Solar electricity generation using Photovoltaic or “PV” has been around for over 65 years. This technology is a proven method of electricity generation and many of the panels installed long ago are still producing electricity today. Today’s solar panels come with 25 year warranties from huge multinational companies. National firms such as Costco, Target, Walmart and other retailers have recognized this and have installed solar on all of their buildings in California. The state and Federal governments have leasing criteria on a new lease that requires solar if available. The nice thing about solar is that the more you learn, the more benefits you find.
SO WHY NOW?
There has been a 75% decrease in the total cost of installation over the last 8 years. In addition, the price of electricity has risen 40% in PG&E territory in the same period. As you can see, this will dramatically improve the payback on your investment. In most cases, if you pre-pay for 3+ years’ worth of electricity you can get the next 25 years at an 85% discount. That is the real beauty of investing in solar. You are going to spend the money anyway; you might as well get something for it. The only risk is that you know longer need electricity and the sun won’t shine. If you have looked at solar in the past, and decided it was too expensive and took too long to pay back, it is worth another look. We are finding our buyers think solar is a way to make money faster than any other investment and create an effortless future income stream. As the solar industry has matured, the financing has also become more main-stream. We have no-money-down financing available for all of our projects.
THIS WORKS FOR EVERYONE
Solar is becoming a mainstream improvement for new construction as well as a retrofit for older buildings. Where we used to see a 10-15% return on investment (ROI), we are now seeing a 30-45% ROI, making it compelling for building owners This is true for owner-occupied as well as landlord owned buildings. For a landlord, we can supply generation to cover the house meter usage as well as sell electricity to the tenant to cover the main meter usage. This is done through a Lease Amendment, for which we have all the paperwork, and revenue grade monitoring, which we install with every solar system. We offer full service on our systems for all maintenance and billing services and since there is minimal maintenance or service required, the fee is also minimal.
If you plan on using an SBA 504 loan in the future, you will find solar is a requirement. We will calculate the amount required, and discuss the various options based on present and future values, with a full risk analysis, as well as handle all the final design, permits, construction and fulfillment.
In many cases we also include a new roof or LED fixtures in the financing package. This allows you to upgrade your building to a Modern Factory or Office that is financed with the savings on your electricity bill.
At one recent installation, a landlord added solar to his building to increase the income from the building and to keep his state tenants when their lease runs out. There are new California State leasing regulations that add significant value to solar on a building, and allow you to charge more than a similar building that does not have solar. We installed the solar system at an after tax cost of $309,000. This system is generating $108,000 of electricity revenue annually, resulting in a 35% return on their investment. In addition, this income results in an increase in the building value of over $1,350,000, assuming a 8% Capitalization Rate. All of this was done with no-money down financing that is cash flow positive from day one and takes less than six months from your first call to your first income check.
At a machine shop in San Jose, the owner purchased a system with a net cost of $622,000. His electricity cost went from over $14,000 per month to $20 per month. He used an SBA loan and was cash flow positive from day one. He was able to take back all the taxes he paid the previous year. The beauty of this example is that Jay has two sons in the business and they will be paying their father for electricity after he retires. He brought them into the room to see him sign the contract because it was such a great event for his legacy. Over the next 25 years, the family will keep $7.6 million that would otherwise have been paid to PG&E.
These examples are not picked for their returns, these are typical and we actually have some that are better than these. Combined with an LED upgrade, a machine shop in Cameron Park is going to enjoy a 57% return and increase his personal income from his buildings, which he leases to his business, by $20,000 per month. This amount will be escalating with the typical 5% annual increase in PG&E’s Rates. If a cash flow struggle hits in the future, he can always withhold payments to himself until the business recovers. Try that with PG&E.
Electric rates escalate every year, with no warning or even notification that it has happened. Compare this month’s bill to the one from last year. If your solar system is providing your electricity, the utility company has no power to raise your bill even if they do raise their rates. This is appealing to owner/users who have businesses that require large amounts of electricity. They have essentially locked in the price of their electricity for the next 35 years without having to worry about any future price increases. This happened at the Sacramento Jet Center and they have locked in their price for the next 35 years, and the owner there is in the process of adding solar to his other buildings!
Now is the time to look into solar because with returns like these, the incentives are not going to be extended. We are seeing paybacks less than 2 ½ years! The Federal Tax benefits will be sun setting in 2020 and this will have a dramatic effect on the future returns of solar installations. It is like water rights, the first ones in will always have the most benefits.
With CitiGreen, we will visit your site; perform an electricity audit on your usage and your electric utility bills. After that, we will present to you a free itemized proposal of how we plan on reducing your electric bill. You can look at the numbers and then decide.