Alpaca is launching a new field study centered around solar energy generation and storage.

1. Field Study:
Rooftop solar energy
Q3 2022

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Solar 101
Solar industry trends
Solar for multi-family and C&I assets
Company profiles
Table of contents
4 Case studies
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SOLAR 101
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4. Sources: US Department of Energy (Office of Energy Efficiency & Renewable Energy)
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There are two main technologies that can harness the sun’s
energy and convert it into electricity
Photovoltaics (PVs) / solar panels Concentrated solar power (CSP)
Focus of this field study
Photovoltaic cells (PVs) convert sunlight directly into
electricity. PV cells can be connected to form solar panels,
and solar panels in turn can be linked together to form solar
arrays. Used in both small-scale and utility-scale generation.
Concentrated solar power (CSP) uses mirrors to
concentrate sunlight onto a receiver, which heats up a fluid
and creates steam, and this in turn can be used to spin a
turbine. Used almost exclusively for utility-scale generation.
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5. Sources: US Energy Information Administration
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Solar panels are made from semiconductor material; sunlight
excites the electrons within and generates a current
• The sun’s photons hit a solar panel and either (1) pass
through, (2) are reflected, or (3) are absorbed – only this
absorbed energy can generate electricity
• Once enough solar energy is absorbed by the
semiconductor material, electrons are dislodged and
migrate to the front surface of the panel
• This movement of electrons creates an imbalance (front
= negative, back = positive), which results in voltage
potential and allows electricity to flow into a circuit
• Solar panel efficiency is defined as the percentage of
sunlight that a panel can convert into electricity; it
depends on the PV technology used, the semiconductor
material, and a number of other key factors
• Efficiency has steadily improved over time; it averaged
<10% in the 1980s, increased to ~15% in the 2010s, and
now some commercially available PVs are >20%
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6. Sources: US Department of Energy (Office of Energy Efficiency & Renewable Energy), OE Solar, SolarReviews
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There are several different types of solar panel, each of which
has its own advantages and limitations
Silicon PVs
Monocrystalline Polycrystalline Thin film
Most efficient Efficiency Least efficient
Least affordable Affordability Most affordable
Non-Silicon PVs
• High performance at high price point
• Monocrystalline silicon wafers are made of only
one crystal structure
• There are now different varieties of
monocrystalline PVs, such as Passivated
Emitter and Rear Contact (PERC) cells
• Mid-tier performance at mid-tier price point
• Polycrystalline silicon wafers are made of
multiple crystal structures
• Low performance at low price point
• Thin film cells are made by coating a layer of a
highly absorptive semiconductor material (a
substrate) on a sheet of glass, plastic, or metal
• Typically use either cadmium telluride (CdTe),
copper indium gallium diselenide (CIGS), or
amorphous thin-film silicon (a-Si)
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All three types have a
lifespan of 25+ years

7. Sources: Solar Power World
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Solar panels can be installed in a wide variety of environments,
depending on the space available
Rooftop Ground-mounted Floating
Water
• Installed on residential, commercial, or
industrial / warehouse rooftops
• Affixed to the roof using rail mounts or
ballasted footing mounts
• Less expensive, but solar generation is limited
by the space and slope of a given rooftop
• Installed on farmland, vineyards, landfills, or
other brownfield sites
• Affixed to the ground using pole mounts,
foundation mounts, or ballasted footing mounts
• More expensive, but panels are often more
productive since the angle can be optimized
• Installed on lakes, reservoirs, or other suitable
bodies of water
• Typically more expensive to install compared
to land, but ‘floatovoltaics’ do not occupy useful
land and also reduce water evaporation
• Most popular in Asia (e.g., Singapore,
Thailand), where dry land is scarce
Land
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8. Sources: Federal Energy Management Program (FEMP)
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All solar installations are classified as either “front-of-the-meter”
(FTM) or “behind-the-meter” (BTM)
Front-of-the-meter (FTM)
Utility-scale installations
• Any solar generation and/or storage system that
sits offsite and feeds energy into the utility grid;
the energy must pass through the end customer’s
