Incentives put solar power within reach.
Commercial property owner will recoup cost in two years.
July 1 2010
EATONTOWN — Local property owner and businessman Gary Rafaloff plans to power up the largest solar generating system in the borough in a matter of weeks. Rafaloff expects the system, estimated to produce a total of 800,000-kilowatt hours per year, to cover nearly 100 percent of the energy costs for two of his Meridian Center buildings on Industrial Way. “For commercial properties, it’s pretty hard to get significantly larger than what we have because the rooftops generally are not big enough,” Rafaloff said.
A need to reduce his energy costs initially drew Rafaloff to solar power, which generates electricity from sunlight, after he reviewed his 2008 end-of-year expense reports. “Energy costs actually became the No. 1 expense line item. It actually surpassed real estate taxes, which is amazing because that is usually not the case,” he said. “From a long-term perspective, the price of electricity has gone way above the annual increase in inflation … there was no doubt that there was an interest in reducing cost.” However, without recent incentives, Rafaloff said solar would not be cost efficient.
Rafaloff explained that the confluence of several state and federal incentives have now made solar a financially viable option for property owners. “If you followed some of the initiatives put in by the state a few years ago, New Jersey has really become the leader in clean energy in the country in terms of state initiatives, probably on par or even surpassing California,” he said. “Combining [American Recovery and Reinvestment Act] incentives along with the state increasing their incentives dramatically actually made it not only a great source of reducing energy costs … but also a great financial investment,” Rafaloff said.
According to Rafaloff, one of the most important incentives for property owners, himself included, was net metering. “The problem with solar energy is that there is no way of saving the energy that is produced. It gets produced when the sun is out shining brightly and it’s not getting produced as much on a snowy winter afternoon. “The property owner in the past wasn’t always able to reap the benefits of the energy they were generating,” he said.
The added cost of battery systems to store unused energy would eliminate the cost efficiency of the system, Rafaloff said. With net metering, generated energy that the buildings do not consume goes onto the grid and that building’s meter runs backward. “Essentially, the utility [company] is buying the energy back from us at retail rate,” he said. This becomes especially useful, Rafaloff explained, at night or on cloudy days when the panels do not produce enough energy and the buildings pull electricity from the grid. This electricity, then, is essentially free. “As long as it gets produced, we get use of it,” Rafaloff said. “That was a great incentive because now property owners don’t have the fear of now trying to analyze what the cost of the system is and how much of that energy generated will actually be useful to me. Now, literally every watt of power generated is either used at the property or used somewhere else in the state, and we still get paid our electric cost for it.”
Rafaloff said he expects the system to cost $4 million when completed and anticipates it will pay for itself in less than two years. The panels, he said, are guaranteed up to 25 years. Additionally, Rafaloff said the panels should improve the life of the roof. “The two most devastating components to the roof of a property are the ultraviolet rays of the sun and the water and ice that sits on it in bad weather. The panels on the roof actually prevent both. “Only time will tell, but in theory, it should really have a significant increase to the life of the roof of the building because the components that would really deteriorate the roof are no longer there,” he said. In theory, he added, the panels should outlast the building itself.
The solar system also makes his properties more appealing to prospective tenants, Rafaloff said. He said that many of the tenants he has spoken with are interested in reducing energy costs but many are also interested in being green “You have things that are happening in Louisiana with the worst oil spill in American history, probably world history, it just makes us realize that … oil has environmental demands that green energy doesn’t. If we all do a little bit to help, that little bit then goes a long way.”
Rafaloff said that he tells his leasing agents to emphasize the solar system when showing his properties to prospective tenants. “The first thing I want you to tell them about is the fact that we’re going to be the first, not 100 percent green, but the first basically green business park in the county.” Learning from his own experience with solar, Rafaloff and business partner Eric Phillips have since started Anova Energy Solutions LLC, a solar consulting firm, to assist other businesses in their pursuit of solar energy.