News & Press
Borrego Solar to take on NYS market
Westchester County Business Journal & Hudson Valley Business Journal
July 26, 2012
For 30-plus years, Borrego Solar Systems Inc. has been installing large-scale solar photovoltaic (PV) systems on commercial and municipal properties across the country, with the New York state market being one notable void.
But encouraged by new incentives that have been made available by the New York State Energy Research and Development Authority over the past year, Borrego executives hope to make a grand entrance.
For companies and organizations that qualify for incentive dollars under a NYSERDA program introduced in 2011, Borrego is offering a power purchase agreement under which it will design, install and operate a full solar PV system at no cost â€“ with the client paying only for the electricity generated by the panels.
David Sugrue, senior project developer at Borrego for the New York region, said the opportunity is tailor-made for municipalities, school districts or nonprofits that lack the upfront capital required to pay for a large-scale solar system.
“What we’re able to do with this incentive is we’ll build a system on, for example, a school’s property â€“ at no cost. Zero. Nothing,” Sugrue said. “Instead of buying electricity from Con Ed for 16 cents per kilowatt-hour â€¦ we can sell it to them for 10 or 11 cents for each kilowatt-hour.”
While it lacks a presence in New York state, Borrego, a private company based in Oakland, Calif., and founded in 1980, says it has designed and installed more than 1,000 large-scale solar developments nationwide, including more than $100 million worth of projects in its 2010-2011 fiscal year.
In addition to the option for Borrego to install and finance a new solar system, the company also designs and installs systems for clients seeking to own their systems outright.
With the combination of federal incentives and the new NYSERDA incentives, a commercial property owner can see a return on a large-scale system in two to three years, and an overall return on investment of roughly 20 percent over a 30-year period, Sugrue said.
Alternatively, under the power purchasing option, Borrego and a client would agree to a long-term contract, typically for 20 years, that allows the client to pay below-market rates that increase 2 or 3 percent annually over the life of the contract while allowing Borrego to absorb the state and federal incentives.
“We negotiate a price up front. We look at your current rate, say â€˜Here’s what you would be paying, and here’s what you’re going to pay with us for the next 20 years,’” Sugrue said.
The latter arrangement would not be financially viable for Borrego if not for incentive dollars that are available through NYSERDA as part of the NY-Sun initiative spearheaded by Gov. Andrew Cuomo, Sugrue said.
Under the NYSERDA program, which was introduced in March 2011 as part of its Renewable Portfolio Standard Customer-Sited Tier Program, property owners looking to install solar PV systems larger than 50 kilowatts were able to bid for a share of $150 million in funding spread across a five-year period.
The funding was then distributed to those bidders who had requested the fewest incentive dollars per kilowatt hour that would be generated by their proposed systems â€“ essentially allowing the market to set the rate, Sugrue said.
For its first two years, the program was restricted to applicants located in the Hudson Valley or New York City.
With the launch of the NY-Sun Initiative in April, however, eligibility was expanded to the entire state, while funding for both large-scale customer-sited systems and residential customer-sited systems was expanded drastically.
In April, the New York State Public Service Commission approved NYSERDA’s request to double funding for all customer-sited solar systems to $432 million over the next four years.
The expanded program will increase incentives for large-scale commercial systems, in addition to small and medium-size residential and commercial systems.
NYSERDA spokeswoman Kate Muller said that as a result of the NY-Sun initiative, state officials are projecting that customer-sited solar systems installed statewide in 2012 will be double the capacity of what was installed in 2011, and for customer-sited systems installed in 2013 to have four times the capacity of the 2011 installations.
“The NY-Sun Initiative puts New York at the forefront of solar development and research, creating green jobs while containing energy costs for consumers,” Cuomo said in a statement when the initiative was announced.
Muller said NYSERDA has received an “enthusiastic” response to its large-scale customer-sited solar PV program, with NYSERDA awarding $34.5 million since the program’s inception in 2011.
The next round of funding for large-scale solar systems is scheduled to be released in November, with a subsequent round in the late spring or early summer of 2013.
The November apportionment will include $36.4 million in incentive opportunities, including $3.03 million for the Hudson Valley.
The subsequent round of funding will total $70.5 million, and is projected to include $8.375 million for installations in the Hudson Valley.
Borrego plans to concentrate its efforts in the Hudson Valley and Long Island, where the market electricity rates are typically the highest and consumers would theoretically have the most to gain by installing a large-scale solar system, Sugrue said.
“Solar used to be stuck in the realm of exotic and very expensive,” said Sugrue. Now, he said, “New York is what we consider to be a real emerging market.”
Schwartz Communications, Inc.
595 Market Street, Suite 2000
San Francisco, CA 94105