meter and be counted before it can be consumed
Behind-the-meter (BTM)
Residential and C&I installations
• Any solar generation and/or storage system that sits
onsite (on the premises of a home or business); the
energy is only meant to power that location and thus
does not need to pass through a meter
• Despite the name, BTM solar systems are generally
still connected to the grid so that they can feed
excess energy back into the grid in return for credits
– an arrangement known as net metering
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9. Sources: US Department of Energy (Office of Energy Efficiency & Renewable Energy)
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Solar installations can be further categorized into one of three
types; community solar is considered a hybrid
Residential Commercial & Industrial (C&I) Utility-scale
Behind-the-meter (BTM) Front-of-the-meter (FTM)
Community
While residential by definition,
multi-family buildings can
closely resemble C&I
depending on the size
Multi-family
Office
Single-family Retail
• Community solar is a hybrid concept because while they are generally offsite, front-of-the-meter installations,
they are not limited to one asset type – a community solar project can be hosted on a multi-family building, a
big-box retailer, a warehouse rooftop, or built as a ground-mounted solar farm
• Individuals and businesses in the area who cannot host solar systems themselves are able to buy a stake in
these projects and receive an electric bill credit for the electricity generated by their share in the solar array
Industrial / warehouse
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SOLAR INDUSTRY TRENDS
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11. Sources: Solar Energy Industry Association (SEIA)
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Solar capacity has grown significantly over the past decade –
the US now has over 120 GW of solar capacity nationwide
• Solar capacity has grown at a 33%
CAGR over the past 10 years,
primarily driven by residential and
utility installations; there are now
>120 GW of installed capacity,
enough to power ~23M homes
• As solar becomes increasingly
cost-competitive, its share of total US
electrical generation has climbed from
~0.1% in 2010 to about ~4% today
• For the past 3 years, solar has been
the #1 source of new electric capacity
added to the grid; in 2021, nearly half
(46%) of all new electric capacity
added to the grid came from solar, the
highest level in history
Cumulative US solar installations
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12. Sources: Solar Energy Industry Association (SEIA)
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Much of this growth in solar capacity has been fueled by rapidly
falling PV prices
• In addition to government incentives
and new regulations, the growth in
solar capacity has been driven in
large part by declining prices; the cost
of solar PVs has dropped by
roughly 60% over the past decade
• Before incentives, the price of an
average residential PV system has
fallen from ~$40K in 2010 to ~$20K
today; utility-scale prices now range
from $16/MWh - $35/MWh, similar to
other forms of generation
• That said, over the past 12 months,
COVID manufacturing disruptions and
supply chain challenges have
temporarily pushed up prices
US solar PV pricing trend & installation growth
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13. Sources: Solar Energy Industry Association (SEIA)
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Residential: California accounts for the bulk of residential solar
capacity in the US, but other states are quickly gaining ground
Annual US residential solar installations
Cumulative US solar installations by state
• California currently has ~1.3M homes with residential
solar systems, and this number is set to grow further
as all newly constructed homes in CA will have solar
• States like New York, Texas, and Florida have
introduced policies to make residential solar more
attractive to homeowners
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14. Sources: Solar Energy Industry Association (SEIA)
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C&I: C&I solar has begun to take off as large companies seek
to meet their ambitious emission-cutting goals
Commercial solar capacity by company
Commercial solar PV installations & penetration growth
• C&I solar is accelerating now that companies have
unlocked new financing options; two-thirds of all
commercial solar capacity in place today was installed
only after 2015
• Tech giants (e.g., Apple, Amazon, Google, Facebook) and
mass retailers (e.g., Walmart, Target) have been leaders in
corporate solar adoption; data center operators (e.g.,
Prologis, Switch) are also rapidly installing solar
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15. Sources: US Department of Energy (Office of Energy Efficiency & Renewable Energy), Solar Energy Industry Association (SEIA)
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Community: Community solar is gaining popularity as it
