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Yearly Archives: 2011

Public Sector Solar – Make Your Project More Attractive to Investors

To date, the public sector has been a large part of the solar business in New Jersey. Projects done via Power Purchase Agreements (PPAs) are everywhere and many schools and municipalities are already enjoying the benefits of clean, renewable solar energy.

Public sector projects involve public bidding. RFPs are issued by a variety of companies – engineers, consultants and architects – on behalf of their clients. These professional services firms provide a great service to the school district or municipality.

Financing public projects requires PPAs because the public sector doesn’t have the ability to monetize tax credits or depreciation.

A year ago, it was not uncommon to see RFPs for solar projects that included ‘free’ roofs, lots of carport canopies and large professional services fees built in. And when SRECs were trading for $650, the project’s economics could support that. But it’s a new day.

The companies that invest in and finance projects are the ones calling the shots. And they’re saying they aren’t interested in projects with high levels of non-solar costs. It’s not the solar integrators, engineers, architects or consultants…it’s the finance sector. But without financing, none of these projects can get off the ground. It’s not uncommon now for RFPs to get no responses when they have high non-solar costs. And that helps none of us.

So what can you do? A few things. First, prepare for more modest savings in electricity costs. You may have heard of deals done with costs per kWh of 2 or 3 cents. Maybe even free. Those days are over. Expect at least 8-9 cents on a large, very clean deal, maybe more. The second thing you can do is to make your project more attractive to investors than other projects. Insist that the fees are kept to a minimum. Forget about ‘free’ roofs. And for now, shy away from carports unless you’re prepared for higher electricity rates. Lastly, prepare yourself for contract negotiations with the PPA company. Certain terms have to be included in the PPA to make it financeable. It’s a collaborative process, not ‘take it or leave it.’

Going solar is a wonderful thing. Good luck!

Certainty of Execution and Why It’s Important

Financing solar projects has always been fairly complex. It involves tax credits, depreciation and state incentives. The ability to monetize these is key. We all know that the value of New Jersey SRECs has come way down from the prices they commanded less than a year ago. That has made financing projects even more challenging. And many projects have become ‘stranded.’

Not a day goes by that we aren’t contacted by some company claiming they can finance solar projects. Usually the story is that the principals of the firm are from Wall Street and they’ve got lots of money to invest. No problem with all of that. However, the ability to perform is usually suspect.

One of the responsibilities of my job is ensuring that the financial partners we go to market with can actually perform should we win the business. It’s one of the most important things to our business. Which brings me to the title of this blog entry. If you are considering several proposals from solar companies, you actually have two decision processes. First, ensure the solar company has done it many times before. Then, you also need to vigorously vet the financial partner. No question should be out of bounds. Ask how they are accounting for SRECs, whether they have rock solid firm financing commitments for your project, what contingencies are in their offer, etc.

If you do your homework, you can minimize the risk inherent in financing solar projects. Insist upon financing partners who can demonstrate their ability to perform. You need to be confident that they can execute. If you have the right financial partner and you’ve chosen the right solar integrator, you’re on your way.

Ray Angelini, Inc. Recognized With Governor’s Occupational Safety and Health Award

SEWELL, NJ (August 31, 2011)—Ray Angelini, Inc. (RAI) recently received the Governor’s Annual Occupational Safety and Health Award for achievement in the prevention of occupational injuries during the year 2010.

“I am proud to accept this award on behalf of RAI employees,” said Jim Specht, Safety Director, RAI.  “We pride ourselves in consistently educating and communicating safety as our number one priority, and this award is recognition of everyone’s relentless work, upholding the highest standards for safety.”

Specht accepted the Citation of Merit on behalf of RAI, awarded to a company for working throughout the calendar year without lost time from a work-related injury or illness.  Specht also accepted the Division of Public Safety & Occupational Safety & Health Award on behalf of Active Construction Corp. Sewell, NJ, for participation in the program for two consecutive calendar years without lost time from a work-related injury or illness.

The 83rd Annual awards banquet, sponsored by South Jersey Industrial Safety Council in cooperation with New Jersey Department of Labor, was held on May 25, 2011 at Auletto Caterers, Almonesson, NJ.

