Executive Interview: Joan Hooke of Distributed Sun

Harry Bennetts

The Solar REvolution?

A: The next frontier for solar is the Mid-Atlantic and Northeast. What’s really driving this business and why it’s essential that owners and investors get focused is simple- a demand for lower cost and cleaner electricity. Demand drives everything we do in real estate –we deliver new buildings when the market tells us that people want more, and now we are building solar systems because people want to purchase the output. Policies and incentives help us get the product out the door, but the business case is all about customer demand. And the pace is quickening-solar installations are up 66% over Q1, 2010.

A: The reality is that the industry is maturing, and policies have helped create a more competitive market that is driving down costs literally every day. Installation costs have declined another 15% year-over-year since 2010. The technology and pricing allows us to see a not too distant future where project economics work without incentives. And for the solar developers that build top tier systems, they and their customers will be rewarded with attractive long term, risk- adjusted returns. So incentives and policies are great, but when they go away it will be because we don’t need them anymore.

A: Improved, more valuable assets. It’s a simple offer-let the solar guys invest millions of dollars of capital into your asset, and they will give you lower, predictable green energy that drives value to the bottom line. Owners and investors like that concept, but often get hung up on making a long term commitment to solar. When done right, owners can retain the flexibility they need and want, and can even get on both sides of the deal if that’s what it takes.

A: Investment grade assets with reliable, costs effective solar energy will maintain a competitive advantage –higher NOI, differentiated market positioning, and an ability to attract tenants with a mandate for renewables in their portfolio. This is as much about not being left behind as it is about leading. Commercial real estate owners are sitting on the best solar assets in the US-they can either take and keep control of those valuable resources and deploy solar on their own terms, or sit back and wait to be told by their tenants they have to do it to keep their business

A: On the technology side, keep it simple. Insist on top tier products that have performed well over many years and deliver only the best warranties. Real estate is a long term business- you don’t want your solar system to be “A for a day”. In terms of deal structure, pick the structures that best match the way you deploy capital and create value. And then work with a solar developer who has a proven track record.

#CRE #finance

Property Owner