Manny Renteria 0:00
In a nutshell, we were able to cut down the level the cost of energy for this business owner. And the tenants because we ended up paying the bill for it down from 24 cents a kilowatt hour down to about nine cents a kilowatt hour, even eight cents a kilowatt hour. Because the owner is is is, you know, forking up the investment in it. And in the first year to five years, the owner will recover 50% of that investment through federal incentives, which is 26% tax credit. And then you’ve got the accelerated depreciation over five years. And then now there’s another depreciation benefit that came through a couple years ago. And so commercial business owners are recovering, you know, more than 50% of the cost in the first five years. And then the next, you know, the other five years that they’re operating already recovered the rest of the investment by way of energy savings. Welcome to
CRE PN Radio for influential commercial real estate professionals who work with investors, buyers and sellers of commercial real estate coast to coast whether you’re an investor, broker, lender, property manager, attorney or accountant We are here to learn from the experts.
J Darrin Gross 1:22
Welcome to Commercial Real Estate Pro Networks, CRE PN Radio. Thanks for joining us. My name is J. Darrin Gross. This is the podcast focused on commercial real estate investment and risk management strategies. Weekly we have conversations with commercial real estate investors and professionals who provide their experience and insight to help you grow your real estate portfolio.
Today, my guest is Manny Renteria. Manny is a 15 year veteran of the solar industry, and has been designing commercial solar systems for over eight years. He is a founder of one up solar, an industry leader and residential, nonprofit and commercial solar installs in San Diego. And they are expanding their reach to the entire country. And in just a minute, we’re going to speak with Manny about the opportunities in solar for real estate investors, and specifically more commercial aspects.
But first, a quick reminder, if you like our show, CRE PN Radio, there are a couple things you can do. You can like, share and subscribe. And as always, we encourage you to leave a comment. We’d love to hear from our listeners. Also, if you’d like to see how handsome our guests are, be sure to check out our YouTube channel. You can find us on youtube at commercial real estate pro network. And while you’re there, please subscribe without on Welcome my guest, Manny Welcome to CRE PN Radio.
Manny Renteria 3:00
J Darrin Gross 3:02
Well, Manny, I’m looking forward to our conversation today. But before we get started, if you could take just a minute and share with the listeners a little bit about your background.
Manny Renteria 3:13
Well, my background is mostly in electrical and electrical engineering, which is why I got into the solar field I guess. Prior to to joining one of the top solar companies in the world, back then known known as Solar City, I was a commercial electrician. And prior to that Residential Electrician and I’d also worked on wind turbine generators and things like that. So my passion comes from knowing understanding electrical transmission, distribution and troubleshooting. So when I found out when I first found out what solar photovoltaic cells are and what they did, I was blown away by the fact that I could now you know, offer folks the value of producing that power on site versus having to transmit it through transmission lines and things like that. So that’s, that’s my background of family man out of San Diego. And, you know, just proud to be an electrician in the trade.
J Darrin Gross 4:31
Awesome. Well, I’m excited to talk to you about solar. I know it’s been something that’s it’s always appealed me ever since. You know, first time I remember hearing about it and probably grade school or something like that. In just the the product itself. Can you talk a little bit about, you know, the product and you mentioned the cells and how they’ve improved And the last, I don’t know how far back you want to go, because I’m sure there have been leaps and bounds. But it just in the recent past, if you could talk a little bit about the product and, and how it’s improved,
Manny Renteria 5:10
Certainly. So the first batch of solar panels that I encountered, were back in 2001. And I was I was actually on a, on a track home build. And we were wiring this these model homes for track home development. And there were, there was an electrician on site that had these modules. And they’re, I mean, they were probably to two feet by four feet. And there was, you know, they had like, two pallets of them. And I looked, I took a look at them closely. And they were manufactured in some warehouse here in the United States by hand. And they were only rated at 25 watts at the time, so the system itself really didn’t, didn’t cover the entire home’s energy demand, so to speak. So, but it was a cool technology, right, just to know that it existed now fast forward seven years, when I actually got into solar, myself and had had hands on experience in in, you know, designing and installing these panels. The modules by then the solar cells, which are, the solar panels are actually, you know, a group of cells that are kind of wired together by conductors. And so when you see a solar panel, usually it has about 60, or more cells. So these cells were now rated at around 175 watts. So, you know, 25 watts, 275 watts over, you know, seven years. And that’s
J Darrin Gross 6:59
per cell, per cell,
Manny Renteria 7:02
