By Vladimir Naoumov
Solar energy generation is quickly becoming a mainstream business. It contributes to sustainability and can be done profitably with appropriate incentives. Installing a solar photovoltaic (solar PV) system on your roof may improve the building’s LEED score or generate significant income. The financial side of solar PV projects has been a hot topic lately, while risks and their mitigation are commonly neglected. In this article we shall discuss the technical risks.
The current life expectancy of a solar PV system is 25 to 30 years. Two major questions must be considered prior to asking for quotes: Is the roof suitable for a solar PV installation? How do you want to be involved in this solar project?
Sales rep Don Ross was featured on his solar roof in the August 2008 issue of REM. Photo by Peggy DeWitt.
A good roof should have:
* Sufficient space: Roof space is often used up for air handling units, gas pipes and other equipment. Future building upgrades that require roof space should also be carefully considered. As a ball park number, a 100 kW system would require about 20,000 sq. ft. of unobstructed space on a flat roof or half of that on a tilted one.
* No shading: Even a small shade will cause significant loss of electricity production.
* New or due for re-roofing: The cost of installation is up to a quarter of the project cost. Temporarily removing the system for re-roofing or repairs will cost dearly. An ideal roof has enough life left to outlive the solar system, or is old enough to be replaced prior to installation.
* Structural stability: Installing a solar system adds load to the roof. The installation will contribute to dead load, wind load and snow accumulation.
* Grid capacity: If the system is to be connected to the grid, the local distribution company should be consulted to ensure smooth integration. “Feasibility level” roof assessment is often offered by solar developers free of charge, but there is a price to pay. When accepting a free assessment you commit to making your decision based on information provided by a salesman.
Now you must consider how you want to be involved in the project. There are three common options on which a variety of practical solutions are based:
* Lease your roof. In this case another company designs, builds, owns and operates the system while paying you rent. Although most risks would lie with the new tenant, responsibility for roof condition through the project life, as well as for other uses of the roof, stays with the owner. No investment is required, but financial gain is also low.
In some cases solar projects can be structured in ways that the developer finances re-roofing in lieu of lease payments.
* Own a system designed and built by another company. In addition to roof-related risks, the owner will be exposed to the energy production and system malfunction risks. This option requires substantial investment, but can offer savings from using electricity or revenues by selling it to the grid.
* Design, build and own the system. Additional profit comes from margins on equipment procurement, design and installation. This option may interest owners of a big portfolio of roofs. It offers the highest profits with highest risks.
Whichever option you choose, installation may affect your ability to access the roof for many years. To allow for work to be done on the roof carrying a solar system, be it roof repair or installation of HVAC equipment, the property owner should plan in several areas:
* System design: Some systems are easier to relocate than others. Some systems allow roof access even in the under-panel area.
* Legal: If you lease the roof, ensure that your contract allows you access to the areas of the roof you may need.
* Organizational: Who will temporarily relocate solar equipment?
* Financial: Who will pay for equipment relocation and cover lost energy sale revenues?
Solar installation may also affect the roof warranty due to damage of the membrane during installation, additional wear and tear resulting from unforeseen traffic on the roof, or from excessive loads on the roof structure due to system weight, wind load or snow accumulation. This risk can be mitigated through adequate system design, contracting and co-operation with your current roofer.
If the property owner chooses to own a PV system fully or partially, energy production equals revenue. Several factors will affect profitability:
* System design: The design is a balance between the highest output and actual roof location, structure and condition, as well as between different panel, racking and inverter technologies.
* Components: Although panels are becoming a commodity, one should look at their bankability, efficiency vs. cost and track record in other projects. The same goes for inverters. Racking should be tuned to roof location and structure.
* Proper installation: Apart from the concerns about your roof during the installation period, one should be wary that the system is installed as designed and without damage to the cabling or the panels themselves.
* Monitoring: A monitoring system allows you to keep track of energy production and helps identify problems as soon as they arise.
* Maintenance: A maintenance schedule is a must, as some electrical components should be regularly inspected. The owner should expect to replace a central inverter in about 10 years, while micro inverters will need replacement much more often due to their large number and shorter life expectancy.
Even if the property owner chooses to lease the roof, system design and quality of components still matter: along with possible damage to the roof structure and membrane, inadequate design may cause excessive maintenance traffic on the roof and even the inability of solar tenant to pay the lease.
The cheapest system, or the most advanced one, by no means ensures the best ROI. An unbiased professional analysis of available options and risks, as well as careful project planning and implementation, provides for a profitable worry-free solar project.
Vladimir Naoumov B.A.Sci, LEED GA, is a project manager with GreenQ Partners, a consulting firm that specializes in helping landlords set up rooftop solar PV projects to maximize their ROI and lower project risks. Email: [email protected]
