Make Money on Your Roof

There's big money on the roofs of industrial and commercial buildings in Ontario as a result of the Feed in Tariff Program under the Ontario Green Energy Act. If you avoid the pitfalls, you can take advantage of this huge opportunity by putting a solar PV power plant on your roof.

As you are no doubt aware, the Ontario government enacted the Green Energy Act a little under a year ago. The Green Energy Act implements one of the most generous feed in tariff (FIT) programs in the world. As a result, many international players in the renewable energy space are beating a path to Ontario. Our company, Oneworld Energy, being a Toronto based diversified renewable energy company with a global footprint, is well positioned to take advantage of the opportunity presented by the Green Energy Act.

One of the most profitable opportunities under the Green Energy Act involves the development of photovoltaic (PV) solar power plants on the roof of industrial and commercial buildings. The FIT Program provides a 20 year contract with the Ontario Power Authority (OPA), whereby the OPA buys 100% of the power produced on your roofs at a fixed price. The feed in tariff varies by the size of the power plant, however the sweet spot is systems between 10 kW and 250 kW, which will pay CDN $0.713 per kWh for the life of the 20 year contract. Someone who owns the system on their own roof can earn returns in excess of 15%, depending upon a few variables.

Some people are even renting their roofs to passive investors who are aggregating multiple rooftop systems into portfolios. The market for rent seems to be around CDN $0.40 to $0.50 per square foot of useable space.

When considering whether to rent your roof or own your a system on your building, there are a number of important considerations that you should take into account:

1. Do I need a new roof?

Yes and no. The system will be on your roof for 20 years. Most flat roofs have a life span of 20 years as well. The bottom line is that if you are due for a new roof in the next few years, since you will have to replace the roof anyway, you might as well as do it now so that you can take advantage of the FIT Program.

2. Will my roof leak or cave in?

No and no. Virtually all roof mounted systems designed for flat roofs are non penetrating. Instead, we use a ballast system which sits on top of the roof membrane and is weighed down by gravel or paving stones which evenly spreads out the weight of the system. The Ontario Building Code dictates requirements for weight and snow load, among other things. Provided the system meets Building Code requirements and is properly installed, the roof will have no problem supporting the system.

3. Does the installer have experience?

As the Feed in Tariff Program is less than a year old, most of the people who have jumped into the market have absolutely no experience in designing, installing or operating the systems. Before, someone puts a power plant on your roof, be sure that you check out their credentials. Oneworld Solar and its team have been installing roof and ground mounted systems in Europe (Germany and Italy) for the last number of years. We have experience in dealing with virtually any situation that can arise and we have key relationships with global players (suppliers, financiers, etc).

4. What's this I hear about "domestic content"?

Ontario has one of the most generous FIT programs in the world. However, in order to be entitled to the high rates for solar, generators are required to use a certain percentage of "domestic content" or made in Ontario components. Its 50% this year and 60% in 2011.

The first phase of the FIT Program is supposed to involve 2,500 MWs of solar projects. Over 750 MWs have already been approved. Currently, there is substantially less than that in supply of modules and inverters, the key components of a solar PV power plant. The upshot is that there are a number of installers running around making promises about timing and pricing that they cannot possibly meet. Be sure to ask a potential installer about their source of domestic content.

Oneworld Solar, due to our deep relationships with global component manufacturers, has over 100 MW of "domestic content" for 2011. We are a 65% "domestic content" provider.

5. What returns can I expect?

Its much better to own the system, rather than simply be a landlord. A 50,000 sq ft roof at CDN $0.40 per sq ft will generate CDN $20,000 in annual rent. Not bad considering your roof has historically been a cost centre.

By owning the system, you can earn between 10% and 20%, depending upon the leverage in the deal. In a market where real estate returns are under 10% and tenants' creditworthiness can be in question, where else can you get these returns from a government agency guaranteed for 20 years. If you bought a 20 year Ontario bond, you would get a return between 4.5% and 5%. WIth a solar power plant you are getting returns that are between 3 and 4 times the returns you would earn from the same credit risk. Not bad!!

I would be pleased to talk to anyone interested in learning more about how you can take advantage of the Ontario FIT Program. Get in touch with me at jdennis@oneworldenergy.com.