US: Commercial rooftop lease launched04. April 2012 | Markets & Trends, Global PV markets | By: Jonathan Gifford
New Jersey-based solar installer GeoGenix has launched a solar lease scheme for commercial rooftops. The deal is based around a 15-year power purchase agreement (PPA).
New business strategies are starting to emerge in the U.S., in the wake of the winding up of the Section 1603 Federal Government solar incentive, which provided tax credits for a third of the cost of a solar installation. While some efforts have been made to revive the tax credit, businesses are not waiting around to create new models to keep solar installations attractive.
One such model has emerged from New Jersey, with installer GeoGenix launching a de-facto solar lease program, under a 15-year PPA. Businesses in the “mid Atlantic” region of the U.S. can now have a photovoltaic array installed at their business without any upfront costs. GeoGenix will cover the equipment, installation, operation and maintenance costs.
Under the PPA, the business will them purchase electricity off GeoGenix for 15 years, at below-market rates. In a release announcing the new model, GeoGenix claims that the electricity rates will be up to 40 percent below market rates. The rates charged by the solar company will increase by two to three percent under an escalator clause.
GeoGenix will also reap the benefits of the Solar Renewable Energy Certificate (SREC) scheme. SRECs are financial instruments that are awarded for every 1,000-kilowatt-hour of electricity produced by a photovoltaic array and are purchased by utilities. There has been a high degree of uncertainty regarding SREC pricing in states such as New Jersey and in particular Pennsylvania, with an oversupply seeing prices plunge.
Avoiding the SREC fluctuations and uncertainty, claims GeoGenix, is an advantage to its commercial rooftop PPA scheme. Gaurav Naik, principal of GeoGenix, said in a statement announcing the scheme: "Because electricity prices are locked in, customers know exactly what they have to pay and don't have to worry about utility rate hikes. Also, since the PPA provider handles the SRECs [Solar Renewable Energy Certificates] there is no uncertainty about fluctuating SREC prices."
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