By: Pivot Energy
August 19 2021
Creative business owners have long leveraged their properties as a new means of generating income. For instance, some building owners choose to lease their rooftops to advertisers who use the space for billboards or to telecommunication companies to site cell towers. Some owners opt to rent out unused parking spaces to offer prime parking to the highest bidder. In both of these examples, the end goal is the same: to generate extra revenue from an otherwise underutilized asset.
Commercial property owners in Los Angeles now have another way to make additional money thanks to the Los Angeles Department of Water and Power (LADWP) Feed-in-Tariff (FiT) program, which allows businesses to realize a new source of revenue by becoming solar energy host sites. Here we unpack how LADWP’s FiT program works and explain how it enables LA businesses to turn their rooftops into assets in order to unlock a new, long-term revenue stream.
Businesses that own property in the Los Angeles area are now able to monetize their roofs by hosting solar on their buildings through the LADWP’s FiT program. The LADWP FiT program was launched in 2013 to incentivize property owners to become solar energy host sites in order to help meet the state-mandated 50% Renewable Portfolio Standard by the end of 2030. The program allows LA property owners to construct solar installations on their buildings, carports, or open spaces and sell the electricity generated by their array back to the LADWP at a fixed price for up to 20 years. The current fixed price being offered by LADWP is 14 – 14.5 cents per kilowatt-hour (kWh).
One of the most attractive things about the LADWP FiT program is that interested businesses can benefit from it without actually spending any money to install or maintain the solar array by leasing their rooftop to a trusted third-party energy developer like Pivot Energy. Here’s how it works: the developer will cover the entire project costs, including maintenance and operations, and earn LADWP FiT credits. In return, the developer will provide you with a guaranteed fixed income for up to 20 years via an annual lease payment. Depending on roof conditions, system size, and other factors, Pivot estimates the average payment to building owners to be 25K-75K annually, with larger projects well above $100,000 a year. This creates a low-risk opportunity to increase a business’s Net Operating Income without an upfront investment.
Becoming a host site for solar through the LADWP FiT program can provide your business several benefits. In addition to the financial gain associated with increasing your net operating income by unlocking a new revenue stream, you can also enjoy the perks of increased brand value, which can lead to additional revenue down the road.
The LADWP FiT program incentivizes large-scale solar projects, so the bigger your array, the more your business will profit. This is one of the largest differences between the FiT program and traditional “behind the meter” solar which is intended to offset onsite energy needs. Under the behind the meter model, arrays are sized according to a building’s historical energy use. On the other hand, under LADWP’s FiT model, arrays are sized according to the available space. That means that with FiT you won’t be limited by the energy needs of your building; instead, you can maximize both your available rooftop space and your profits.
LADWP boasts the largest FiT program in the nation with an authorized capacity of 450 megawatts. As of 2019, LADWP’s FiT program has generated over $500 million in new solar investment for the City of Los Angeles. And these investments prove to pay.
One of the first projects developed under the LADWP FiT program was the Oxnard Plaza Apartments in North Hollywood. Completed in June 2013, the array is composed of 336 panels that generate 142,000 kWh of solar energy. In its first year of operation, the project generated $29,500 in revenue, and the expected revenue from the 20-year LADWP contract is projected to reach $561,100. Not only did this property owner unlock a tremendous new source of income by going solar through the LADWP FiT program, but they also helped Los Angeles get one step closer to its ambitious climate and renewable energy goals.
Navigating all of the LADWP’s FiT program features and understanding how to design a system that maximizes your space and therefore your revenue can be a challenge. Thankfully the seasoned team of experts at Pivot Energy has experience walking clients through the process, and we continue to offer hosted solar opportunities for businesses of all sizes throughout the Los Angeles area. Pivot’s national community solar team can help you assess your solar options and convey the critical information you need to make an informed decision.
Contact us today to see how we can help put your unused roof space to work for your bottom line.
Together, solar and storage offer the unique ability to lower both demand and energy portions of a customer’s electricity bill.