well, per, you know, packaging of cells. So, okay, packaging, so so the, when you see a solar panel, the traditional solar panel that you see on home, that’s going to be the usually the standard size of packaging. And so as, as the years go by efficiency inside of each cell, increases about one to 2% per year has been the average. And it’s had, it’s had kind of a drop off over the last few years, where the cell efficiency is kind of leveled, leveled off. And and now we’re seeing in commercial, especially modules that are rated upwards of 450 to 500 watts now, so huge, huge, you know, bounds and leaps to get where we are today. And so now with now with one solar panel, you mean you can you can power an entire, you know, entire kitchen, whereas before you needed like 10 of them? So, so yeah, I mean, technology’s come a long way. It’s not it’s not going out of control, you know, to the point where, oh, yeah, two years, they’re just gonna be this big and, you know, one cell is gonna take care of an entire apartment building I that’s not gonna happen, but
J Darrin Gross 8:18
Right, right. But this is just the the progression to where, you know, you may have needed like, yours and your neighbors or have to power your house where now you can get it done with you know, party roof being covered is it’s it’s fascinating and impressive just to see you know, the, the real practicality and, and the opportunity there. So that the basic is a cellular or an outsider but the solar panels that basically the kind of the foundation of what you guys do as far as the or I guess the, the energy collection is that were the, the primary kind of the starting point for the the collecting the energy from the sun.
Manny Renteria 9:08
Yeah, so so that’s going to be the only source of you know, incoming power that we that we have in our systems and from there, we have inverters, which which condition and convert the energy to usable energy to sunlight energy to usable energy, then you’ve got batteries that store the power and distribute the power during different times of the day. So, yeah, in fact, the solar the solar panels and the solar cells themselves are responsible for attracting that sunlight and converting it into energy.
J Darrin Gross 9:40
Getting so going from the 25 watt to the 175 watt panels. How somebody that has one of these installations on the Start with a residence, are you able to essentially be off the grid for the average? average homeowner?
Manny Renteria 10:02
That’s a great question. The possibility or the feasibility in going off grid is, is is available, it’s a thing. It’s not really cost effective to be off the grid. today and for for as long as I can remember, solar in the, you know, marketable residential and commercial space has always been grid tied. And so what that means is that your, your solar PV system, that generates all the power that you need in your household, is, in fact is most of the time is going to be grid tied. Why? Because storing energy can become really expensive, and not only storing it, maintaining the storage batteries, and having enough storage, battery capacity, you know, to weather any any type of ongoing, cloudy days, for example, I don’t know, let’s let’s use as an example, Seattle, where you have, you know, days and days and days of no sunlight or low sunlight or even Alaska. Or even in California, we’ve we’ve had days where, you know, four or five days, there’s not a lot of sunlight. So what happens is, if you don’t have an autonomous, you know, storage system that could take you through these five days, you’re you’re going to be left without power. So it’s not really a good idea to be off grid unless you’re, you know, you’re living in a cabin, up, you know, the woods where there’s really no no access to grid voltage, and communication. And then that’s where that’s where you can really become much more efficient, and find electrical devices like, like light bulbs, or even refrigerators that are powered directly off of DC power and doesn’t require you to store the energy. And you just you have to live a very minimalistic sort of consumption life, right to be off grid. So it’s possible, not feasible.
J Darrin Gross 12:05
So, so let’s, so I guess walkway from the the off the grid, but but just in the fact that you’re generating power, is it common now that when you generate power, and you’re not using it, that you’re that you’re able to, I guess, supply the grid? Or is there any kind of a do you become a generator for the grid, then?
Manny Renteria 12:31
That’s a great question as well. So most utility companies across the US, they will sign this agreement called the net net metering agreement with the with the consumer, or the customer. In this case, most utility companies benefit from solar power, because what happens is you you become a producer of power, and then you lend them out that power, which they can then turn around and sell it to you know, the building next door or the neighbor for you know, for the premium price that they sell power at. And instead of you getting billed for it, you get credited for the excess power that you put in put onto the grid. Now, some utility companies in California now have enacted net metering 2.0 and are going for 3.0 where 2.0. Now there’s they’re actually charging you a small non by passable charge, they call it NB C’s not by passable charges, to store the power on the grid. So now they’re they’re actually charging you a small fee to store that excess power, and then call it back in the evening. And then they’ve got time of use rates and things like that, where where they have actually learned how to recover some of the losses that they’ve experienced with with solar customers. But for the most part, yes, it’s it’s an, it’s a one to one exchange, so you give power, they give you power, you give them power. But now they charge you a small fee. And it’s a small percentage, I’m talking maybe one or 2% of what they’d actually charge you if it was if it wasn’t, if it wasn’t solar energy that you put on the grid, if it was just pure power that you’re buying from them and wholesale.
