Considerations for Investing in Solar Energy
Introduction
This resource provides a basic list of considerations to help school and local government officials
prescreen sites for solar and understand the potential financial benefits of an investment in solar. While
not intended to replace a professional site assessment, this checklist provides information on key
physical, policy, and financial factors impacting a site’s suitability for solar.
Site Assessment
The costs and benefits of a solar energy system depend on a number of technical site characteristics.
Less than ideal conditions that increase the cost to install a system or diminish system output can
negatively impact overall project economics, reducing or eliminating the financial benefit of an
investment in solar.
The questions in this section will help you understand basic siting criteria for rooftop and ground-
mounted solar energy systems.
1. Are you interested in a rooftop or ground mounted system?
a. For rooftop systems, consider:
i. Available roof space. Solar PV panels with 15% efficiency require approximately
100 ft.2
of roof space per kilowatt. Does your proposed site have enough roof
space to accommodate a project of the desired size?
ii. Slope, Shading, and Orientation. The site should be free of shading from nearby
buildings, vegetation, or other obstructions (including equipment or fixtures on
the roof itself). A basic shading assessment can be performed using Google
Maps satellite images or using the ArcGIS Solar Radiation Graphics extension.
For unshaded locations, the maximum annual solar energy is received on a
surface that faces due south, with a tilt angle slightly less than local latitude.
Deviations from tilt angles may be recommended if there is a large difference in
seasonal loads. For winter-dominant loads, arrays should be tilted at an angle of
latitude +15°. For summer-dominant loads, arrays should be tilted at an angle of
latitude -15°. For south-facing arrays, tilt angles close to 30° (or a 7:12 pitch
roof) will produce very close to the maximum amount of energy for most
locations in the lower 48 states.
While orientation to the south will optimize production, arrays oriented to the
southeast and southwest will produce nearly the same amount of energy
(within 7%) as a system facing due south. Does your proposed site offer south-
facing, unshaded roofspace?
iii. Structural loads. Roofs should be able to withstand both the static and dynamic
loads associated with the PV system. Static loads (i.e., the system components)
will add between 3-6 pounds per square foot, depending on the mounting
system used. In addition, dynamic loads such as wind or snow loads should be
assessed in accordance with the American Society of Civil Engineers (ASCE)
international building code 7-05. At each attachment point, roofs should be able
to accommodate up to 45 lbs. of additional load. Is the roof at your site able to
accommodate the additional dead load required for a PV installation?
iv. Roof age and warranty. If the roof is due for replacement within the next 5 to 10
years, it may make sense to reroof the structure before (or during) the
installation of a rooftop PV system. Roof warranty information should be
reviewed to understand whether a mounting system that requires roof
penetration will void the warranty. A ballasted mounting method will minimize
or eliminate the need for direct structural attachments and penetrations, but
will be heavier than some other mounting types and will have very specific
installation requirements. For these systems, even if wind loading is not a
concern, it may be necessary to include extra restraints to protect against
seismic loads, where these are a concern. Depending on the age of your roof,
are there any plans to replace it where your system will be installed, and will a
PV installation void your roof warranty?
v. Electrical configuration. Assess whether the existing electrical distribution
system is suitable for interconnecting a PV system and to what capacity. This
requires a working knowledge of the National Electric Code, particularly Article
690. In addition, the system should conform with state interconnection
standards. Can a project of the desired size be installed given the site’s current
electrical configuration and can this system be interconnected to the electric
grid?
b. For large ground mounted systems, consider:
i. Useable acreage. One megawatt of solar PV requires approximately 6 acres of
direct unshaded, unobstructed land area. Areas with significant shading or that
contain obstructions (such as equipment or storage areas) should be subtracted
from the acreage total. Is there enough ground space to accommodate a
project of the desired size?
ii. Site slope. If the slope of the site is greater than 6 degrees (~10% grade), or
cannot be leveled at a reasonable cost, ground-mounted solar PV may not be a
viable option, or may require special mounting methods. If the project is to be
ground-mounted, what is the slope of the site?