spreads beyond NY, MA, and MN
• Community solar brings the benefits of
solar energy to individuals and businesses
who are unable to host a solar system –
either because they rent, live in a multi-
tenant building, live in an unsuitable
location, or have a small roof
• Although there are 41 states with at least
1 community solar project today, just 3
states (i.e., NY, MA, and MN) make up
three-quarters of the market
• As of December 2021, 22 states (plus
DC) now have policies on the books to
formally support community solar, either
through mandates or incentives
• Experts believe community solar will open
up previously ineligible sites and drive
future solar adoption; according to
forecasts, the US will add over 4.3 GW of
community solar over the next 5 years
Cumulative US community solar installations
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16. Sources: Solar Energy Industry Association (SEIA)
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Solar capacity is poised for continued rapid growth through
2027 and beyond
• 2021 proved to be a record year for
solar installations; we are going to
see a YoY decline in 2022 due to
ongoing procurement issues
• In 2023, solar capacity growth is
expected to rebound strongly as
supply chains normalize
• As a result of the Inflation Reduction
Act and ITC extension, the US is
projected to install nearly 200 GW
of new solar capacity, about 2x the
current installed base
Forecasted US solar installations
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17. Sources: Solar Energy Industry Association (SEIA)
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Solar energy generation is increasingly being coupled with
solar battery storage
• Homeowners and businesses alike
are increasingly looking for a solar
generation + storage solution
• In 2021, ~10% of behind-the-meter
solar systems were paired with
battery storage, but by 2025, this % is
projected to rise to ~29%
• Batteries are viewed as a hedge
against changing net metering
policies; if net metering rates fall,
homeowners can consume their solar
energy at night rather than selling
excess energy back to the grid
• This trend is also playing out in the
utility-scale market, where there has
been over 45 GW of commissioned
or announced projects involving
storage
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SOLAR FOR MULTI-FAMILY
AND C&I ASSETS
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19. Sources: World Economic Forum
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Real estate accounts for ~40% of global emissions and energy
usage; solar can play a critical role in decarbonization
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20. Sources: Greystar images
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Residential Commercial & Industrial (C&I)
Conventional Multi-family Office
Industrial / warehouse Life sciences / labs
Student Senior (55+)
Single-family Retail
Historically, solar panels were mainly installed on single-family
homes, but they are now becoming popular on other asset types
Red boxes indicate primary
field study focus areas
Includes garden, mid-rise,
and high-rise formats
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21. Sources: McKinsey & Company, Industry participant interviews
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Multi-family Commercial & industrial (C&I)
Operating cost
savings
• A landlord can use solar energy to power
common areas (e.g., elevators, hallways); if
units are individually metered, a landlord can
potentially allocate solar savings to tenants too
• Rooftop solar arrays can power some or all of a
warehouse’s operations
New revenue
stream
• If a building has a net metering arrangement with the local utility, the owner can receive income for
energy put back into the grid; alternatively, a building can ‘rent’ their rooftop to an owner/operator
Government
incentives
• Tax credits, deductions, and other incentives are available at both the federal and state level
(specific programs vary by state)
Regulatory
compliance
• Many states and cities have regulations on the books – or have regulations going in effect shortly –
that will force buildings to consider solar (e.g., NYC Local Law 97)
Energy hedging • Reduces exposure to rising oil & gas prices predicted over the next 15-20+ years
Capital raising • Capital allocators are increasingly making real estate investments that align with ESG goals
Tenant demand
• Certain renters, particularly Millennials and
Gen-Zs, may factor solar installations into their
rental decisions
• Many companies have made public
sustainability commitments and are actively
looking to reduce their warehouse emissions
Generous incentives, stricter regulations, and ESG concerns are
making solar more attractive for multi-family and C&I assets
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22. Sources: Solar Energy Industry Association (SEIA), DSIRE
