Climate Matters: A case for on-site solar
31st in a series
Regular Climate Matters columnist Mike Roy sat down with Ian Phair of Cornwall to learn more about his new solar power venture, Vermont Solar Fund LLC.
Mike Roy: What does your new company do?
Ian Phair: Our mission is to help more folks “go solar” with financial arrangements structured to fit individual client’s needs. We believe that solar makes sense for many situations, but the upfront cost and tax aspects may deter people from pursuing it. We hope by eliminating the upfront cost and/or acting as a tax-credit investor to enable more people, businesses and nonprofit and tax-exempt entities to “go solar.”
For example, a recent project we completed required no upfront payment, the client will continue paying the same amount for the electricity they consume as before, and after 10 to 12 years they will have a choice to either a) receive a 50% discount on their future electricity from the solar project or b) buy the solar project for approximately 10% of the original upfront cost of the project — in either case the client has a solar project onsite now, and they will save a lot of money over the life of the project.
I should also mention we do normal solar installations as well, for clients that do not need any assistance with the upfront cost or tax benefits. Nonetheless, what we feel differentiates our company from other solar installers is our approach to financing projects to meet a client’s needs and enable them to “go solar” with no upfront payment and no additional payments (beyond their normal power bill) thereafter.
How has the Inflation Reduction Act changed your strategy?
Until recently, nonprofit and tax-exempt entities could not use the federal tax credit available for solar projects and therefore partnering with a tax-credit investor (such as Vermont Solar Fund) was necessary to make a solar project cost-effective. Now the Inflation Reduction Act has changed that through direct payments to tax-exempt entities in lieu of the federal tax credit (PLEASE CONSULT YOUR TAX ADVISOR). For example, as a tax-exempt entity the town of Middlebury could receive a check from the U.S. Government for 30% of the cost of a solar project, in accordance with the Inflation Reduction Act. So, whereas previously nonprofits and tax-exempts needed a tax-credit investor to partner with on a solar project, they no longer do.
Many such entities, however, still need help financing solar projects, so we’re focusing more on that aspect. In any case there still could be some additional tax benefits and value that a nonprofit or tax-exempt couldn’t capture, so it might make sense for a tax credit investor in certain situations.
Why should folks consider onsite solar instead of investing in off-site solar?
Onsite generation is preferable to big, offsite generation, or at least it should be part of the puzzle. Onsite solar generation can reduce the strain on transmission lines and systems. It’s also worth observing that the effective price for onsite power generation is more attractive than for off-site generation, at least for those folks whose cost of electricity is higher than the prevailing net-meter pricing, which is usually the case for small and medium power consumers. Onsite generation first reduces consumption, which is like selling power at the higher consumption (vs. net-meter) price.
If it does not make sense to put solar on your own property, a good way to go solar off-site and still benefit as an owner of a solar project is through a group like Acorn Energy. This remote solar model was already in place, and well received, and I was familiar with it, having participated on behalf of our church. But as I said before, we believe that it’s desirable to do solar on your own property whenever possible. Having the generation and consumption at the same site is efficient by reducing transmission and benefits from the pricing differences we talked about. So our focus has been to do onsite solar projects.
Given that Green Mountain Power provides more or less carbon-free electricity, why should you bother going solar now?
I believe in onsite power generation whenever possible. We also believe that as we transition away from fossil fuels for not only power generation but also transportation, heating, etc. we will need more renewable power generation, and onsite solar generation can contribute to this effort.
I also think it’s a financially desirable thing to do. For a long time the American dream has been to own your own home, and the reason you should do that is because you have an asset that’s going to last a very long time. Why would you want to pay ever-increasing rent for 50 years if you could pay a fixed mortgage amount for 20 or 30 years, and then own it outright? The exact same thing applies here. A solar project is a long-lived asset (30 years or more), and homeowners and business owners should consider the benefit of owning their power source rather than paying a utility increasing amounts into the future.
Where is Vermont Solar Fund heading?
We would love to do both heat pumps and battery storage. I don’t know how fast we’ll get there, but I think both make a ton of sense. We’ll have to figure out what works for our internal growth plan, and how to either partner with folks who do that, or do this ourselves, or both. That said, I think the battery piece is more challenging. There is an upfront cost to installing a battery that doesn’t replace another cost. While both solar and heat pumps have costs, they also offset costs (such as your utility bill or heating oil bill), which makes the financial aspects more attractive.
What keeps you awake at night?
If Vermont is going to reach its renewable energy goals, it certainly seems we will need many more people to help with solar installations. Ensuring that installations are done efficiently and safely is very important to continue to increase solar energy. We know that the construction industry and everybody else is having a hard time hiring people. I’m sure it will be a challenge for us too, as we grow. The other big piece that I keep wondering about is the funding model. I’m funding this myself at the moment, and we’ll need to step into a sustainable long-term funding model as we continue. So people and money are two areas I keep thinking about.
We focused initially on nonprofits and tax-exempt organizations, but we’re also working with homeowners and business owners. I would encourage anybody who’s interested to please reach out to us, and that could be for themselves or their business, or their favorite nonprofit or a friend. Email [email protected] or call 802-448-4346.
Ian Phair has worked for over 20 years in the area of private investment focused on start-up companies and projects in the energy, real estate and financial sectors. He has been involved in multiple energy-related companies and projects, including a commercial solar project in Pittsford, Vt., and, in 2021 he established Vermont Solar Fund LLC. He lives in Cornwall with his wife Tanya, their son Bas (22) and daughter Eva (20).
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