iii. Distance to transmission lines should be less than ½ mile. Most properties in
dense to moderately dense urban setting will meet this criterion. Is the ground-
mounted project within a half-mile of a transmission line?
iv. Distance to graded roads should be less than one mile. Most properties in dense
to moderately dense urban setting will meet this criterion. Is the site accessible
by graded roads?
v. Land-use exclusions. Is the site an environmentally sensitive or preservation
area, or does it have other land-use restrictions that would limit or preclude the
use of solar PV? Examples include: wetlands, wild/scenic rivers, wildness study
areas, critical habitat for endangered species, areas surrounding airports, areas
with other special government designations (e.g., parks, preserves, monuments,
etc.). Are there any zoning or land use restrictions on solar at this site?
Financial Assessment
Though schools and local governments cite several reasons for going solar (including the environmental
benefits and educational opportunities attached to this investment), the primary motivating factor for
most is the energy cost savings solar stands to offer. The overall financial benefit of solar depends not
only on system installed costs and the availability of incentives or financing to help reduce these costs,
but also on the value of the utility-sourced electricity that will be offset by the solar energy system.
The questions below will help you understand the opportunities available to reduce or finance the
installed cost of solar, determine the value of the electricity that will be offset by solar, and produce a
high-level estimate of the financial benefits of solar using free online tools.
1. Where will the electricity produced by the system be used?
a. If on site, system will most likely be net metered. Information on net metering rules for
your state and/or utility can be found by searching the Database for State Incentives for
Renewables and Efficiency (DSIRE).
b. If nearby on one or more local government properties, local government will need to
consider aggregate or virtual net metering (which allows for a single solar energy system
to be used to offset electricity use on multiple meters, without necessarily requiring a
physical connection between the system and those meters). More information about
these policies is available in this short report from the North Carolina Clean Energy
Technology Center. Aggregate or virtual net metering programs are not available in all
states. Check your state’s net metering rules to find out if this is an option in your area.
2. What is the user’s energy load? For virtual net metering projects, what is the combined load
of all buildings?
a. Collecting and reviewing a full year’s worth of electricity bills will provide you with a
good idea of how much electricity your facility is using. Combined with available site
area from the site assessment, this information will help determine how much of the
user’s load can be offset by solar. Net metered projects are typically limited by a
capacity cap and/or to producing only a certain percentage of the user’s energy load.
3. What is the user’s energy cost?
a. Under what tariff is electricity provided to facility? Different utility rate structures use
different combinations of fixed and variable charges, both of which can impact the value
of an investment in solar. Your electricity bill should list the rate structure for your
facility. If not, you can contact your utility for this information.
4. What incentives are available?
a. State and utility incentive programs can take the form of up-front rebates, long-term
performance-based incentives, solar renewable energy certificates, grants, loans, or
other forms of financing support. A list of incentives available for school projects can be
found on the DSIRE website.
5. What financial benefit can solar deliver?
a. With the information above, you should be able to produce a high-level estimate of the
financial benefit of an investment in solar. Simple financial analyses can be performed
using free tools such as the National Renewable Energy Laboratory’s PVWatts calculator
(http://pvwatts.nrel.gov/) or System Advisor Model (https://sam.nrel.gov/)
Ownership Structure
Recognizing the barrier to solar investment posed by the high upfront cost of solar, the industry has
developed unique ownership arrangements that spread these costs out over the long term. Via third-
party ownership (TPO), a solar developer – rather the solar customer – finances, installs, owns, and
maintains a solar installation, in exchange for which the solar customer makes regular payments for the
energy the system produces (through a “power purchase agreement”) or pays to lease the system.
However, third-party ownership is not permitted in every state. Check the DSIRE website to find out if
TPO is an option in your area.
The questions below will help you think through whether TPO or direct ownership is a better option for
your project.
