Exploring Ownership Models for Large-Scale Solar Project
Developing medium to large-scale solar projects requires careful consideration of various factors, including the ownership model of the project. There are several ownership models available, each with its own advantages and disadvantages. The four most common ownership models are as follows: (1) Developer-Owned and Off-Taker, (2) Utility-Owned and Developer-Operated, (3) Landowner-Owned and Developer-Consulted, and (4) Community-Owned.
Below we will synthesize the information and compare and contrast these models, highlighting the key differences and considerations for each.
Developer Ownership Model/Build-Own-Operate (BOO):
Under this model, the developer owns the project and sells energy to the off-taker. This is the most common ownership model, and it involves the following features:
The developer finances, builds, and operates the solar project.
The off-taker signs a long-term power purchase agreement (PPA) with the developer, agreeing to buy the energy generated by the project at a fixed price.
The developer takes on all the risks associated with the project, including construction, operation, and maintenance.
Utility Ownership Model:
Under this model, the utility owns the project and pays the developer a success fee. This model has the following characteristics:
The utility finances, builds, and operates the solar project.
The developer is paid a success fee for their services in developing the project, which includes identifying the site, obtaining the necessary permits, and designing the system.
The utility takes on all the risks associated with the project, including construction, operation, and maintenance.
The utility may choose to self-finance the project or obtain third-party financing.
Landowner Ownership Model:
Under this model, the landowner owns the project and pays the developer as a consultant. This model has the following features:
The landowner provides the land for the solar project, and the developer provides the expertise to develop and operate the project.
The developer is paid a fee for their services in developing the project, which includes identifying the site, obtaining the necessary permits, and designing the system.
The landowner takes on the risks associated with the project, including construction, operation, and maintenance.
Joint Venture Model:
Under this model, the developer and the utility or landowner form a joint venture to develop and operate the solar project. This model has the following characteristics:
The developer and the utility or landowner jointly finance, build, and operate the solar project.
The risks and rewards of the project are shared between the parties based on their ownership stake in the joint venture.
The joint venture structure allows the parties to combine their expertise and resources to successfully develop and operate the project.
Community Solar Ownership Model:
Under this model, multiple participants can invest in a shared solar project, typically located in the same community. This model has the following features:
Participants can include individual consumers, businesses, or organizations that cannot install solar panels on their own property.
The solar project is owned by a third-party entity, which sells the energy to the participants through a subscription or lease agreement.
Participants benefit from reduced energy costs and the environmental benefits of solar energy without having to install and maintain solar panels themselves. For example, Community Solar can provide access to low income or disadvantaged communities.
However, community solar projects may face challenges related to site selection, regulatory barriers, and administrative costs.
In summary, the main differences between these models are the ownership structure, financing arrangements, and allocation of risks and rewards. The developer ownership/build-own-operate model is the most common and involves the developer owning the project and selling energy to the off-taker. The utility ownership model involves the utility owning the project and paying the landowner rent and the developer a success fee. The landowner ownership model involves the landowner owning the project, selling energy to the utility and paying the developer as a consultant. The joint venture model involves the developer and the utility or landowner forming a joint venture to develop and operate the project. The community solar model involves multiple participants investing in a shared solar project.
There are various ownership models available for medium to large-scale solar projects, each with its own unique set of advantages and disadvantages. Regardless of the model chosen, it is crucial to have impartial, expert advice throughout the project development process to ensure the success and sustainability of the solar project.
At Cascadia Renewables, our team is dedicated to providing comprehensive guidance and support to our clients, regardless of which development model is selected. Our expertise and industry knowledge will ensure that your solar project will be developed with the highest level of quality and efficiency, ultimately contributing to a cleaner, and more affordable future. If you are interested in developing a large scale solar project in the Pacific Northwest, don’t hesitate to get in touch, we would love to see how we can help bring your vision to life.
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- Callum and Markus