Site Map   

Frequently Asked Questions - Financial

I have some non-productive land - how do I make money by installing an Energy Park ?

I hear about other companies installing solar arrays on their roofs .  Is it possible to make money with that ?

Ontario's FIT program is for 20 years... what happens after that ?

Is lowest " dollars per watt " the right measurement when I buy a solar array ?

What about investors ?

I've heard about "offsets" - what are those and how do they benefit me ?

I have some non-productive land - how do I make money by installing an Energy Park ?

Generally, there are three ways a land-owner can work with us :

1. lease us the land - we'll manage everything else
2. hire us to 'prove out' the earning potential of the land and find the investor(s) - you will have shares of the new company formed to own and operate the Energy Park
3. control your own financing and own the operating company yourself.  We'll be your "general contractors" and bring the Energy Park 'on line'.

I hear about other companies installing solar arrays on their roofs .  Is it possible to make money with that ?

Absolutely - the new Ontario Feed In Tarrif ( FIT ) program will buy electricity at very attractive rates.  The purchase contract is for 20 years at a fixed rate. Other jurisdictions may have similar programs.

Actually, there are three ways to get involved :

1. Because a rooftop is generally unproductive, leasing the space to the owners of a solar array is a very sound way to generate extra income.  The owner of the array will have a contract with the local power authority ( in Ontario, the OPA ), generally for a good rate and for a number of years .  Thus, the rental of hitherto unusable space becomes another source of income for the landlord.
2. It is even more profitable to own the generating asset yourself.  That way, you pay yourself the roof lease AND collect all the money earned by the generating asset.
3. You can opt to own part of the asset, and let another investor own the rest.  You share the Capital Expense, the Capital Cost Allowances, and the revenue.

Ontario's FIT program is for 20 years... what happens after that ?

Once a contract is signed, the price within that contract is fixed.  However, every 2 years or so the program will be reviewed , and the prices offered for new contracts will likely be lower.

The program itself is not guaranteed to last forever, so what happens in 20 years when the first contracts are expiring ? :

• Ontario will in all likelihood have an even higher appetite for electricity
• Ontario Power Generation will have shut down all its coal-fired plants
• OPG willl probably not have built any more Nuclear generating stations by that time ( they can take 30 years to complete )
• thus the problem we have now will probably be worse in 20 years
• the OPA will not have any other way to provide the power being generated by the Renewable Energy generators, and will thus not be able to afford 'turning them off' by refusing new contracts
• new contracts will be signed, but probably at a lower purchase price ( but since the Renewable Energy generators will have been long since paid for, it is still a good deal for the owners of the assets.

1. in some jurisdictions, you are paid a 'grant' or 'incentive' just to purchase an array, and not paid much for selling the electricity.  If that's the case, you don't care very much about yield , so by all means, buy the cheapest equipment being offered.
2. on the other hand, in other jurisdictions ( like Ontario ) , you are paid by how much electricity you produce.  If the initial capital expense is somewhat higher, but the productivity is much greater, the value of a high yield installation goes up year by year.

Let's consider an analogy.  Suppose you received a 20-year contract to haul gravel for the building of roads.  You will be paid  $10 per ton for all the gravel you can deliver.

You can go out and buy a 1/4 ton pickup truck that might cost you $20k and start work with a lower capital expense.

OR, you can buy a 10 ton dump truck for $100k - a much higher CapEx.

Which is better ?

The pickup truck will :

• carry 1/40 as much, so you will need to make 40 times as many trips ( spending much more for gas and repairs )
• probably wear out more quickly, forcing you to buy another pickup - how many will wear out in 20 years ?  5, 10, 20 ?

The dump truck will :

• carry 40 times as much per load - earning 40 times as much per load, per day, per year
• probably last a lot longer

The bottom line is, if you are being paid by the amount of gravel delivered ( or the amount of electricity being generated ), then you are far better off to spend a little more at the beginning and earn a lot more over the length of the contract.

What about investors ?

I've heard about "offsets" - what are those and how do they benefit me ?

A viable option is to invest in an Energy Park. Thus, owning ( for example ) 10% of a 1 MegaWatt Energy Park is the same as reducing your electricity consumption by 100 KiloWatts.  Needless to say, owning part of an electricity- and revenue-producing Energy Park is also a source of income.

As "Carbon Credits" ( ERU's ) come on line,  corporations will also be able to earn income by selling the ERU's on the 'carbon market'.

Your benefits will be :

1. reduction of your Carbon Footprint
2. revenue from the earnings of the Energy Park
3. revenue from the ERU's
4. tax benefits from owning part of a registered Tax Shelter