On July 1, 2022, the Ontario Government enacted new regulations opening the door for significant growth in the use of rooftop solar as a means for providing energy to buildings, including for large industrial warehouse and commercial applications. Net metering – an existing program enabling owners to trade renewable energy produced on-site with the grid to offset their consumption – has now been expanded to allow third-party entities to own and operate renewable energy generation assets.
Until recently, energy regulations assumed that the property owner was also the renewable energy provider. For example, if the owner wished to install a rooftop solar array to produce renewable energy on-site, the cost and management of these systems was their responsibility. Under the new regulations, a third-party can undertake these activities on the owner’s behalf.
For context, net metering essentially enables the grid to be used like a giant battery. During sunny periods when panels produce more electricity than needed, excess electricity is sent into the grid. On the other hand, during periods of low energy production, such as at night, energy can be pulled from the grid to meet demands. Net metering ultimately enables the use of solar panels to meet a building’s energy needs year-round, without the requirement of additional batteries and storage capacity.
Under the new third-party net metering regulations, property owners unlock significant flexibility to support their transition to renewable energy, including options to lease, rent, or finance the equipment.
An emerging leading delivery model is referred to as energy-as-a-service (or, utility model). Under this arrangement, a third-party energy developer invests in the solar system, connects to the grid under a net-metering arrangement, and supplies power to the building under a direct energy agreement with the owner (often referred to as a Power Purchase Agreement, or PPA).
The owner benefits from avoiding the capital cost of these systems, while retaining an experienced third-party renewable energy developer to deliver the system on their behalf. Critically, the PPA is between the building owner and the renewable energy developer. It is privately negotiated and structured to reduce operational energy costs and increase price certainty for the owner over the term of the agreement, as compared to simply connecting to grid rates.
Rooftop solar implemented under a third-party net metering framework can be implemented on new buildings, as well as existing buildings. It can work on all sizes of buildings, up to and including 1.0 million sf+ industrial warehouse and distribution centres.
Third-party net metering is a gamechanger. It has never been easier for owners to reap the benefits of green energy, while simultaneously improving their bottom lines. If you are interested in differentiating your organization as a leader in sustainability, our team at AltCrest Energy would be pleased to assist. We are passionate about the energy transition and supporting the real-estate industry’s journey to net-zero.