Residential Property Developments

Solar panel investment more accessible to multi-family developers as prices drop

NRG Home Solar installers add rooftop solar panels to residences in the Houston area earlier this year.

With the cost of solar Photovoltaic (PV) panels dropping steadily over the past few years for commercial use, solar power is becoming a more attractive investment for multi-family developers.

Prices are now low enough for PV panels that, when combined with federal tax credits available through 2016, rooftop panel systems can be justified as an investment during multi-family rental property construction, with an eye toward the value it will lend to unit resale upon transition to a condominum.


"For commercial through the end of 2016, which includes multi-family rental properties, this is without a doubt the best time to buy solar panels, prices are at an all-time low," said Bill Park, owner and president of Altamonte Springs-based Central Florida Solar, which has been installing solar panels on commercial and residential properties locally for 31 years.

"Federal tax credits now for residential are 30 percent, but for commercial it can total a 100 percent write-off on solar PV. Commercial developers can amortize the total cost over five years, and deduct 50 percent of that cost their first year in," he said.


Multi-family developments built out across a campus of multiple buildings offer the best opportunity for return on solar power, because they boast more rooftop space for panel coverage than a single high-rise building, Park said.

Purchase and installation costs for solar panels have dropped notably in recent years, with residential PV systems costing a median $4 per watt of capacity to buy and install in 2014, down 40 cents from 2013, and down from $10 in 2004, according to a recent report from Lawrence Berkeley National Laboratory. The U.S. Department of Energy has set $1 per watt as a goal for price reduction.

Developers of new multi-family buildings, or buyers who plan to redevelop older apartment properties, can include the cost of solar panels in a construction loan, as banks have become more open to make loans for solar panels based on the future income they'll generate.

New multi-family developments are categorized as commercial instead of residential for solar power-related tax credits, because the property is operated as a business. Local utility companies offer minimal rebates currently for solar installation, though OUC has organized low-interest loan rates for solar installation with the help of Orlando Federal Credit Union.

OUC offers solar net-metering, in which the company buys excess kWh's from the customer, and offers a monthly production incentive for energy produced by a commercial customer's PV or solar thermal systems.

The six-story, eco-friendly NORA apartment building on N. Orange Avenue downtown participates in OUC's program with a PV panel array on its rooftop, as does Bella Lago Apartments on Texas Avenue.

AGPM Communities, which owns or operates more than a dozen properties in Greater Orlando with more than 4,000 units in the area (including Bella Lago), has been investing steadily in solar PV installation over the past three years.

The company worked with Duke Energy to install a 10,000-watt system with 39 modules and panels on the common-area buildings and office at its Buena Vista Pointe Apartments complex near Walt Disney World.


Cost of installation was $50,000 gross, but after federal tax credits and Duke incentives that covered another third of the cost, AGPM's net cost was less than $17,000, said Scott Zimmerman, president.

"PV is still not a no-brainer in terms of cost, but is getting there. We've done solar hot water panels on buildings at two of our properties to benefit residents, and that makes the most sense when doing new construction or renovation," he said.

Other local developers are drawn to the idea, but are not sold yet.

"We have considered roof-top solar panels for some of our projects," said Anthony M. Everett, director for Central Florida of Pollack Shores Real Estate Group, which has multi-family projects underway in Winter Springs, near Mall at Millenia and College Park.

"Right now, the cost still does not quite justify the use of solar, but we are getting closer and closer," he continued. "As solar becomes more efficient and more widely used, costs should come down. I feel pretty confident that we will soon reach a point where it will make sense to include solar systems to augment the power needs of our properties."

Marc Nourafcham, general counsel for Los Angeles-based PRG Fund LP, said the company is investing heavily in energy savings updates at two properties it bought within the past year in Waterford Lakes for a combined $94 million, but solar doesn't seem feasible.


"I haven't seen any suburban garden-style communities that use PV panels, even for new development," he said. "I don't know where you would put the panels (on his properties), since we have gabled roofs. If I do see solar, it's typically on high-rise projects with flat roofs."

Developers can get an idea of how many kilowatt hours a solar array could produce on apartment building rooftops, and how many dollars it would sell for locally, by using the PVWatts Calculator from the National Renewable Energy Laboratory.

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