J Darrin Gross 14:19
Well, it’s interesting, I’m just kind of curious, you mentioned that, you know, California I think has probably been more progressive. Stay with regards to solar power. Have you found that most states are moving in this way? Are there any that have been resistant to you generating power and, and, you know, putting it into the grid or or or tying to the grid that you’re aware?
Manny Renteria 14:47
Yeah, so there are many states now that are on board with solar. You know, there’s there’s a handful I can name off a few Texas, Nevada, Arizona, New York, New Jersey. South and North Carolina, Georgia is now peaking. And Montana, Florida, I mean, just just to name a few, there are quite a few states that are still, you know, kind of struggling struggling behind. But these new states and figured they’re actually offering tons of incentives in some of these states, state incentives along with federal incentives, you know, to deploy rooftop solar. And not only are not only are their state and federal incentives, there’s also production incentives, and also, utility now are offering rebates as well. So I like in the Carolinas, I think there are, there’s, there’s a pretty significant utility rebate when you go solar, and I imagine it’s because of the, you know, the lack of energy sources around the area. So there’s a lot of fields out there, where where, you know, people have big plots of land, and they’re putting, you know, utility scale solar on there. So now they’re putting solar in, they’re selling it back to the utility and the utility gets to profit from that.
J Darrin Gross 16:10
Yeah, no, I was gonna say, recently, I’ve seen more and more of those, just kind of a field with panels. You know, and I didn’t know if that was privately owned, or if that was, you know, municipality owned, or, or how that was, but it’s, it’s, it’s impressive. I mean, when you see, you know, 100 acres where the panels all lined up, they’re generating power. So, the, the the basic is, the panel on on your roof, whether it be your residential property or commercial property, you are able to operate your, your facility, from the power you’re generating any access, then you can have an agreement with the utility. So right, and then, and then they kind of store it, and then you’re, you’re not like unplugged. But you are getting some credit for your, your generation. So, let me ask you this. So we’ve talked about basically the, the system or the hardware and stuff. What’s the I guess the the cost and the benefit and kind of more of the, you know, the, what kind of a financial obligation to somebody, you know, looking at to, you know, whether you’ve got a 10,000 square foot building, or 100,000 square foot warehouse, or can you talk a little bit about how that looks? And then kind of ways that you mentioned some sort of the incentives that are available? Or how how these installations are being paid for or financed?
Manny Renteria 17:49
Yeah, certainly, though. So in California, the easiest way for me to explain the cost of solar is comparing it to the cost of the utility power in terms of kilowatt hour or price per kilowatt hour. Because I can tell you $100,000, and that’s not going to mean anything to you unless you know how much you’re spending or, or how much you you’re avoiding in the near future. And that’s not some sort of gimmick is just the way it is the way we calculate the levelized cost of energy over 25 years span, which is, you know, which is the typical lifespan of a system, the minimum lifespan, I should say, because there’s warranties in place. And so, when you look at all use California as an example, the rates here, especially in San Diego Gas, and electric, the rates for commercial power, are roughly around 22 to 28 cents per kilowatt hour. Now, compared to residential, it’s almost half of what residential power costs are energy, I should say, energy is a measure of kilowatt hours. And so 22 to 28 cents per kilowatt hour is what you’re paying for electricity today. Now, when you deploy solar on your rooftop, and it really depends on the size of the building, obviously, if you have a taller building that has a smaller roof space and you have you know multiple floors, then you know solar panel coverage on the roof, may or may not cover your your full need, right, we’re looking more for buildings that are you know, one to two storeys with a with a with a larger footprint, where you can actually cover that rooftop and and then realize the full incentive of going solar and, and the most savings. So in my building right up above my head, actually I have an 18 kilowatt system installed. Now below us, there’s a restaurant. There’s and then Next to that restaurant is another restaurant. So we have an it’s an it’s us. And then next to us on the on the left here, we have another office building, and that’s a real real estate business. So we have about 1200 square feet in here. And the real estate has around the same. So together, because it’s the type of the business that we are, right, we consume, we consume light, and we consume air conditioning. And that’s pretty much it. We don’t have, you know, multiple refrigerators and, you know, in all these freezers and things like that, like the restaurants have, so basically, the roof space that we have above our heads only only satisfies the the power consumption