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.
Thursday, September 16, 2010
Tuesday, May 11, 2010
Still Green - Part II
I can't believe that its been over a year since my last installment. So, what's new?
Much has transpired since March of 2009. COU Solar Inc., the company John Gamble and I founded, has grown to be a >$50 million company. We sold ourselves for shares to Oneworld Energy Inc. Oneworld is a diversified renewable energy company with operations in North America and Europe. Its 3 operating divisions are:
Much has transpired since March of 2009. COU Solar Inc., the company John Gamble and I founded, has grown to be a >$50 million company. We sold ourselves for shares to Oneworld Energy Inc. Oneworld is a diversified renewable energy company with operations in North America and Europe. Its 3 operating divisions are:
- Wind development and power production
- Solar development and power production
- Operations and maintenance for both solar and wind
The company has over 1.5 GW of solar and wind projects in both North America and Europe slared to be developed over the next couple of years.
Oneworld's revenues have increased steadily from $2.5 million in 2007 to $25 million in 2009. Revenue for 2010 is projected to exceed $100 million.
I now run the solar business for Oneworld along with my co-founder John Gamble. John looks agter the European business and I am focused on the Ontario market with the advent of the Green Energy Act.
Oneworld is in the process of going public by way of a CPC. We should be publicly traded by the end of June. Stay tuned for further updates.
Thursday, March 19, 2009
I'm Still Green - Lang AG
You may be wondering what my next project is. I have been retained by Lang AG to assist it in getting to the next level in its business development. We are financing this project by taking Lang public on the Toronto Venture Exchange by way of a reverse take over.
Lang AG is in the property improvement and solar integration business in Germany. Their property improvement business services some of Germany's largest property owners, providing a turn key solution to their renovation needs. When Germany was unified, the government privatized large portfolios of government housing. The private equity investors are obliged to bring the properties up to current “green” standards. Government subsidies are in place to assist with this. Many of the property owners outsource this to companies like Lang.
In addition to the property improvement side of the business, Lang is also developing ground and roof mounted (for their property owning clients) PV solar power installations. We have partnered with a Canadian fund to provide the equity for these projects.
At this stage, we are looking for public distribution of a pre-RTO round in order to comply with the distribution requirements of the Toronto Venture Exchange. The minimum investment is CDN $5,100. The maximum is CDN $25,500. We will be looking for a more substantial round of financing in the fall once we are publically trading.
Our plan is to fund Lang's growth of both the property improvement division throughout Europe as well as the solar division on a global basis. The solar division's initial focus will be roof and ground mounted projects in Germany, but we also intend to expand into other markets in Europe and North America, particularly with our team based in Ontario given the new initiative announced last week by the provincial government.
Green business is one of the few industries that will experience growth during this economic downturn. I suggest that you join me in going green. Otherwise, you might be green with envy!
Lang AG is in the property improvement and solar integration business in Germany. Their property improvement business services some of Germany's largest property owners, providing a turn key solution to their renovation needs. When Germany was unified, the government privatized large portfolios of government housing. The private equity investors are obliged to bring the properties up to current “green” standards. Government subsidies are in place to assist with this. Many of the property owners outsource this to companies like Lang.
In addition to the property improvement side of the business, Lang is also developing ground and roof mounted (for their property owning clients) PV solar power installations. We have partnered with a Canadian fund to provide the equity for these projects.
At this stage, we are looking for public distribution of a pre-RTO round in order to comply with the distribution requirements of the Toronto Venture Exchange. The minimum investment is CDN $5,100. The maximum is CDN $25,500. We will be looking for a more substantial round of financing in the fall once we are publically trading.
Our plan is to fund Lang's growth of both the property improvement division throughout Europe as well as the solar division on a global basis. The solar division's initial focus will be roof and ground mounted projects in Germany, but we also intend to expand into other markets in Europe and North America, particularly with our team based in Ontario given the new initiative announced last week by the provincial government.
Green business is one of the few industries that will experience growth during this economic downturn. I suggest that you join me in going green. Otherwise, you might be green with envy!
Sunday, March 15, 2009
I'm Back!!
