Energy Trust of Oregon Raises Business Cash Grant Incentives for Commercial Solar

There’s great solar incentive news for Oregon businesses in Portland General Electric (PGE) and Pacific Power service areas: Energy Trust of Oregon (ETO) has raised its upfront solar electric incentive.

There’s great solar incentive news for Oregon businesses in Portland General Electric (PGE) and Pacific Power service areas: Energy Trust of Oregon (ETO) has raised its upfront solar electric incentive.

For most commercial solar installations, the increased Energy Trust grant means that the upfront cost of a solar photovoltaic (PV) system will be reduced by over 1/3. Additionally, that lower price means that Oregon businesses will see a payback in less than 5 years through reduced utility costs, Federal tax credits, and other tax incentives.

The larger Energy Trust of Oregon incentive is also significant in that it reduces the payback period, which is now shorter than Oregon’s recently expired Business Energy Tax Credit (BETC) and the Oregon feed-in tariff (FIT) programs. Plus, unlike the restrictions in the Oregon FIT, solar electric system sizes can vary under the ETO program, allowing REC Solar to design a commercial solar PV system that’s more optimized for the businesses’ actual power usage.

However, the higher Energy Trust commercial solar incentive is only temporary and is granted on a first-come, first served basis. So, if you’ve been considering a solar electric system for your business, or want to see how installing solar can impact your bottom line, now’s the time to get a free solar estimate from REC Solar.

As an Energy Trust trade ally, REC Solar provides free estimates for both small businesses and large companies in PGE and Pacific Power service areas. Contact us before the new incentive level runs out.

 

What’s a Solar REIT?

Recently, the IRS made a so-called “private letter ruling” that—under certain conditions—allowed solar equipment to be a “good asset” as part of a Real Estate Investment Trust (REIT.) While this ruling is promising news for financing commercial solar projects, it’s not the “Solar REIT” that solar finance people were hoping would be approved.

Recently, the IRS made a so-called “private letter ruling” that—under certain conditions—allowed solar equipment to be a “good asset” as part of a Real Estate Investment Trust (REIT.) While this ruling is promising news for financing commercial solar projects, it’s not the “Solar REIT” that solar finance people were hoping would be approved.

REITs and Solar REITs

Traditional REITs (Real Estate Investment Trusts) are a longstanding financing method in which individual investors invest in a fund that buys property or makes loans for real estate assets or invests in other “good assets” applicable to real estate. As long as the REIT annually pay its investors at least 90% of the REITs profits, the REIT itself isn’t taxed. Instead, only the individual investors are taxed on their REIT dividends, thus avoiding double taxation.

Seeing this successful real estate development and financing model, the solar industry wanted to create Solar REITs (Renewable Energy Investment Trusts) that would bundle investors to fund solar projects or solar loans and pay out dividends to individual investors. For this model to be legal, it requires either Congressional action (difficult) to create a separate Solar REIT law, or it would require the IRS to simply redefine what a REIT is, and include solar energy as a “good asset.”

This most recent IRS private letter ruling does not open the floodgates to creating Solar REITs, but it does allow traditional real estate REITs the ability to invest in solar as an energy efficiency asset for the buildings owned by the REIT.

According to Kelly Kogan of Chadbourne & Parke, the main point of the IRS ruling is that the solar installation qualifies as a good REIT asset if it’s structurally and functionally integrated with a building, which most solar installs are. In addition, solar was part of other energy efficiency measures, not just producing electricity, which is a “bad” asset. The ruling also allows loans secured by such permanent energy efficiency equipment to qualify as good REIT assets, provided that the loan is also secured by the building with the equipment and that the lender (the REIT) has the right to foreclose on the building in the event of a borrower default.

Beyond this ruling, there are other ways that traditional REITs are funding solar projects under the current law, and it involves creating a Taxable REIT Subsidiary (TRS) to own solar PV projects or to develop projects.