of the top floor, which are offices, right. So office space, retail space, things like that, that’s where we see, you know, a huge feasibility. So the owner of this building, when I when I brought the project to them, because I, we pay the electric bill, listen here, listen, this is what we sow. So in a nutshell, we were able to cut down the level the cost of energy for this business owner. And the tenants because we ended up paying the bill for it down from 24 cents a kilowatt hour down to about nine cents a kilowatt hour, even eight cents a kilowatt hour. Because the owner is is is, you know, forking up the investment in it. And then the first year to five years, the owner will recover 50% of that investment through federal incentives, which is 26% tax credit, and then you’ve got the rapid accelerated depreciation, I think it’s
the makers, right, it’s a, I don’t know what the N stands for, I don’t remember off the top of my head, but it accelerated depreciation over five years. And then now there’s another depreciation benefit that came through a couple years ago. And so commercial business owners are recovering, you know, more than 50% of the cost in the first five years. And then the next, you know, the other five years, that, that they’re operating, already recovered the rest of the investment, by way of energy savings. So you know, after, after the first five or six years, everything from then on is just is just power that’s being produced on the roof with a system that’s been paid off. So, you know, cash investments are definitely, you know, the, if you have that type of, of investment, capital, I would say is, is the biggest, you know, the the best way to recover your your your return, to realize return on investment on any system. So, because your levelized cost of energy ends up being around seven cents at that rate. So if you can, if you can compare paying seven cents for power, you know, over 25 years, versus paying 20 to 24 cents today. And then being susceptible to inflation and other things that utility companies usually stick us with every year three to 4%. You know, there’s a huge saving spectrum. And so when you add financing in there, when you add interests, when you add, let me give you an example, we looked at a finance option for this building, as well as with interest in program fees and other things like that the levelized, cost of energy went from seven cents from being in cash investment to to about 12 to 13 cents in a finance investment. So So when picking up investment financing, your levelized cost of energy actually goes up, but you’re still around 50% in savings. Now, that’s for California, other states. We, it’s, it’s a little bit tougher when you when you when you when you finance your commercial project, in a utility where the utility power is only 14 cents, you know, because then what ends up happening is the price that you pay for power today is going to equal the price that you’re paying for your investment right off the bat. But with but with, but what I like to what I like to really focus on and have my customers that I consult for focus on is the fact that they that they’re getting rid of that expense and replacing it with an investment cost No matter how much this investment is, if it’s a little bit more a little bit less, it doesn’t you know, you’re getting rid of the whole expense. So it’s like renting your power versus owning it. So that’s my perspective on, on on financing and the cost the cost right now very, very accessible and affordable, obviously compared to what it was years ago and commercial. I can To tell you commercial right now is going to cost anywhere between 25 to 35%, less than any residential project. So if anybody’s ever had a residential bid for their home, they can expect to see, you know, 25 to 35%. lower costs for their commercial business, because of the size of the system.
J Darrin Gross 25:20
Gotcha. Gotcha. And you mentioned kind of the the base rate for California 22 to 28 cents for the commercial. Do you have our I mean, I would assume based on just the the recognition of the the benefit, that states that have higher cost power would be kind of more of a target opportunity, just just for my initial easy to see that the benefit kind of thing. Are those states easy to identify what states that that stand out?
Manny Renteria 25:55
Yes, states and stand out to me are going to be California, Maryland and New Jersey. Those are the New York. So those those four states and Massachusetts. So these are all states that have that we’re experiencing power over 18 to 19 cents per kilowatt hour.
J Darrin Gross 26:15
Gotcha. Yeah. In and if I understood, right, the payback on this was roughly five to 10 years, based on the California model you were talking about as far as the cost to invest. And then you said 50%, back in five years, and that was just, if I should write that wasn’t even talking about their reduced or the XIV, he said five, but 50%, five years, and then I assumed of the balance another five years, so 1010 years payback? And then after that, you mentioned that the systems are good for 25 years is that kind of the expected life. So you’ve got, you know, 15 years of controlled cost of your your power at a reduced rate, remove in your out of the susceptibility of the increases from the power company, correct. You can lock in?