Its been over 6 months since the last entry on my blog. The reason for the hiatus was a combination of being very busy in my role as interim President & CEO of SonnenEnergy Corp. and the risk of writing about the goings on at the company given the disclosure rules of the Toronto Venture Exchange. Frankly, I wasn't too sure about what I could and couldn't write about. So, I chose not to write at all.
I left SonnenEnergy a little over a month ago. I have been asked by many people why I left. The bottom line was that the board of directors and I were in a dispute with Hans Hager, the founder and major shareholder of the company. It got to the point that Herr Hager commenced litigation against the company and me personally. He was able to get injunctive relief that made it virtually impossible to deal with the many problems of the company without a court order or his consent.
Despite many attempts to settle the litigation or obtain Herr Hager's consent to some of the changes that the board and I had brought forward, we simply couldn't move the company forward. In addition, we were needlessly spending a huge sum of money on litigation. We came to the conclusion that it was not in the best interest of the company to spend money that we didn't have to fight the litigation. As a result, we resigned and turned the company over the Herr Hager and his new board.
The ball is now in the new board's and Herr Hager's court to act in the best interest of the company. I remind them that they must take into account the interest of the company as a whole when making decisions about the future of the company. I wish them well, particularly since I am still a significant shareholder of the company.
I left SonnenEnergy a little over a month ago. I have been asked by many people why I left. The bottom line was that the board of directors and I were in a dispute with Hans Hager, the founder and major shareholder of the company. It got to the point that Herr Hager commenced litigation against the company and me personally. He was able to get injunctive relief that made it virtually impossible to deal with the many problems of the company without a court order or his consent.
Despite many attempts to settle the litigation or obtain Herr Hager's consent to some of the changes that the board and I had brought forward, we simply couldn't move the company forward. In addition, we were needlessly spending a huge sum of money on litigation. We came to the conclusion that it was not in the best interest of the company to spend money that we didn't have to fight the litigation. As a result, we resigned and turned the company over the Herr Hager and his new board.
The ball is now in the new board's and Herr Hager's court to act in the best interest of the company. I remind them that they must take into account the interest of the company as a whole when making decisions about the future of the company. I wish them well, particularly since I am still a significant shareholder of the company.
Wednesday, September 3, 2008
President & CEO of SonnenEnergy Corp.
The last week and a half have been crazy for me. Since November, 2007, I have been chairman of the board of directors of SonnenEnergy Corp. (www.sonnenenergy.com), a public company that trades on the Toronto Venture Exchange (TSXV:PWR). The company is a solar energy integrator and independent power producer with most of its operations in Germany.
Last Monday, the day before our annual general meeting of the shareholders, the board of directors decided that we needed a change in the leadership of the company. On short notice, I agreed to step in as President & CEO until we can conduct a search and identify an appropriate candidate for the job. The next day I addressed the shareholders and two days later I did the earnings conference call for shareholders and analysts.
You can hear the webcast of my conference call at http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2394480.
In between these meetings and over the past weekend I have been busy getting my head around the issues, communicating with key stakeholders and planning a trip to Germany to review our operations.
As I see it, my goals are as follows:
1. Conducting a thorough and comprehensive search to find a new CEO to lead this company, ensure that we execute on our business plan and create value for our shareholders;
2. Working diligently to ensure that we deliver on the projections laid out by management and that revenue from future projects comes in as projected; and
3. Making it a priority to secure the funding we require in order to fund our future growth and meet our installation and power production targets in this year and the years to come.
With the whirlwind that I have jumped on to, I may not be blogging on as regular a basis. Stay tuned.
Last Monday, the day before our annual general meeting of the shareholders, the board of directors decided that we needed a change in the leadership of the company. On short notice, I agreed to step in as President & CEO until we can conduct a search and identify an appropriate candidate for the job. The next day I addressed the shareholders and two days later I did the earnings conference call for shareholders and analysts.
You can hear the webcast of my conference call at http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2394480.
In between these meetings and over the past weekend I have been busy getting my head around the issues, communicating with key stakeholders and planning a trip to Germany to review our operations.
As I see it, my goals are as follows:
1. Conducting a thorough and comprehensive search to find a new CEO to lead this company, ensure that we execute on our business plan and create value for our shareholders;
2. Working diligently to ensure that we deliver on the projections laid out by management and that revenue from future projects comes in as projected; and
3. Making it a priority to secure the funding we require in order to fund our future growth and meet our installation and power production targets in this year and the years to come.