As described by Jared Wiedmeyer in this National Renewable Energy Laboratory (NREL) blog post, REITs can create a TRS that can develop, finance, and own rooftop solar PV systems. The TRS can then receive the benefits of the 30% Investment Tax Credit and also make income by selling the power generated to the building tenants. The TRS then returns this after-tax income to the main REIT fund.

A second way for traditional REITs to finance solar is for the TRS to act like a developer and fund the construction of solar projects on land that it owns. The TRS cannot directly sell power, but it can sell its interest in the solar project to a utility or PPA company. Once again, the TRS income will be taxed, but the net proceeds will be transferred to the parent REIT.

A third way to utilize the REIT is by simply renting the actual land or rooftop space for the purpose of solar development. Here, no TRS is formed, but the REIT is leasing the land or rooftop to a solar developer, who can profit via a solar PPA or a local feed-in-tariff (FiT). Thus, the only income the REIT receives is real-estate related, and therefore a “good asset” that does not jeopardize the REIT’s non-taxable status.

All of the above methods are indirect ways to finance solar projects, but it is complicated and requires rigorous adherence to the detailed regulations and rules, plus the TRS work-around is a taxable entity. Please confirm all of the above with your tax attorney.

Should Congress or the IRS act to create an official Solar REIT dedicated to renewable energy, it’s likely that investors would fully embrace these funds as they have traditional real estate REITs. Solar REITs could not only fund commercial solar and utility projects, but also residential solar, significantly expanding solar development across the U.S… But that’s not the case yet.

If you’re a REIT or TRS and would like to develop solar projects under existing regulations, consult with REC Solar. With over 11,000 installations on homes, retail stores, and for utilities, the REC finance team can help develop, construct, and manage “good” REIT solar assets. Get started here.

Solar Jobs: Clean Energy’s Effect on the Job Market, Economy

Most of us are familiar with the benefits solar power has on the environment and our electricity bills, but we don’t often stress the benefits of solar on the economy – and, more specifically, the job market.

Most of us are familiar with the benefits solar power has on the environment and our electricity bills, but we don’t often stress the benefits of solar on the economy – and, more specifically, the job market.

But reports like the Bureau of Labor Statistics’ “Employment in Green Goods and Services” have historically demonstrated the importance of green technologies like photovoltaic power when it comes to employment. Unfortunately for the industry, those reports aren’t being produced as regularly because of budget cuts at the BLS.

That said, there’s no denying solar jobs are everywhere. In fact, the REC Solar Careers Section is one of the most popular pages on the site, and that’s probably the case for a lot of green tech companies across the country. According to Ecotech Institute’s Clean Jobs Index, there were more than 700,000 clean energy jobs posted in the U.S. in Q1 of 2013, which, as EarthTechling.com probably put it best, is “news that’s good for our economy as well as our environment.”

Green employment not only has an effect on local economies but has ramifications in Washington as well, where politicians are realizing the benefits of green jobs to their states, districts and cities.

Earlier this month, Congresswoman Lois Capps visited with our friends at Central Coast Distributing and Larrabee Brothers Recycling, where we installed the largest commercial solar system in Santa Maria, Calif., in 2011.

At the event, Capps – who represents California’s Central Coast (24th) District, where REC Solar’s headquarters is located – discussed the benefits of green technologies with the Larrabees and representatives from REC Solar and PG&E. The visit made it clear that Capps remains committed as ever to clean energy, not only for the environmental impact but for the impact on the economy as well.

“Green jobs are reducing our dependence on fossil fuels and contributing to our local economy,” Capps said, prior to last year’s election. “… There is a pressing need for smart investments in energy efficient construction, advanced clean energy manufacturing, and strengthening our nation’s infrastructure.

“Here on the Central Coast, we’ve already seen significant growth in the renewable energy and energy efficiency fields thanks to innovative companies like Transphorm, Clipper Wind and REC Solar, and our premier colleges and universities that are leading the way. However, more must be done. Increasing green job creation will help address job shortages, meet industry demand for a skilled work force, reduce our dependence on foreign oil, and boost America’s global competitiveness.”