Manny Renteria 27:11
Manny RenteriaThat’s correct. Yep. So yes, now, that’s California, I think it’d be anywhere between four to six years for a full return on investment. Only because 50% of that is coming back through incentives. The other 50% is coming back through energy saving.
J Darrin Gross 27:29
Oh, I got just so the fit there is that there’s both? Okay, I knew there’s two parts that I just didn’t, yeah. So you’ve got the incentives, plus the reduced rate. And the reduced rate is something you’ll carry on for the life of the system. Right?
Manny Renteria 27:44
Yeah, so once, once you you, you realize your return on investment, which again, California can be four to six years, there’s no cost of power after that everything’s paid for done. In fact, most every power system that we that we develop and consult for comes with a 25 year craftsmanship guarantee. It’s more of a operations and maintenance, sort of warranty, that, that covers, that covers, any any, you know, manufacturer defects, that covers any any malfunction of the system, you know, that this is unexplainable, but anything having to do with like, real world conditions, like I don’t know, say a hurricane, or our you know, tornado comes by or hail. Even hail doesn’t really cause a, you know, a lot of damage, it’ll damage the roof before it damages the solar panel, ironically, but so, so that’s what we look out for is usually something that comes with with a full plan and coverage, you know, maintenance coverage over 25 years, because that’s one of the biggest concerns is like now it’s on my route, who’s going to take care of it for the next five years? So to finish answering your question, again, that’s going to vary by state. And I think, I think if we look in the in the states where you have the lowest cost per kilowatt hour, utility wise, your your return on investment, you’re looking at around 12 years that you know, at most, so from from five to 12 years can be the the the window, I guess you can call it
J Darrin Gross 29:27
right. But even as the system outlives its here, you know, you get to the end of its life. I’m assuming would the would the I guess the replacement would it be a full replacement or would it be just more of like significant parts like the panels or I mean, because you’ve got some guests in there some infrastructure or some capital improvements you have to do just to make the system plug into your your building there is that? I mean is it is that makes sense. So as far as I’m assuming, like, the wiring and stuff, he wouldn’t be necessarily replacing that it’d be more of the panels, maybe some key components? color.
Manny Renteria 30:08
Great question. Actually, what’s what’s great about solar panels is the fact that there’s no moving parts. And so when you when you talk about or or think about huge ticket items that need to be replaced, maybe once or twice throughout the life of the system. Depending on the type of system, there’s only two, there’s, there’s systems that have micro inverters and every panel. And so typically, what happens with those little micro inverters is you have to replace one or the other every other, you know, every so often you have to have somebody out there replacing one of these, one of these components, and you can have 100 200 panels on the roof. And you probably have two or three malfunctions, every, you know, two or three years. And so throughout the life of that system, you’ll have somebody out there 25 times replacing these little components, but it doesn’t shut the entire system down. Whereas when you have a an optimized system that has a central inverter, and there’s differences between the two, and I’m, you know, I’m for both, but the one with the central brain, for example, the central inverter will typically need to be replaced somewhere around 12 or 15 years. And that’s a, you know, to four to five hour, you know, just replacement. And so your system is down for about, you know, half of a day, while they go on, they replace this big component, and it’s backed up and running. And so those are the kinds of things you need to weigh out, as it relates to, you know, full system maintenance, and then solar panels themselves. You know, there’s there’s panels out in space, I’m sure you’ve heard this reference, right, you got satellites and things like that, that solar panels attached to him since since the 1950s, and 1960s, are still in orbit. So I mean, solar panels themselves is just, you know, a cell that’s glued to a piece of glass and, and it’s on there and has two wires on it. And that’s basically all that is. And so those things can go forever. Really, the performance guarantee is what runs out after 25 years. So after 25 years, you’re no longer have that coverage, that your system has to produce this amount of kill this, this amount of energy, you know, throughout the 25 years, and there’s degradation and things like that. But once you lose that warranty doesn’t mean your panel just dies out, it continues to work, but you probably will need to replace the electronic components every now and then.
