Theme park giant, Six Flags recently announced an initiative to install solar panels in three of its largest parks across the United States. The panels will power the parks’ rides and act as shade in parking areas. They will also provide savings: about US$1 million annually in energy costs per park.
Aside from a low electricity bill, going green is an increasingly lucrative move for commercial real estate investors who use state and Federal incentives to get more bang for their buck.
Developer sPower, for example, used the Solar Investment Tax Credit (ITC) to solarize the Six Flags parks.
“If you’re not thinking about how you can be greener in your portfolio, then you’re leaving money on the table,” says Kyle Goehring of JLL’s Clean Energy Solutions group.
We look at which states are offering the best incentives for owners and investors who go green:
California: The Golden State has been at the forefront of the green movement for years, taking advantage of plentiful sunshine and the need for more power as its population continues to grow. “The infrastructure and government regulation are already there, so green investment in California is a no-brainer,” says Goehring. One of the state’s offerings is the Performance Based Incentive, which is paid at a fixed dollar per kilowatt-hour of generation
Hawaii: The island paradise comes with ample sunshine — and opportunities for investors and owners to soak up some savings. With the highest electricity rates in the country, many have already taken advantage of existing government programs that encourage the commercial use of renewable energy.
Developers and owners who install new solar electricity systems, for example, qualify for tax credits on 35 percent of the cost, up to $500,000.
Illinois: The Land of Lincoln has provisions in place that make solar power king. In Illinois, it’s all about Solar Renewable Energy Certificates (SRECs). Owners and operators who are interested in harnessing solar power can turn the energy they produce into SRECs, which are created every time a megawatt hour (MWh) of solar energy is produced.
The state requires utility companies to buy SRECs as part of their renewable portfolio standard, so there is readymade demand for this alternative energy source.
The state also initiated what it calls the Adjustable Block Program, slating prices for SRECs that are fixed for 15 years.
A word to this wise: Investors must have a letter of intent saying they own land before they can determine how much their SRECs will be worth. And time is of the essence, says Goehring.
“As the program fills up, land buyers are essentially establishing their place in line.”
Massachusetts: Do you have a basement or other space in your building that isn’t contributing to your bottom line? If you’re in Massachusetts, the state’s Solar Massachusetts Renewable Target (SMART) program could help.
The program allows owners to add to their net operating income by leasing otherwise unused areas of buildings to the state’s utilities to store or produce renewable energy.
The program can also help pay for building upgrades such as new solar-paneled roofs or carports, all of which increase the value of a building.
“By taking advantage of the SMART program, you’re essentially getting free or government-subsidized upgrades,” Goehring says.
5. New Jersey: Much like Illinois, New Jersey operates on a system that uses SRECs. However, New Jersey’s program is more established, having been in place since 2001, and prices are already set.
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