1. Are you a tax paying entity?
a. If not, you will be unable to directly take benefit of federal tax credits for solar energy,
making direct ownership challenging in the absence of other financing options. Third-
party ownership, however, should allow you to realize at least part of the benefit of
these incentives, such as in the form of a lower PPA rate.
2. Do you have access to financing or available cash?
a. Having cash on hand will allow for direct ownership while avoiding financing costs.
Bond-issuing authority could be used to raise inexpensive capital, but is not always
politically palatable. Depending on where your school is located, loan or grant programs
may be available to help finance the system. If these options are not available, other
means of financing the system could increase costs and make third-party ownership
more financially attractive.
3. Can you enter into long-term contracts?
a. Power purchase agreements can run 10, 15, or 20 years. For this to be an option, the
local government needs to have the ability to do this by right, or have the ability to
obtain this authority relatively easily.
4. Is your local government able/willing to assume responsibility for operations and
maintenance?
a. Performing O&M in house will require a properly trained staff. Inadequate O&M will
expose the local government to performance risk (i.e., an underperforming system will
result in reduced financial benefits). If unable/unwilling to perform O&M in-house, it
may be possible to contract out for these services. Otherwise, these services would be
included under third-party ownership.
5. Do you need renewable energy certificates for compliance?
a. In cases where local governments are under a mandate to procure a certain amount of
renewable energy or to reduce greenhouse gas emissions, the renewable energy
certificates (RECs) generated by a renewable energy system are often used to
demonstrate compliance. Under third-party ownership, these RECs are typically
retained by the solar developer (though this may be negotiable).
Additional Resources
Brooks, W. and Dunlop, J. (2012). Photovoltaic Installer Resource Guide. North American Board of
Certified Energy Practitioners. Available at: http://www.nabcep.org/wp-
content/uploads/2012/08/NABCEP-PV-Installer-Resource-Guide-August-2012-v.5.3.pdf
Environmental Protection Agency and National Renewable Energy Laboratory. (n.d.). Screening Sites for
Solar PV Potential. RE-Powering America’s Land Initiative. Available at:
http://www.epa.gov/oswercpa/docs/solar_decision_tree.pdf

Considerations of Invetsing in Solar Energy: Understanding System Siting, Benefits, and Ownership Options

  • 1.
    Considerations for Investingin Solar Energy Introduction This resource provides a basic list of considerations to help school and local government officials prescreen sites for solar and understand the potential financial benefits of an investment in solar. While not intended to replace a professional site assessment, this checklist provides information on key physical, policy, and financial factors impacting a site’s suitability for solar. Site Assessment The costs and benefits of a solar energy system depend on a number of technical site characteristics. Less than ideal conditions that increase the cost to install a system or diminish system output can negatively impact overall project economics, reducing or eliminating the financial benefit of an investment in solar. The questions in this section will help you understand basic siting criteria for rooftop and ground- mounted solar energy systems. 1. Are you interested in a rooftop or ground mounted system? a. For rooftop systems, consider: i. Available roof space. Solar PV panels with 15% efficiency require approximately 100 ft.2 of roof space per kilowatt. Does your proposed site have enough roof space to accommodate a project of the desired size? ii. Slope, Shading, and Orientation. The site should be free of shading from nearby buildings, vegetation, or other obstructions (including equipment or fixtures on the roof itself). A basic shading assessment can be performed using Google Maps satellite images or using the ArcGIS Solar Radiation Graphics extension. For unshaded locations, the maximum annual solar energy is received on a surface that faces due south, with a tilt angle slightly less than local latitude. Deviations from tilt angles may be recommended if there is a large difference in seasonal loads. For winter-dominant loads, arrays should be tilted at an angle of latitude +15°. For summer-dominant loads, arrays should be tilted at an angle of latitude -15°. For south-facing arrays, tilt angles close to 30° (or a 7:12 pitch roof) will produce very close to the maximum amount of energy for most locations in the lower 48 states. While orientation to the south will optimize production, arrays oriented to the southeast and southwest will produce nearly the same amount of energy (within 7%) as a system facing due south. Does your proposed site offer south- facing, unshaded roofspace? iii. Structural loads. Roofs should be able to withstand both the static and dynamic loads associated with the PV system. Static loads (i.e., the system components) will add between 3-6 pounds per square foot, depending on the mounting
  • 2.