J Darrin Gross 32:36
Got it? Got it? No, no moving parts certainly is. You know, something I would like I mean, just from the standpoint of it seemed like the things to turn around and and that move they they tend to have some sort of a bushing bearing or something like that that’s due to squeak and become a problem. Yeah. Let me ask you this. So if somebody has a, an office building takes like, I don’t know, say like a 20,000 square foot footprint. They they get a a system installed by you guys. And, you know, they’re they’re able to show energy savings is is there a transfer to the bottom line? As far as the value? If you were to, you know, sell your property? Is there a is there market recognition of, of the system that the translates to increase value?
Manny Renteria 33:35
Yeah, I mean, it’s the system is paid off, then then obviously, you can calculate using the software that the system is equipped with, you can see exactly, you know how much power this system has produced in its lifetime, year after year after year. And you can see and measure the degradation. And so once you measure how much power this thing is capable of producing every year, you can actually calculate that into energy savings, and then calculate that into the future. Let’s say let’s say year 10. Somebody transfers this building, they transfer over the system. And they tell you, they give you this full report. There’s over the last 10 years this system has produced, you know, 15 megawatts of power, avoiding, you know, this much in utility costs, which can be you know, 10 times what the system actually costs originally. And so, and this system still has a 10 year warranty, here’s the contractor’s number that’s responsible for the servicing. And this is how much this this this system will will then save in terms of energy, right, and so they will not have this expense moving forward. And then, after you’re 10, the system’s already paid off, so there’s really not a big, you know, I’m going to hike up the price of the building just because I have a small Solar System on here, I don’t think it really affects the sale of the property, it does help it. And, you know, some some, if there’s still, if there’s still some sort of a loan or, or a lease on it, then it’s easily transferable most of the time, once you show the benefit in the savings and what you know what this, if there’s, you know, a loan, a loan payment, that it’s equivalent to, you know, one quarter of the cost of the actual power that the utility would bill you for it, then it kind of sells itself, right. So there’s something I did want to mention, with, with different building types, the bigger buildings and and you know, refrigeration, like liquor stores and things like that, it really when you when you, when you become a high energy consumer, in the eyes of the utility company. And residential, you may have experienced this, where you use more power, they, you know, they, they, you jump into a higher tier, or they bill you more at certain times, and things like that. Same goes for commercial, we have time of use rates, which bill customers, you know, at a higher rate at certain times of the day. And that’s obviously to recover a lot of the losses that we’ve that the utility companies have experienced. And so they also have this other charge that commercial only commercial customers I’ve seen,
are actually being billed for, and those are, those are called demand charges. And for years, it’s been, it’s been this constant battle between, you know, the solar industry and utility companies to kind of figure out ways to, to mitigate that demand. So what demand charges is really simple, let’s say, let’s say you have, you have a few air conditioning units on the building, all these air conditioning units are programmed to turn on at the same time, when the temperature hits something. And then what happens is the the entire demand of power spikes up, and you’re drawing a lot of power, and all of a sudden wire that brings the power in is saturated with power, and there’s all this power coming in. And so the easy way to explain that is if if you have a huge traffic of power coming in for any any 15 minute interval, and it exceeds that threshold, that that, that commercial buildings are sort of, you know, set at, I think it’s like 20 kilowatts or 20,000 watts at a time over 15 minutes, you get hit with these charges. And then once you once you become a customer that gets demand charges, then that’s that’s, that’s every month now. Now they’re looking for that demand charge every month. So you can actually avoid being on that by, by, by doing these things inside the building, which are energy management devices, you can you know, you can probe around your h HVAC units to do different things at different times. Same with refrigeration, if you can isolate, you know, all the condensers and things like that kick on the refrigerators, you can program those at different times. And you can you can avoid these demand charges. Because one thing about demand charges is they’re really difficult to get rid of, and you can’t do it with solar panels most of the time. Because Because the solar panel, I’ll give you an example. If, if it’s a cloudy day, and you’re a demand customer and your solar panels are only producing at a quarter of the rate that they’re supposed to be producing, because it’s cloudy, and then for some reason your demand kicks up, now you just got this huge charge for the month in a 15 minute interval, you can have a two or $3,000 charge. And that’s because you’ve used this much power for this long. And that’s a penalty, basically a penalty fee. And the only way to avoid those sometimes is with with large battery banks, capacitors or there’s even there’s even gas generators that that some, you know, that that that some buildings are installing in order to avoid busy buildings that you know, drawing 100,000 watts of demand. And you know, they get billed 200 grand in one, you know in 115 minute cycle. And so there’s different ways to sort of get, you know, just get in front of that or get away from it. You just have to be very strategic. And that’s that’s what we like to we like to look at all these aspects, right. So with your, with your utility, we have a we have a this link that we send out to our commercial building customers. It’s a utility API link. And what that does is it we can pull their their Energy profile over five years and it gets minute by minute data, so that we can we can understand the you know, how this energy how this building consumes energy. And then we can kind of target and say, hey here, we can actually put in some devices, instead of, you know, putting into batteries that are putting, instead of putting more solar panels, we can actually convert everything to LED, you know, put in some, some controls here and do this and that, and then reduce makes makes the building much more efficient, before they produce the power that they need. So that’s really important to do energy efficiency,
J Darrin Gross 40:40
more of a global approach, as opposed to just to replace the source. But look at the demand kind of thing. I like that. And even like you mentioned, just leveling off the demand to where if you can, you know, space, the power, instead of having all the compressors kick on at the same time, you know, have them sequence or whatever, to where you can level that out. That makes a lot of sense.
