Bit by bit, people and companies are finding ways to make a

difference. Here's one, described below; many companies find the

notion of clean, sustainable energy to be a desirable one, yet are

hesitiant to ante-up the capital for the initial installation costs,

which can be substantial. Solution: companies willing to install such

energy generation capacity on the property of companies willing to

purchase it, but not willing to pay the up-front cost: a "win-win-win"

situation!!

http://www.nytimes.com/2006/10/21/business/21solar.html?th&emc=th

Sunny Side Up

Published: October 21, 2006

General Motors liked the idea of using the sun to power its buildings.

But until recently, one immutable economic fact held G.M. back: The

upfront costs were simply too high to justify the ultimate payoff.

A property manager examines the photovoltaic cells on the roof of a

General Motors warehouse in Cucamonga, Calif. The cells have the

capacity to generate as much as 1.5 million kilowatt hours of

electricity a year.

G.M. is not alone. Even solar energy's biggest fans concede that the

high investment costs have kept companies from pursuing what is

arguably the cleanest, most renewable and least politically sensitive

energy source around.

But now, G.M. and a small but growing number of other companies and

municipalities are getting solar energy from systems installed by

others. Even though the installations are right on their own roofs,

they buy the electricity much as they would from a utility's grid. And

because the companies that paid for the systems will get a steady

income, they can provide power from the sun at competitive electricity

rates.

Since June, the roof of G.M.'s parts warehouse in Cucamonga, Calif.,

has been host to a photovoltaic array with the ability to generate as

much as 1.5 million kilowatt hours of electricity a year. The

installation, which G.M. expects will provide half of the building's

electricity, cost G.M. nothing.

A solar developer called Developing Energy Efficient Roof Systems —

commonly called Deers — bought the equipment with money it raised from

private financiers. Deers and its investors own the cells; G.M. signed

a long-term contract to purchase the solar-generated electricity from

them, at a discount to the prevailing rate for electricity in the region.

These days, that rate is 9 cents to 10 cents a kilowatt hour; G.M.

expects that the solar system will reduce its overall electricity

costs by 10 percent a year.

"We assume the risk, because we know that companies like G.M. have

budgets to buy electricity, not to spend millions of dollars

generating it," said Jack P. DeLiddo, president of Deers.

G.M. is already negotiating with Deers to put a similar solar array on

a warehouse in nearby Fontana. "The savings are small, but it's

exciting to create such an environmentally sound project without any

need to shell out capital," said Kamesh Gupta, manager of planning and

programs for General Motors Energy and Utility Services, which

purchases all the energy used by G.M.

Similar deals are cropping up elsewhere. Some specify that the users

pay the solar developers a fixed rate for electricity, while others

specify a fixed discount to the going rate.

Other factors are involved as well. The parties generally negotiate

who will retain potential credits for reducing carbon emissions. When

the developers and their backers keep the carbon abatement credits,

they generally plan to sell them to companies that might otherwise

have trouble complying with rules planned in California and expected

elsewhere aimed at limiting global warming.

The electricity users could do that, too, but some of them might also

use the credits to offset emissions from other parts of their operations.

But the same logic underpins all of the deals: The electricity users

get a clean, reliable source of energy. The developers and their

backers get an equally reliable return on their investment — which can

be as high as $6,000 per kilowatt hour of capacity — as well as the

tax credits and rebates that California and other states offer for

renewable energy projects.

"Corporations like solar energy, but they would rather make sizable

investments in their core businesses," said Craig Hanson, head of the

Green Power Market Development Group, a consortium of large companies

working under the auspices of the World Resources Institute to promote

renewable energy. "But for the financiers, it's like buying the bond

of a triple-A-rated company. It may not offer a 20 percent return, but

it's a stable and secure investment."

The "solar services model," as Mr. Hanson calls the solar contracts,

is drawing interest from a diverse group of companies and financiers.

Alcoa is negotiating with developers to put solar cells on a

manufacturing plant, although it will not specify details. General

Electric Energy Financial Services has installed solar roofs that

provide half the electricity used by 23 San Diego schools.

Kevin Walsh, the G.E. unit's manager for renewable energy, said the

company was installing another seven. "For a financier like us, it's a

nice, steady stream of revenue with the risk virtually eliminated,"

Mr. Walsh said. His unit, he said, is negotiating with a "big box

retailer" to install solar roofs on some of its stores.

Retailers, which normally operate with the kind of razor-thin margins

that cannot support large capital investments on anything but the core

business, have been particularly receptive to the solar services model.

Whole Foods Market, in a deal with SunEdison, a solar project manager

financed by a group of investors that includes Goldman Sachs, has

solar cells providing about 10 percent of the energy it uses in three

stores and one warehouse, and plans many more. "There's just no

downside," said Jennifer McDonnell, green mission specialist for Whole

Foods.

- Ross Mayhew.

Posted to the Yahoo Group ClimateConcern