    system used. Inaddition, dynamic loads such as wind or snow loads should be assessed in accordance with the American Society of Civil Engineers (ASCE) international building code 7-05. At each attachment point, roofs should be able to accommodate up to 45 lbs. of additional load. Is the roof at your site able to accommodate the additional dead load required for a PV installation? iv. Roof age and warranty. If the roof is due for replacement within the next 5 to 10 years, it may make sense to reroof the structure before (or during) the installation of a rooftop PV system. Roof warranty information should be reviewed to understand whether a mounting system that requires roof penetration will void the warranty. A ballasted mounting method will minimize or eliminate the need for direct structural attachments and penetrations, but will be heavier than some other mounting types and will have very specific installation requirements. For these systems, even if wind loading is not a concern, it may be necessary to include extra restraints to protect against seismic loads, where these are a concern. Depending on the age of your roof, are there any plans to replace it where your system will be installed, and will a PV installation void your roof warranty? v. Electrical configuration. Assess whether the existing electrical distribution system is suitable for interconnecting a PV system and to what capacity. This requires a working knowledge of the National Electric Code, particularly Article 690. In addition, the system should conform with state interconnection standards. Can a project of the desired size be installed given the site’s current electrical configuration and can this system be interconnected to the electric grid? b. For large ground mounted systems, consider: i. Useable acreage. One megawatt of solar PV requires approximately 6 acres of direct unshaded, unobstructed land area. Areas with significant shading or that contain obstructions (such as equipment or storage areas) should be subtracted from the acreage total. Is there enough ground space to accommodate a project of the desired size? ii. Site slope. If the slope of the site is greater than 6 degrees (~10% grade), or cannot be leveled at a reasonable cost, ground-mounted solar PV may not be a viable option, or may require special mounting methods. If the project is to be ground-mounted, what is the slope of the site? iii. Distance to transmission lines should be less than ½ mile. Most properties in dense to moderately dense urban setting will meet this criterion. Is the ground- mounted project within a half-mile of a transmission line?
  • 3.
    iv. Distance tograded roads should be less than one mile. Most properties in dense to moderately dense urban setting will meet this criterion. Is the site accessible by graded roads? v. Land-use exclusions. Is the site an environmentally sensitive or preservation area, or does it have other land-use restrictions that would limit or preclude the use of solar PV? Examples include: wetlands, wild/scenic rivers, wildness study areas, critical habitat for endangered species, areas surrounding airports, areas with other special government designations (e.g., parks, preserves, monuments, etc.). Are there any zoning or land use restrictions on solar at this site? Financial Assessment Though schools and local governments cite several reasons for going solar (including the environmental benefits and educational opportunities attached to this investment), the primary motivating factor for most is the energy cost savings solar stands to offer. The overall financial benefit of solar depends not only on system installed costs and the availability of incentives or financing to help reduce these costs, but also on the value of the utility-sourced electricity that will be offset by the solar energy system. The questions below will help you understand the opportunities available to reduce or finance the installed cost of solar, determine the value of the electricity that will be offset by solar, and produce a high-level estimate of the financial benefits of solar using free online tools. 1. Where will the electricity produced by the system be used? a. If on site, system will most likely be net metered. Information on net metering rules for your state and/or utility can be found by searching the Database for State Incentives for Renewables and Efficiency (DSIRE). b. If nearby on one or more local government properties, local government will need to consider aggregate or virtual net metering (which allows for a single solar energy system to be used to offset electricity use on multiple meters, without necessarily requiring a physical connection between the system and those meters). More information about these policies is available in this short report from the North Carolina Clean Energy Technology Center. Aggregate or virtual net metering programs are not available in all states. Check your state’s net metering rules to find out if this is an option in your area. 2. What is the user’s energy load? For virtual net metering projects, what is the combined load of all buildings? a. Collecting and reviewing a full year’s worth of electricity bills will provide you with a good idea of how much electricity your facility is using. Combined with available site area from the site assessment, this information will help determine how much of the user’s load can be offset by solar. Net metered projects are typically limited by a capacity cap and/or to producing only a certain percentage of the user’s energy load.