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40 states have mandatory net metering rules that require
owners to be compensated for energy put back into the grid
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23. Sources: US Department of Energy (Office of Energy Efficiency & Renewable Energy), Solar Energy Industry Association (SEIA), DSIRE, EnergySage, Sunrun
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A broad range of government incentives exist to lower the
upfront capital investment and boost ROI
Federal State / Local
• As of July, the ITC stood at 26% and was scheduled to step down to
22% in 2023 before finally expiring in 2024
• However, as part of the Inflation Reduction Act passed in August, the
ITC was increased from 26% to 30% and extended for another
decade (runs through 2032)
• The ITC is based on the tax basis of the solar system and only applies
in the year in which it was placed into service
• In addition to the ITC, the owner can also take advantage of
accelerated depreciation
• Many states offer Property Assessed Clean Energy (PACE)
financing to reduce the upfront burden
• State-specific programs vary widely – some examples include:
• New York
• NY State Solar Energy System Equipment Tax Credit: 25% tax
credit ($5K max)
• Solar Electric Generating System Tax Abatement (SEGS): exempt
from any added home value
• Solar Project State Sales Tax Exemption: exempt from 4% state
sales tax
• New Jersey
• Solar Investment Property Tax Exemption: exempt from any
added home value
• Solar Panel System Sales Tax Exemption: exempt from 6.625%
state sales tax
Resources like DSIRE and EnergySage can help real estate owners identify the specific incentives for which they qualify
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The DOE has published a comprehensive
guide to better understand how the ITC
applies to commercial solar installations
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24. Sources: McKinsey, The New York Times, Building Design & Construction, NYC.gov, PV Magazine
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In addition to these ‘carrots’, state governments are introducing
mandates and other rules to hasten solar adoption
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In March 2022, the SEC proposed a new rule that
would “enhance and standardize climate-related
disclosures for investors”; in its current form, it will
drive demand for solar installations as public
companies push their landlords to put forth concrete
plans to reduce emissions.
Since 2020, California has required all newly built
single-family homes (as well as multi-family
buildings up to three stories) to have PVs installed;
it is currently considering a new law that would
expand this requirement to commercial buildings
and high-rise residential projects.
Massachusetts is currently considering a bill
(S2165) that is modeled after California’s policy;
it would require rooftop solar panels on most
residential and commercial buildings, with some
exceptions.
Part of the Climate Mobilization Act, NYC’s Local
Law 97 will require most buildings over 25K square
feet to meet rigorous energy efficiency and
greenhouse house gas limits by 2024.
In 2022, in response to the Russian invasion of
Ukraine, the European Commission proposed a
rooftop solar requirement for all commercial and
public buildings starting in 2027, and for all
residential buildings by 2029.
In 2021, New Jersey passed a law requiring all
newly built warehouses to have “solar-ready
rooftops” – that is, they must reserve up to 40% of
their roof space for solar arrays.
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25. Sources: Industry participant interviews
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For multi-family and small C&I solar installations, high
single-digit / low double-digit unlevered returns are typical
• Rooftop solar returns can vary significantly from
project to project, even in the same asset class
• Exact return profile is dependent on the size of the
system, state in which it’s located, current energy
consumption, creditworthiness of the offtaker, structure
of the transaction, and a variety of other factors
• Average unlevered IRR for a typical multi-family or
small C&I project (100 KW) is in the ~8-10% range
• This represents the return on the installation overall, and will be
divided up between cash equity investors, tax equity investors, and
debt holders
• Utility-scale developments have unlevered IRRs in the ~3-5% range
while residential might be ~12%+; ~8-10% reflects the moderate
degree of risk
• Payback period can be anywhere from ~2-10 years
depending on the state, but ~4-5 years is most common
• For instance, in NY, the incentives are heavily front-loaded so you
reach breakeven earlier
• Conversely, in NJ, the incentives are more evenly distributed over
time which pushes breakeven further out
~8-10%
Average unlevered IRR
~4-5 years
Average payback period
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IRR likely to increase
as interest rates in
the US rise

