EDISON – With solar panels sprouting on utility poles and rooftops across the state, interest in solar and other renewable energy sources is clearly resonating across New Jersey. To address the myriad of issues, a NAIOP New Jersey program titled “How to Choose, Design, Finance, Install, Insure and even Profit from a Sustainable/Clean Energy System” was the first in a series of seminars focused on the commercial real estate industry’s perspective.
New Jersey has already emerged as a fertile ground for the technology, so much so that, “companies from all over the country are coming here to get a piece of the action,” observed Rob Crespi of Wolff & Samson, the program’s moderator. “Federal and state incentives have created an environment where double-digit returns on investments are possible.
“Various forms of financing are available, and money is coming into the solar/renewable energy industry,” Crespi said. “With the evolving legislative landscape on the federal and state levels, including a re-evaluation of the state’s energy master plan, among many other issues, a lot is expected to happen in the coming months.”
One of the architects of the state’s energy master plan is Assemblyman Upendra Chivukula, who chairs that body’s Telecommunications & Utilities Committee. The combination of aggressively high targets in the reduction of greenhouse gases (“New Jersey is part of a 10-state compact”) with the fact that no new power plants have been built in the state in 25 years adds up to “a critical role for renewable energy,” he told seminar attendees.
“New Jersey is serious about solar energy—that is our message to the financial community,” he said, noting that besides solar, off-shore wind and hydroelectric are a substantial part of the equation. “New Jersey’s extensive legislative effort to encourage and support solar/renewable energy clearly demonstrates that we are serious about it. We aren’t perfect, and there are many issues to be addressed, but our goal is to make New Jersey a leader in this technology.”
“Renewable energy projects are popular in New Jersey,” confirmed Steve Kisker of Wolff and Samson, leading off a panel titled ‘How and Where to Begin.’ “If you are not involved, you should be,” he continued, prefacing a detailed overview of the state’s statutory and regulatory framework for structuring a solar energy project. Available programs include Solar Renewable Energy Credits (SRECs) and the Solar Energy Advancement & Fair Competition Act. The latter, in his view, “separates New Jersey from all other states.”
Jeffrey Milanaik of Heller Industrial Parks, Inc., and current NAIOP New Jersey chapter president, described a journey that began as part of his company’s customer-centric approach and a company-wide effort to reduce costs, and evolved into HIP Solar LLC. Noting that 40 percent of his company’s buildings are on-line with solar, saving between 60 percent and 70 percent on energy costs, “the rate of return for Heller as an investor is a major upside.”
Brad Campbell of Swan Creek Energy, a former New Jersey DEP commissioner, emphasized the opportunity that solar/renewable energy creates for providers and users alike. “It is a very competitive market right now, and the scale of benefits revolves around how big the project is.
“We should also be looking at the bigger picture—not just the revenue stream, but also the energy efficiency,” Campbell said. “A solar project is a vehicle for a more comprehensive energy program.”
Discussing the various options to “go solar,” ranging from power purchase agreements, to a lease in lieu of power, to direct ownership, “the tax benefits are substantial and important,” said George Livanos of Sax Macy Fromm, leading off a panel titled “Executing and Funding a Plan.” For those considering solar, “all parties need to review the benefits and look at this as part of a complete business model.”
Art Kuyumchian of Sunco Industrial described the three simplest financing options: Straight cash (“the fastest option”), institutional financing (“the banks want longer-term contracts”), and power purchase agreements. “But there are a myriad of options, and there is always something new. The devil is in the details,” he said cautioning, however, about “teaser rates” offered by some providers.
Michael Hornsby, PSE&G’s product manager for renewable energy, discussed the PSE&G Solar Loan and the Solar 4 All programs. The former is an 81 MW program with $250 million available for loans. The latter is set to invest $515 million over the next two to three years, including pole-attached neighborhood solar and installations on PSE&G-owned and third-party sites.
On the subject of “Critical Considerations” as the focus of the third panel, Jack Fersko of Farer Fersko addressed insurance issues related to solar/renewable. He encouraged potential users to examine the key issues within the context of insurance for green development projects, study insurance product offerings, and specifically “examine coverage for solar development” and all of its potential nuances.
“Under a traditional commercial general liability policy, is failure to meet green certification grounds for coverage? Under a professional errors and omissions policy, do risks associated with green development fall outside the scope of ordinary negligence? These are the kinds of questions that need to be asked,” he said.
Concluding the final panel, energy tax consultant Charlie Goulding of Energy Tax Savers, Inc. discussed such issues as the nuances and regulations of selling power back to the grid. Structural consultant Dave Doran of Allied Building Products addressed roof and other structural concerns and considerations relating to installing solar.
“A lot has already been done in terms of solar and other renewable energy sources in New Jersey,” Crespi concluded, “and there is still a lot to do.”
Speaking at NAIOP New Jersey program titled “How to Choose, Design, Finance, Install, Insure and even Profit from a Sustainable/Clean Energy System” is Assemblyman Upendra Chivukula. Some of the other speakers included (l-r): Steve Kisker of Wolff and Samson, Brad Campbell of Swan Creek Energy, and Jeffrey Milanaik of Heller Industrial Parks, Inc., and current NAIOP New Jersey chapter president.
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