Manny Renteria 41:02
J Darrin Gross 41:03
Yeah. So let me ask you, what’s an ideal prospect? for solar, as far as in commercial type applications.
Unknown Speaker 41:15
Interesting. Um, so we’ve, we work with, with organizations that are nonprofits, places of worship, we’ve worked with. So all the assets are the spectrum of nonprofit, whether it’s an HOA, which an HOA is still kind of rare, generates revenue, but doesn’t pay taxes or something like that. But then you have houses of worship. And, and so so we have all the nonprofit sector that we can help now, because we have programs that help them even though they’re they don’t have a huge tax liability, and they can’t necessarily monetize the tax incentives and the depreciation, there’s, there’s tax Equity Partners in these funds, that can actually do that for them. And so what ends up happening is, for the first seven years, these tax Equity Partners have a fund that owns the system. Right. And the funding, the funding is based on the on the on the net cost of the system. So after all, the incentives is what the customers or the building will will finance because the Equity Partners and take all the tax credits and things like that, that, that the nonprofits can’t. So that’s one, obviously, private businesses, any any private business that that is established, that has, that has a good track record will qualify for funding, anybody that just that has, you know, that that sees the value in in producing their own power and being independent, if you own a piece of land, and you and power is getting into that land, whether you have tenants there, or whether you have your business there or, or it or you have nothing there, you know, and there’s no power coming into it, you can capitalize on on just the fact that you can produce power on that piece of land and sell it either to the utility company, you can sell it to your own business, you can sell it to your tenants. So really, there’s a there’s a huge market for for power. And I think I think the most overlooked type of business are our retail spaces where they have tenants, or tenant tenant occupied buildings, where let’s, let’s say, for example, I have a you have a tenant that has a 10 year 15 year lease in that building, that’s a perfect candidate, because there are no programs that that tenant can qualify for, as long as they have a commitment to be in this building for a certain amount of time, then they can make the commitment in saving the money and putting up a system that’s going to save them money. And at the end of the day when that when that when that lease or or whatever agreement is done and and they’re moving out and someone else is moving in, the property owner gets to keep that system. So and the tenant paid for it. So, you know, there’s really some opportunity and we can get really, really we can get really creative as it relates to this. And I just the the ideal candidate is every building that has the space to produce the power that it needs to to sustain itself or to sell it back to, you know, to the utility in this case for for a small profit
J Darrin Gross 44:51
at it. Hey Manny, if we could like shift gears here for a second. By day I’m an insurance broker and work with my clients to assess risk and determine what to do with risk. And there’s three strategies we typically consider, we look to see if we can first avoid the risk. If that’s not an option, we’ll look to see if we can minimize the risk. And then beyond that, we’ll see if we can transfer the risk. And that’s what an insurance policy is, is a risk transfer vehicle. And I like to ask my guests if they can look at their own situation. And you can frame this however you want, whether it be or you’re looking at your clients, investors, tenants, the marketplace, in a technology. But if you can take a look at it your situation and identify what you consider to be the biggest risk. And for clarification, I’m not necessarily looking for an insurance related answer. But if you’re willing, I’d like to ask you, Manny Renteria, what is the BIGGEST RISK?