We here at REC Solar (where we recently completed our 10,000th residential solar installation) couldn’t agree more, and we look forward to helping generate more solar power, and more green jobs, for years to come.

CAN SOLAR HELP CALIFORNIANS BRIDGE THE GENERATION GAP?

With above-normal summer temperatures and Southern California’s San Onofre Nuclear Generating Station still offline for repair, California’s utilities and grid operators are closely monitoring peak electrical demand and supplies, and have asked customers to reduce electricity usage especially in the afternoon, when air conditioning typically ramps up demand.

With above-normal summer temperatures and Southern California’s San Onofre Nuclear Generating Station still offline for repair, California’s utilities and grid operators are closely monitoring peak electrical demand and supplies, and have asked customers to reduce electricity usage especially in the afternoon, when air conditioning typically ramps up demand.

Such conditions are perhaps a test for California’s Independent System Operator (CAISO), which manages 80% of the state’s electric grid, and utilities, who will contend with aged infrastructure and the retirement by 2020 of more than 12,000 megawatts of existing generation facilities, rendered obsolete by time, changed market conditions, or government mandate.

As a result, the CAISO has projected a shortfall of electrical generating capacity of 3,500 megawatts as early as 2017, even with significant amounts of large-scale solar, wind, and other renewables coming online in the next eighteen months, and planned construction of conventional generation facilities.

Businesses throughout California can insulate themselves now from higher electricity costs and potential brownouts by installing on-site commercial solar systems to cut their peak demand and reduce or eliminate electric bills.

REC Solar has installed many commercial solar systems nationwide, with most requiring little or no money down.

9/7 UPDATE: According to Vote Solar and the California Independent System Operator (CAISO), solar did indeed provide record-breaking amounts of electricity to the grid on August 14th, subsequent to the issuance of a ‘flex alert’ notifying Californians to immediately conserve electricity or face brownouts.

According to the CAISO: “California surpassed a major milestone during a recent heat wave that hit the sun-soaked state. More than 1,000 megawatts of solar power generation—equal to the size of two large gas-fired power plants—set new U.S. records twice in recent weeks.”

 

BUSINESS … POWERED BY THE SUN

When it comes to design prowess, operational efficiency and cost control, perhaps no company stands out more than IKEA. So when the world’s leading furniture retailer came to REC Solar looking to partner in the company’s long-term commitment to sustainability, we gladly stepped up to the opportunity. The result was installing expansive solar power installations on the rooftops of IKEA locations around the country.

When it comes to design prowess, operational efficiency and cost control, perhaps no company stands out more than IKEA.

So when the world’s leading furniture retailer came to REC Solar looking to partner in the company’s long-term commitment to sustainability, we gladly stepped up to the opportunity. The result was installing expansive solar power installations on the rooftops of IKEA locations around the country.

“I can’t think of a better-suited partner for REC Solar than IKEA,” said Ben Collinwood Director of National Accounts at REC Solar. “They explained their ambitious goals to our team, and we have created a series of custom 1+MW systems that take advantage of their substantial rooftops. Their investment will save IKEA a significant amount in electricity costs over the coming years.”

IKEA’s latest 132,000-square-foot PV array in consists of a 1,063-kW system, built with 4,620 panels. It will produce approximately 1,359,100 kWh of clean electricity annually, the equivalent of reducing 1,033 tons of carbon dioxide, eliminating the emissions of 184 cars or powering 117 homes yearly.

IKEA is just one of many exciting commercial solar installations REC Solar has been working on recently. “We have vast experience with helping every size business seize the power of the sun,” says Collinwood. “What we did for IKEA, we can do for any company—helping their commitment to environmental sustainability while permanently reducing energy costs.”

To learn more about our recent commercial installations and other exciting REC Solar news, visit our News and Events page. And if you missed it, be sure to check out our webinar on the risks and rewards of going solar in retail, which also features IKEA.