RAI serves public and private clients in NJ, PA, DE and MD in various industries, including transit, data centers, schools, universities, government, industrial plants, medical facilities, and more.  Originally established in 1975 by Ray Angelini as an electrical contracting company, today RAI is a full service electrical contracting, general construction, and design build solar energy company.

The company was recognized as the largest solar industry contractor in the region in 2011 by NJBIZ magazine.  To learn more about Ray Angelini, Inc., visit www.raiservices.com or call the Sewell, NJ-based headquarters at 856-228-5566.

governors-safety-award-2011

Jim Specht, Safety Director, Ray Angelini, Inc. headquarter in Sewell, NJ, recently received the Governor’s Annual Occupational Safety and Health Award on behalf of the company at a banquet held at Auletto Caterers, Almonesson, NJ.  Pictured from left to right are Division of Public Safety & Occupational Safety & Health (PSOSH) Director Howard Black, Jim Specht, NJ State Industrial Safety Committee Vice Chair Robert Sagendorf, and NJ State Safety Council President William Margaretta.

Ray Angelini, Inc. Launches Blog Targeted to Commercial Solar Market

blog

Ray Angelini, Inc. recently launched, RAI Blog—A Solar Industry Update, which can be accessed 
at http://blog.raiservices.com or from the company’s home page at http://www.raiservices.com.
The blog offers readers insight into the ever-changing and fast-moving solar energy industry, based 
on the company’s experience as the largest commercial solar provider in the region and a local, 
privately-held business for nearly 40 years.

SEWELL, NJ (August 22, 2011)—Ray Angelini, Inc. (RAI) recently launched, RAI Blog—A Solar Industry Update (www.blog.raiservices.com), that will share with readers not only the company’s solar industry experiences, but also the company’s experiences gained in its nearly 40 years of business in the tri-state region.

“As the leading commercial solar integrator in New Jersey, we often hear from customers how our insight is helpful to them in being able to make sound business decisions,” said Ray Angelini, founder and president, RAI. “We are happy to help in this regard, because our business philosophy has always been that of partnering with our customers.”

Designed to assist current and prospective customers in navigating the solar industry maze, the blog will offer ideas and perspective on topics such as financing opportunities, the volatile SREC market, the virtues of structural engineering, and more.

“We’re bullish on solar, always have been,” said Sean Angelini, solar division manager, RAI.”Yet solar projects are complex, and a significant investment.”

“In order to feel confident in making the investment, customers need to understand all the moving parts and how they fit together,” said Joe Joyce, senior vice president of sales and marketing, RAI, and one of the blog’s authors. “RAI helps simplify the complexity of a solar project.  Having done more than any other solar provider, we know this stuff.”

RAI serves public and private clients in NJ, PA, DE and MD in various industries, including transit, data centers, schools, universities, government, industrial plants, medical facilities, and more.  Originally established in 1975 by Ray Angelini as an electrical contracting company, today RAI offers these additional services from its three locations:  design and build solar energy projects, solar maintenance and systems monitoring, power systems testing, energy reduction design and installation, industrial electric, and general contracting.

The company was recognized as the largest solar industry contractor in the region in 2011 by NJBIZ magazine.  To learn more about Ray Angelini, Inc., visit www.raiservices.com or call the Sewell, NJ-based headquarters at 856-228-5566.

Will You Be Able to Get Your Project Financed?

Maybe. Lenders and PPA companies are all about taking virtually no risk right now. Cost of tax equity has risen and underwriting guidelines have gotten tougher. The recent softness in NJ SREC values has really impacted things.

So what to do?

It depends. If you’re looking to construct a wholesale to the grid project, it’s going to be a lot harder to get this off the ground. It doesn’t matter how much you’ve spent developing your project to this point, you’re probably out of luck for now.

If you have a net metered project, you’re probably OK if you and your lender are fine with paybacks being in the 6-7 year range.

Investment money moves in large chunks. In New Jersey, we’ve been lucky for the past several years that solar paid off so well due to artificially high SREC values. Now, it’s a more normal market. Those large chunks of money are now seeking higher returns and solar is still a phenomenal value in New Jersey but the profile customer has changed. Gone are most of the pure-play investors. It’s now a game for the long-term owners. If you own your own business and building and have sufficient free cash flow, come on in. We’re all here to help and there’s plenty of money for you.