  • 4.
    3. What isthe user’s energy cost? a. Under what tariff is electricity provided to facility? Different utility rate structures use different combinations of fixed and variable charges, both of which can impact the value of an investment in solar. Your electricity bill should list the rate structure for your facility. If not, you can contact your utility for this information. 4. What incentives are available? a. State and utility incentive programs can take the form of up-front rebates, long-term performance-based incentives, solar renewable energy certificates, grants, loans, or other forms of financing support. A list of incentives available for school projects can be found on the DSIRE website. 5. What financial benefit can solar deliver? a. With the information above, you should be able to produce a high-level estimate of the financial benefit of an investment in solar. Simple financial analyses can be performed using free tools such as the National Renewable Energy Laboratory’s PVWatts calculator (http://pvwatts.nrel.gov/) or System Advisor Model (https://sam.nrel.gov/) Ownership Structure Recognizing the barrier to solar investment posed by the high upfront cost of solar, the industry has developed unique ownership arrangements that spread these costs out over the long term. Via third- party ownership (TPO), a solar developer – rather the solar customer – finances, installs, owns, and maintains a solar installation, in exchange for which the solar customer makes regular payments for the energy the system produces (through a “power purchase agreement”) or pays to lease the system. However, third-party ownership is not permitted in every state. Check the DSIRE website to find out if TPO is an option in your area. The questions below will help you think through whether TPO or direct ownership is a better option for your project. 1. Are you a tax paying entity? a. If not, you will be unable to directly take benefit of federal tax credits for solar energy, making direct ownership challenging in the absence of other financing options. Third- party ownership, however, should allow you to realize at least part of the benefit of these incentives, such as in the form of a lower PPA rate. 2. Do you have access to financing or available cash? a. Having cash on hand will allow for direct ownership while avoiding financing costs. Bond-issuing authority could be used to raise inexpensive capital, but is not always politically palatable. Depending on where your school is located, loan or grant programs may be available to help finance the system. If these options are not available, other means of financing the system could increase costs and make third-party ownership more financially attractive.
  • 5.
    3. Can youenter into long-term contracts? a. Power purchase agreements can run 10, 15, or 20 years. For this to be an option, the local government needs to have the ability to do this by right, or have the ability to obtain this authority relatively easily. 4. Is your local government able/willing to assume responsibility for operations and maintenance? a. Performing O&M in house will require a properly trained staff. Inadequate O&M will expose the local government to performance risk (i.e., an underperforming system will result in reduced financial benefits). If unable/unwilling to perform O&M in-house, it may be possible to contract out for these services. Otherwise, these services would be included under third-party ownership. 5. Do you need renewable energy certificates for compliance? a. In cases where local governments are under a mandate to procure a certain amount of renewable energy or to reduce greenhouse gas emissions, the renewable energy certificates (RECs) generated by a renewable energy system are often used to demonstrate compliance. Under third-party ownership, these RECs are typically retained by the solar developer (though this may be negotiable). Additional Resources Brooks, W. and Dunlop, J. (2012). Photovoltaic Installer Resource Guide. North American Board of Certified Energy Practitioners. Available at: http://www.nabcep.org/wp- content/uploads/2012/08/NABCEP-PV-Installer-Resource-Guide-August-2012-v.5.3.pdf Environmental Protection Agency and National Renewable Energy Laboratory. (n.d.). Screening Sites for Solar PV Potential. RE-Powering America’s Land Initiative. Available at: http://www.epa.gov/oswercpa/docs/solar_decision_tree.pdf