Manny Renteria 46:02
So the biggest risks that we run as a nationwide consultancy, and myself myself personally, as a consultant that has, that has a phone with with over 1000 clients, and that call me You know, every other day is, is, is not meeting the performance, right. So I’ve, I’ve made this mistake, you know, when I, when I first started consulting, in the consulting business signing agreements, on behalf of service providers, so I would be the the in between the service provider and the customer. And so, in this agreement, I’m the one presenting disagreement to the customer and saying, hey, these are all the benefits of, you know, doing solar with, with my, with my service provider. And so in these agreements, it’s it’s not, it hasn’t been a standard to have a performance guarantee. And that I think, is the biggest, biggest ticket item for me, for my customer. And for him, even for the for the service provider, is to have that, because now without that I cannot sell anybody’s product, I cannot promote or sign anybody’s agreements, unless there is a performance guarantee, which covers me, and it covers my, my, my client, in this case. And what that is, is very simple if if your system is, is out there and is producing power, but the power that it’s that it’s supposed to be producing, let’s say I presented you with a proposal that says, hey, this, this system is is supposed to produce 10,000 kilowatt hours every month, okay. And for the first year, you know, multiply it by 12, that’s 120/3, whatever that is, right. So, so they sign up based on the fact that you showed them, you know, a performance estimate on the proposal that they signed, and then the agreement didn’t really have any performance guarantees. And what happens is, a year later, when this system underperforms significantly, and and your customer ends up with with a system that doesn’t produce or meet their needs, and on top of that, now they have a huge utility bill, why because all the power that they didn’t produce is now coming from the utility and now they have this extra bill on top of whatever, you know, if they’re financing, then they have the only have two bills. And so what ends up happening is I have to go and explain why the system is underperforming, or whether or not they need more panels. And I’m stuck in between, you know, explaining to the customer, hey, you know, your system didn’t produce because these trees are still in the way or something like that. So it’s really, really important that that a performance guarantee is set in place by any service provider. And then that performance guarantee has some sort of sort of sort of monetary compensation in in the event that the system underperforms in a certain year or every two years and typically what a performance guarantee does is every two years if the accumulated power doesn’t equate to this much you get reimbursed at this rate. So that to me now is is one of the biggest risks that I that I’ve had moving forward. And so now I always look for that in service providers to give me that performance guarantee. Otherwise, I’m out there, you know, exposing myself and my company as as you know, as being untrue or just on I don’t know, just not not trained, I guess
J Darrin Gross 50:01
Well, no, that’s, you know, from a consumer standpoint to anybody and if you’re making a big investment and it’s based on future savings and performance Yeah, I would think that would be that would be a pretty critical at least you know for the for the make the thing work as far as monetarily You know, you’re you’re investing in it with an expectation of payoff, so I get it. Manny, Where can the listeners go if they’d like to learn more or connect with you?
Manny Renteria 50:31
Um, so on my Instagram most most people are on Instagram, you can find me as the the solar plug at the solar plug. And in in, in my bio, I have a link tree to you know, various, you know, consulting sites or I know there’s calendly links, there’s links to testimonials those links to my LinkedIn, I’m on LinkedIn as well. I’m pretty much on all these platforms. My company is one up solar.com so you can reach me there my face usually pops up at the bottom of the website asking if you need any help. So yeah, you can find us there or you can shoot me an email my emails, Manny at one up solar dock. And that’s that’s the number one.
J Darrin Gross 51:22
channel one up solar. Alright, wait, Manny, want to say thanks for taking the time today. I’ve enjoyed her talk, learned a lot about solar. And I look forward to doing it again soon.
Manny Renteria 51:37
Well, thanks for having me on here until my all the listeners on on on Darrin’s radio station. I really hope you you know, you guys, if you own commercial real estate, or are thinking about owning or a tenant, definitely look at the look at the possibility. All all that we require that anybody requires to give you a full analysis is your utility bill. So if pulling your utility bill, you know, out of your mailbox and sending it over as too much to know them? Yeah.
J Darrin Gross 52:12
probably not a good prospect. But yeah, that’s awesome. Thanks again. And for our listeners. If you liked this episode, don’t forget to like, share and subscribe. Remember, the more you know, the more you grow. That’s all we’ve got this week. Until next time, thanks for listening to commercial real estate pro networks. cr e pn radio.
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