Investment Opportunities Available

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Investing in Solarback’s solar installations offers long-term fixed income streams, cost savings on energy bills for building tenants, ancillary income (cash or in kind) to the landlord, various tax incentives, and a positive environmental impact by reducing carbon footprint. 

Returns on investment come from energy savings to the tenants within the building (under the roof) that Solarback leases. Since there is no cost to Solarback to produce the energy, once the equipment is paid, the returns are infinite during the lease term. There is also potential revenue from excess energy sold back to the grid for states that grant Power Purchase Agreements (“PPAs”), value in Renewable Energy Credit (“REC”) sales, and various financial incentives like tax credits, depreciation, and rebates. 

Factors to consider include the location's solar potential (amount of sun days), available sunlight (amount of sun hours), local and federal regulations and incentives (PPAs or not), upfront costs depending on individual leases, financing options, labor and supply costs, and maintenance requirements. 

Risks may involve changes in government policies affecting solar incentives (such as the repeal of the Inflation Reduction Act “IRA”) the time frame (10 years left until the IRA sunsets), fluctuations in energy prices, system performance variability, tenancy within the building, storms, insurance expense, and maintenance costs.   

A) Government subsidies are critical to Solarback’s success.  While a change in administration could repeal some elements of the IRA, many scholars believe the targeted provisions would include Section 30D and 45X (the $7,500 consumer tax credit for EVs and the manufacturing tax credit respectively). Additionally, while the Solarback license allows the company to profit from its energy services, the State of Florida does not allow direct energy sales (PPAs).  Solarback is relying on case law from March 2018 SunRun vs. the Public Service Commission and Florida Power and Light which allows for the use of license agreements. Trade tariffs always remain a risk on costs, and while the Biden Administration increased tariffs on Chinese solar products, the market had already taken this into account.  Furthermore, as a result of the IRA, more onshore factories have been or are currently under construction; there is an additional 10% tax credit for buying domestic product. Finally, Solarback has several policies and lawmakers on its Board of Advisors to keep a pulse on the latest legislative changes to ensure a rapid response. Though there is 10 years left with the IRA incentives, in 10 years the expectation is that solar will provide 25% of the grid’s energy (currently 6%); panels are already 95% more efficient and 90% less expensive than they were five years ago, so efficiency and cost will more than cover the IRA’s benefits.  

B) Energy prices could drop, forcing Solarback to reduce its license fee pursuant to the agreements with each tenant, but with transmission costs and volatile fuel prices, coupled with an insatiable appetite for energy, the probability of continual reduction remains low.

C) System performance can be variable, however Solarback implements technological equipment oversight to ensure maximum efficiency; if systems are nonfunctional or inefficient, measurements recorded will be reported to home office and immediately addressed via the management and operations team. The modules themselves are angled at 5-10 degrees and are considered “self-cleaning.”  The cost of routine maintenance is covered in the cashflows via a reserve.  In addition, Solarback includes in its reserves replacement costs for the Investors in year 15.  Furthermore, our calculations adjust for nominal efficiency loss due to the elements and shading.    

D) Since the income stream is derived by the tenants, there is a risk of tenant lease terms, vacancy, tenant bankruptcy etc.  There is also the probability that a landlord will redevelop the property and cancel the lease.  To mitigate this risk, there are termination clauses with penalties payable to Solarback.  If there is vacancy at the retail level, solar arrays can easily be reconfigured, portions of excess energy can be sold back to the grid, or Solarback can rely on its insurance captive policy or reserves to cover any recurring costs further injured by the vacancy.  

E) Hurricanes and Tropical Storms can be a hinderance due to the geographic concentration of real estate roof leases in south Florida.  Notwithstanding, the solar equipment is CAT-5 hurricane wind load tested (176 mph winds).  Furthermore, Solarback’s engineering software already accounts for the irradiance and azimuth in its calculations.  

F) Insurance has remained a costly problem for many landlords in Florida.  While the market is starting to soften, and premiums are dropping, adding solar to buildings optically) increases the risk to the carriers.  Some try to obtain higher premiums, but most have gained comfort once Solarback produces engineered drawing and wind load specifications.   

Payback periods can vary based on factors like system size, location, energy usage, financing structure (leverage), and available incentives but typically range from 3 to 6 years. 

Solarback’s feasibility assessments involve conducting site evaluations, analyzing energy consumption patterns, estimating potential savings, evaluating financing options, inclusive of tax subsidies, and understanding local regulations.

Working with reputable solar contractors (“EPCs”), checking certifications, warranties, and track records, and conducting due diligence on equipment and existing installations is essential when making an EPC selection for ensuring quality and reliability. Solarback has vetted a half-dozen EPCs and Roofing contractors, creating a stable of reliable contractors.  Each installation not only comes with a 15–20-year workmanship guarantee, but the Manufacturer (roof and solar) provides a 25-year guarantee should something happen to the contractor’s business operations. 

Solar incentives and tax credits, such as the Investment Tax Credit (“ITC”) and accelerated depreciation, can significantly reduce upfront costs and improve the financial viability of commercial solar investments. There are ways to layer and add-on additional tax credit incentives above the IRA’s 30%, such as building solar projects in a low-income community (10%) or buying domestic on shore product (10%).

Solar incentives and tax credits, such as the Investment Tax Credit (“ITC”) and accelerated depreciation, can significantly reduce upfront costs and improve the financial viability of commercial solar investments. There are ways to layer and add-on additional tax credit incentives above the IRA’s 30%, such as building solar projects in a low-income community (10%) or buying domestic on shore product (10%).