

real-world business analysis or products as they are based only on

very limited and dated open source information. Assumptions made

within this publication are not reflective of the position of any U.S. or

other government entity, public or private entities. There are no

endorsements of any of the companies or products mentioned within

this publication.

2016 solar business opportunity

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