With the whirlwind that I have jumped on to, I may not be blogging on as regular a basis. Stay tuned.
Sunday, August 17, 2008
All Your Eggs in One Basket
Much has been heard and written about businesses that have too much of their revenue tied to one customer. If the customer goes elsewhere, you lose your business.
In fact, a friend of mine who shall remain nameless for confidentiality purposes was just about to submit a letter of intent to buy a business that had 90% of its revenue coming from one customer. During his due diligence, my friend heard a rumour that the customer representing 90% of the business had recently decided move to single sourcing for this product and the target company apparently was not going to be the single source. Yikes.
Another example of having all one's egg is one basket involved my client Auctionwire Inc. This is a supply side situation. Auctionwire is the leading auction agency for top brand companies and non-profit organizations. Historically, they ran all of their high end auctions exclusively on the ebay platform. Ebay was effectively their sole supplier of the back end of their auctions. A number of months ago, Auctionwire had a dispute with one of their customers when the customer failed to deliver the auction item and Auctionwire refused to forward the purchase price opting to protect the buyer. A complaint was lodged with ebay, who rather that ajudicating whether the complaint was valid, began to arbitrarily suspending some of Auctionwire's other auctions even though they had nothing to do with the dispute.
Auctionwire began to realize that it had all of its eggs in ebay's basket and that their entire business was at risk. Ebay could arbitrarily and unilaterally put Auctionwire out of business because of the onerous terms of their standard form user agreement. Because of the near monopolistic position that ebay has in the market, Auctionwire has no ability to negotiate the terms of the user agreement. They have to take it or leave it.
Auctionwire decided to leave it. They took immediate action to diversify their suppliers of the online auction back end. Auctionwire successful found another platform and was able to secure the exclusive licence to use this online auction software. Now Auctionwire controls their own destiny because they have complete control over their online auction back end systems and no longer are dependent on ebay.
Be very careful if you have all of your eggs in one basket, whether it is on the supplier or the customer side. Being so dependent on someone puts your business in a very vulnerable position. Whether they have greater bargaining power, end up going out of business or being bought by one of your competitors, having all of your eggs in one basket could result in the death of your business.
In fact, a friend of mine who shall remain nameless for confidentiality purposes was just about to submit a letter of intent to buy a business that had 90% of its revenue coming from one customer. During his due diligence, my friend heard a rumour that the customer representing 90% of the business had recently decided move to single sourcing for this product and the target company apparently was not going to be the single source. Yikes.
Another example of having all one's egg is one basket involved my client Auctionwire Inc. This is a supply side situation. Auctionwire is the leading auction agency for top brand companies and non-profit organizations. Historically, they ran all of their high end auctions exclusively on the ebay platform. Ebay was effectively their sole supplier of the back end of their auctions. A number of months ago, Auctionwire had a dispute with one of their customers when the customer failed to deliver the auction item and Auctionwire refused to forward the purchase price opting to protect the buyer. A complaint was lodged with ebay, who rather that ajudicating whether the complaint was valid, began to arbitrarily suspending some of Auctionwire's other auctions even though they had nothing to do with the dispute.
Auctionwire began to realize that it had all of its eggs in ebay's basket and that their entire business was at risk. Ebay could arbitrarily and unilaterally put Auctionwire out of business because of the onerous terms of their standard form user agreement. Because of the near monopolistic position that ebay has in the market, Auctionwire has no ability to negotiate the terms of the user agreement. They have to take it or leave it.
Auctionwire decided to leave it. They took immediate action to diversify their suppliers of the online auction back end. Auctionwire successful found another platform and was able to secure the exclusive licence to use this online auction software. Now Auctionwire controls their own destiny because they have complete control over their online auction back end systems and no longer are dependent on ebay.
Be very careful if you have all of your eggs in one basket, whether it is on the supplier or the customer side. Being so dependent on someone puts your business in a very vulnerable position. Whether they have greater bargaining power, end up going out of business or being bought by one of your competitors, having all of your eggs in one basket could result in the death of your business.
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