Businesses Gradually Embracing Solar Energy
Last week, National Grid announced that it is establishing an online platform in Rhode Island that will help customers add solar to their energy portfolio.
SolarWise Rhode Island, which is part of National Grid’s 2016 Rhode Island Renewable Energy (RE) Growth Program, will be available to residential and business customers when it launches this spring.
The platform, which is being created in cooperation with Boston-based EnergySage, will feature The SolarWise Marketplace. The platform will provide objective information on solar energy and a reverse auction process in which prospective customers describe their projects in great detail and are provided with quotes and financing options by potential installers. The program is open to new and existing structures.
Solar energy has taken off more slowly in the business than residential sector. EnergySage Founder and CEO Vikram Aggarwal expects to see the business sector to increasingly take advantage of solar in general and the SolarWise program in particular. It has a distance to go, however: Aggarwal estimates that the company’s customer base is 90 percent to 95 percent residential.
Of course, on an apples-to-apples basis there always will be more residential customers simply because there are more residences. However, the business market has been slower to form even if the numbers are normalized.
Aggarwal sees reasons for this. The first is that tenants, not landlords, generally pay for energy. Therefore, landlords don’t have incentive to invest in these projects. A second reason is that the nature of business spending and the tax laws often don’t make solar projects as advantageous as it is for homeowners. Finally, new financing instruments such as power purchase agreements are only now becoming common. Commercial lending for solar projects is maturing slowly, though progress has been made.
The tide is turning, Aggarwal says. At the highest level, the profile of renewable energy is much higher and is overwhelmingly positive. Indeed, the benefits are so pronounced and the downside so minimal that a common reaction among people is to think that solar is too good to be true. “They say, ‘If it is such a no-brainer, what am I missing?’ said Aggarwal.
That phase is fading as people increasingly understand that they are not missing anything. On the commercial business case is even stronger than the residential, Aggarwal said. Solar plays into needs that are largely absent in for homes. In addition to cutting costs and helping the environment – which of course are priorities for both businesses and home owners — solar power diversifies procurement and improves an organization’s image. Gradually, the financial and marketing infrastructure supporting business use of solar is catching up.
Aggarwal says that the common wisdom is shifting. Landlords are beginning to see solar as tool with which to attract tenants as opposed to an investment with no payback. This change – from liability to asset for those looking to keep their properties occupied – is powerful. On the financing side, power purchase agreements (PPAs) and other instruments are making funding more accessible.
Aggarwal says that EnergySage – which he describes as “the Expedia or Kayak of solar” — works with about 90 financing-related organizations and more than 300 installers. The installers, he says, are regional in nature. It is active in more than 30 states and works with several hundred business customers each year.
Characteristics of the commercial customer handled by EnergySage – and, by extension, the profile of the businesses that are open to integrating solar into their energy portfolio – are that they have high and volatile energy bills, a desire to protect their businesses with diverse procurement strategies and have ample parking lot, rooftop or other areas in which to put the panels. The percentage of energy procured in this way and the size and type of business varies. “The type of commercial customer that is leveraging us is very, very broad,” Aggarwal said.
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