26. Sources: The New York Times
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Despite these tailwinds, two recent developments could
potentially reduce the ROI and slow solar’s momentum
• Since 2012, the US has imposed tariffs on Chinese-made solar panels to prevent China’s state-subsidized industry from
“flooding the US market”
• As a result, most US installers buy solar panels from Southeast Asia (i.e., Cambodia, Malaysia, Thailand, and Vietnam);
together, these four countries account for about 80% of the most popular type of solar panel used in the US
• In early 2022, Auxin Solar, a small US-based manufacturer, claimed that these panels in fact use Chinese-made wafers and
accused China of circumventing anti-dumping laws, prompting the Department of Commerce to open an investigation
• The threat of retroactive tariffs has effectively frozen all Asian imports, and forced installers to cancel or postpone more than
300 solar projects nationwide
• Fortunately, in June 2022, the Biden administration announced a 2-year pause on any new solar tariffs to prevent further
disruption; it also invoked the Defense Production Act to stimulate domestic manufacturing
That said, the investigation is ongoing and the resulting uncertainty could continue to dampen demand for solar panels
Ongoing US
federal
investigation
Potential
changes to
net metering
• Currently, 40 states (plus DC) have mandatory net metering rules, which require utilities to compensate solar rooftop owners
for the excess electricity they put back into the grid
• However, several US states (e.g., California, North Carolina) are under pressure from local utilities to alter net metering
policies and reduce their payouts
• For instance, in California, the Public Utilities Commission is considering a plan that would charge customers a ~$50 monthly
“grid participation charge” and reduce net metering credits by as much as 80%
• Florida was recently considering a similar bill, which aimed to significantly reduce the value of net metering, but Governor Ron
DeSantis vetoed the bill citing inflation concerns
If these plans ultimately pass, they will hurt the ROI of rooftop solar and deter behind-the-meter installations
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27. Sources: Company websites, Industry participant interviews
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Solar consultancies exist to guide clients through the end-to-end
process from initial feasibility through to implementation
Company Description Sample clients / case studies
Environmental
consultancies
• Bright Power is a provider of both energy and water management services
for real estate owners, operators, and investors – from utility bill analytics
to physical improvements
• Within solar, it offers a full suite of services from early-stage feasibility to
‘turnkey design-build project implementation’
• Bozzuto Management, Equity
Residential, John Rose Companies,
Nuveen Real Estate, RDC
Development, Related
Specialist solar
consultancies
• Founded as part of the Rocky Mountain Institute (RMI), Black Bear Energy
is a ‘buyer representative’ that helps commercial, industrial, and
multi-family owners with the full solar value chain
• Serving as commercial advocate, it has completed 600+ solar projects
(450K+ MW) and claims $5-50 in solar value creation per sq. ft.
• AEW, AMC, Clarion Partners, Equity
Residential, Iron Mountain, LaSalle
Investment Management, Link
Industrial, STAG Industrial
• SolarKal is a B2B marketplace that connects organizations to 150+
pre-vetted solar providers; each company also has a dedicated human
advisor to provide expert guidance
• The platform has facilitated >$200M in closed deals with “30% cost
savings, on average, compared to traditional solar energy procurement”
• Bergen Logistics, Cornell University,
Halpern Real Estate, New Jersey
Motorsports Park
Turnkey solar
developers
• Wunder was initially focused only on C&I solar financing; with backing
from Ares, Blackstone, Keyframe, and other institutional investors, it was
able to offer fast and flexible financing options to clients
• It has since expanded beyond financing to provide an all-in-one turnkey
solution, including permitting, design, installation, and ongoing operations
• Sample C&I projects include a CA
shopping center, DC charter school, NJ
warehouse, and HI homeowners'
association, among many others
Utility-owned
consultancies
• Powerflex (fka EnterSolar prior to EDF acquisition and re-branding)
advises clients on onsite solar, battery storage, EV charging, microgrids,
and energy management systems
• In addition to its advisory work, it also sells several software products that
provides real-time data and insights into a client’s energy assets
• ACME, Amazon, BJ’s, Bloomberg,
Fordham University, Honeywell,
Pepsico, Regeneron, Swiss Re, Target,
UNFI, USAA
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CASE STUDIES
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Sources: The New York Times, StuyTown.com