Interconnection Issues – South Jersey Continues to be Incredibly Clogged

While New Jersey is the most densely populated state in the US, there is a large portion of the state that is largely open space – the southern part of the state. For the most part, this area maps pretty closely to the Atlantic City Electric service area.

For the past few years, there have been a lot of wholesale projects proposed and applied for in the ACE territory. This process is managed by PJM – the folks who run the regional electric grid. They manage the application process with a ‘first come, first served’ approach. Once an application is made, the applicant has 7 years to get the project going. Most projects haven’t a prayer of ever seeing the light of day. But that doesn’t matter…PJM treats the grid as if these projects are already producing so as to avoid any detrimental effect to the grid.

So we have a situation where applications for projects that won’t be built are keeping financially viable net-metered projects from moving ahead. We have over $35 million of these projects…business owners have the funding, the desire and have given my company the go-ahead to build solar arrays. But we can’t because of the PJM process.

Our net-metered customers run businesses in New Jersey, pay lots of taxes and employ many New Jersey residents, all of whom pay taxes and spend their income in the community. All good stuff – the way things are supposed to work.

What can we do about it? Not sure. We’ve met with the PJM folks, the ACE folks, the BPU commissioners, elected officials… pretty much everyone who would meet with us. Everyone acknowledges the problem, but the path to fix it isn’t clear. The electric grid in ACE’s territory is not robust and they should be able to ensure that solar installations don’t impair their ability to deliver electricity to their customers.

One thing we’ve suggested but have yet to see move forward is for there to be some vetting of wholesale applications. We believe the applicant should have to prove financing commitments of the project before PJM reserves that capacity. Also, net-metered projects should absolutely receive preferential treatment. In a time when the New Jersey economic theme is all about jobs, that should be a ‘no brainer.’

Structural Engineering – Do This First.

Rooftop solar – what a terrific idea. A chance for you to put an underutilized asset to productive use. Sign me up.

BUT — before you go telling all your friends about this, pull out your checkbook. Go hire a reputable structural engineering firm to analyze your building as to how much weight it can handle. I’m not talking about the roof, I’m talking about the structure. You don’t want a solar integrator to tell you how good it’s going to be when you have panels on your roof and then get that “Oops” phone call telling you that your building can’t handle the extra weight. Besides, your lender won’t take the solar company’s word for it…they’ll insist on an independent structural firm’s opinion.

So – if you want solar on your roof, spend a few bucks before you spend your time and the time of potential solar companies, and find out if your building can handle the weight of the solar system…you’ll be glad you did.

Doing Solar Projects Right is Hard Work – Don’t Expect a Boy to do a Man’s Job

Take a drive up and down the New Jersey Turnpike or across I-80 or the Atlantic City Expressway. I’ll bet you’ll pass at least several trucks or vans of solar companies. Seemingly, all it takes to claim you’re a solar company is a shrink-wrapped truck with a picture of the sun and grass on the side. There are no other certifications or barriers to entry to the business. While I’m no fan of certifications, you, as the customer, need to do your due diligence. Caveat emptor. Ask your solar company for the list of completed installations. Call these customers, especially the ones where the projects had some unexpected twists and turns. Make sure your solar company has LOTS of experience with your type of project – do you want to be the test case?

Experience counts. It always has, no matter what the industry. Commercial solar installations are very complex. There are a host of things that have to be done just right or the system will be worthless, regardless of what you’ve paid for it. These are complex construction projects, not just a quick equipment installation like some solar companies believe.

We get calls every week from customers who need someone to come out and fix problems caused by solar installers who ‘bit off more than they could chew.’ We’ve seen roofs damaged by improper ballasting, the wrong racking systems and a number of other bad decisions. Fixing these problems isn’t as simple as sending knowledgeable, experienced teams of electricians to the site. The customer usually has to litigate against the company that caused the problems in order to recover the money to fix them. That alone takes a lot of time and money, all the while the system isn’t producing, SRECs aren’t being generated and the roof is leaking, causing who knows what trouble down below. Not a good scenario.

It comes down to something I find myself saying often to our prospective customers – “If you can’t find the time or money to do it right, where do you think you’re going to find the time and money to do it over?” Think about it. Spend the time up front to vet your solar company. You’ll be glad you did.

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