Solar power arrays cost a small fortune to install, with a $1 million price tag for a typical commercial project producing 200 kilowatts of energy. But supporters say the installations pay for themselves through savings generated by solar energy, coupled with generous state and federal incentives.
And locally, the pot has just been sweetened further.
In his continuing efforts to turn Beantown into Greentown, Boston Mayor Thomas Menino has announced a building permit fee reduction for developers who include solar panels on their projects.
Until now, city hall charged real estate developers a fee equal to one percent of the overall project cost. Under Menino’s new ordinance, the cost of the energy-collecting panels would be deducted from the permit fee.
“By eliminating the costs of the panels from that calculation we can significantly reduce the permit fees and one of the barriers,” for developers looking to go green, said Jim Hunt, the city’s chief of environment and energy.
Small Potatoes
In most installations, the panels themselves account for about 65 percent of the solar project’s cost. If the panels in that hypothetical $1 million solar array cost $650,000, that amount would be deducted from the project cost. That would leave $350,000 to charge for the permit fee, lowering a $10,000 building permit to $3,500.
But while real estate financiers welcome the savings, those amounts are small potatoes when compared to the overall cost of many local projects. According to one developer, deep pocketed investors interested in incorporating solar panels on their projects will still need more motivation than just the new permit fee reductions.
“You would have to want to do the solar installation for a lot more reason than to save $3,500, but every little bit helps,” said developer John Rosenthal, president of Meredith Management.
While the incentive for solar installations is modest, it may prove popular if the city formally adopts new, stricter energy-efficiency measures proposed last week. The new rules mandate a 20 percent increase in efficiency in all new residential and commercial construction – a mandate that would make going solar far more of a necessity than a luxury.
“Solar is one way that developers can reduce energy consumption, and those permit fee reductions and other incentives can help offset that,” Hunt said. “But solar is one of many strategies that developers can incorporate … to meet the state’s stretch code requirements.”
Meredith is in the process of creating the Fenway Center, a five-building, 1.3 million-square-foot, mixed-use development to be located between Beacon Street and Brookline Avenue near Kenmore Square.
Rosenthal’s company installed about 300,000 kilowatt hours of solar generators in eight different buildings in Newton, Springfield, Clinton and Ware last year, totaling $1.3 million.
Now, he is undertaking a $13.5 million renovation of the existing Yawkey commuter rail station set to break ground this week. If the state and federal governments continue tax incentives and energy credit programs, Rosenthal plans to build a photovoltaic array attached to the commuter rail station, with energy capacity that will make it the first zero-net energy train station in the state.
If all goes to plan, about one acre at Rosenthal’s $450 million project would be covered with solar panels, producing 750,000 kilowatts of power each year – more than two times what he installed all last year. The site may end up hosting the state’s largest photovoltaic power plant when it’s all said and done.
Implicit Approval
Rosenthal, however, is not your ordinary developer. He spent his 20s organizing protests of nuclear power plants and weapons, and was jailed for more than three months for trespassing in a California plant. So he has the added activist’s motivation to delve into renewable energy.
“It’s not only good for the planet, it’s good for business,” Rosenthal offered. “Our tenants tell us they love knowing that their electricity is coming from solar. It’s a serious value added for our tenants … and the equipment has a 30-year life.”
Rosenthal said state and federal tax rebates of 35 percent and 30 percent, respectively, provided further motivation to implement solar. And while the state can no longer afford 35 percent, the commonwealth has mandated utility companies pay a premium to buy back excess solar power produced by private investors.
In the end, Boston’s fee reduction incentive may not be a windfall for developers. But the city’s seal of approval implicit in the arrangement should be enough to push developers to go solar, according to Jon Abe, senior vice president for Andover-based Nexamp, a clean energy company that builds and installs solar arrays.
“By supporting solar in particular, you’re supporting an industry that basically did not exist [in Massachusetts] 10 years ago, and today supports thousands of jobs,” Abe told Banker & Tradesman.
Abe said Nexamp will be looking to take advantage of the city’s new fee reducing ordinance in upcoming projects. He declined to elaborate, citing confidentiality agreements with clients. The company has eight other projects in progress, so he said the company and its investors can use whatever breaks they can get.
Recent projects include a 109-kilowatt array that supplies approximately 70 percent of the electricity for Boston Sand and Gravel’s maintenance garage; and a 110-kilowatt solar array at Boston Properties’ newly developed Weston Corporate Center.