Multi-family case study: Stuyvesant Town (New York, NY)
• Stuyvesant Town-Peter Cooper Village (“StuyTown”)
is a 110-building complex on the east side of
Manhattan; completed in 1947, it remains the largest
multi-family development in the US (27K residents)
• Blackstone, the current owner, installed more than
9,600 panels (3.6MW) across the site’s 22 acres of
rooftop in 2019, making it the largest private
residential array in the country
• StuyTown sends the solar energy back into the
electrical grid and receives a credit from ConEdison
against its electricity bills
• Residents do not see direct benefits because units
are not separately metered for electricity (utilities are
included in monthly rent)
• Blackstone spent nearly $10M in the project – “nearly
a quarter of that — $2.3 million — was offset by
incentives provided by the New York State Energy
Research & Development Authority, through its $1B
NY-Sun program”
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Sources: Solar Power World
Senior housing case study: Villa Catalina (Tucson, AZ)
• Villa Catalina Apartment Homes is an 80-unit
55+ community in the heart of Tucson, AZ
• It partnered with financial firm Solaris Energy and
installer Solar Gain to add solar power (152 kW) on
top of the senior living complex
• Installation produces about half of the energy
consumed and significantly reduces the HOA’s
electricity rate
• Solaris provided the upfront capital, and Villa Catalina
pays for the solar electricity as a service on a
monthly basis; the complex has the opportunity to own
the solar system outright after a 6-year period
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Sources: Cornell University website
Student housing case study: Cornell University (Ithaca, NY)
• Cornell University has invested heavily in rooftop
solar systems and solar farms in order to achieve its
goal of carbon neutrality by 2035
• To date, Cornell has completed 15 solar projects,
which provide ~20% of its campus electricity needs
• Rooftop solar projects include:
• 2007: Cornell Campus Store Solar Array (2.2 KW)
• 2012: Human Ecology Solar Array (76 KW)
• 2014: Fernow Hall Solar Skylight (2.2 KW)
• 2014: Snee Hall Solar Array (3.5 KW)
• 2015: Klarman Hall Solar Array (20 KW)
• 2021: North Campus Housing (Phase 1)
• 2022: North Campus Housing (Phase 2)
• The North Campus solar installation will be the
largest campus project to date; once completed in
2022, it will generate roughly 1.1MW of electricity
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Sources: The New York Times, Power Grid International
Industrial case study: STAG warehouse (Hampstead, MD)
• STAG Industrial, a Boston-based real estate
investment trust, owns a 1.1M sq ft warehouse in
Hampstead, MD that it leases to Penguin Random
House, a book publisher
• STAG leases the 23-acre roof to Summit Ridge
Energy, a solar developer, which installed a 9.2 MW
solar array; it is thought to be the largest rooftop
community solar project in the US
• The rooftop system sends its energy back into the
grid, lowering utility bills for ~1,300 homes and
businesses in the local area; the warehouse itself still
runs on power from the grid
• This is the first of three solar projects STAG is
working on in the state of Maryland – they are all part
of Maryland’s community solar program to provide
low-cost renewable energy to surrounding homes and
businesses
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Sources: Solar Industry Magazine
Industrial case study: Anheuser Busch (various locations)
• Anheuser Busch partnered with ForeFront Power, a
leading solar developer and advisor, to install solar
systems at 8 of its craft breweries across the country
• ForeFront has completed solar installations at the
following locations:
• Goose Island Beer Co. in Chicago, IL
• Blue Point Brewing Co. in Patchogue, NY
• Virtue Cider in Fennville, MI
• Breckenridge Brewery in Littleton, CO
• Devils Backbone Brewing Co. in Lexington, VA
• Four Peaks Brewing Co., in Tempe, AZ
• Karbach Brewing Co. in Houston, TX
• 10 Barrel Brewing Co. in Bend, OR
• Combined, these systems will generate 2.4
megawatt-DC (MWdc), and in doing so, will reduce
AB’s carbon footprint by ~2M lbs of CO2 annually
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Sources: Company websites
Industrial case study: Link Logistics (various locations)
• In 2021, Blackstone announced it would take part in
New Jersey’s Community Solar Pilot Program by
bringing together two of its portfolio companies – Link
Logistics, a warehouse operator, and Altus Power, a
clean electrication company
• Under the agreement, Altus and Link will install solar
arrays on warehouse rooftops across the state; the
systems are expected to generate 35 MW and will
lower energy bills for approximately 6K customers in
the area, including underserved populations
• The initiative supports Altus’s revenue growth,
while also helping Link achieve its ESG goal of
becoming carbon neutral by 2025
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