There might be a virtual treasure trove above your head. Rooftop revenue generation is increasingly becoming a viable concept thanks to advances in technology, government incentives and energy deregulation. In this article, we will cover basic ideas on the way you might be able to create cash flow from your roofing system.
Rooftop revenue generation is not a particularly new concept. Building owners and developers have been capitalizing on the idea for years with cellular antenna installations where cellular companies paid a small lease for rooftop space for their equipment. A rooftop can have antennas mounted on or above its parapet, on top of elevator shafts, and even have small flagpoles or rooftop cell towers mounted on them. They are usually less obtrusive from the ground level and can have less of a visual impact by deployed on an existing structure.
With all rooftop installations, it is important to consider structural and access issues before making the plunge. Rooftop leasing is often similar to cell tower leasing, however there is usually much less space for the transmission equipment. Furthermore, while wireless carriers or third party cell tower companies often own the tower, rooftop owners can lease space to multiple carriers and receive multiple income streams.
An issue inherent in rooftop leasing is the physical attachment of the equipment to the roof the building. Most lessees will look for the easiest and least expensive way to install the equipment. Sometimes, this installation may void your roofing warranty; other times, it may cause leaking. Forcing a carrier to repair this kind of damage can be quite difficult, since the carrier may claim the roof was installed improperly when the building was originally constructed or renovated. Other issues you need to be concerned with include access and noise. Rooftop leasing usually requires that the carrier be allowed 24/7 access — although this is negotiable. Tenants in a residential building or condominium may not appreciate having a cell site technician coming through the building at all hours. Building owners may request the rooftop lease language contain certain limitations on the type of access so tenants are minimally impacted.
With the advent of energy deregulation and advances in solar and wind power generation, there are more options than ever to capitalize on the unused space over your head. Solar panels, wind turbines and other energy systems will provide not only tax credits and LEED points, they will also generate electricity that can be used to offset property utility costs. In some cases the energy can be sold by the property owner directly to tenants at retail (utility company) pricing.
While there is a good political and environmental argument for pursuing the installation of solar and wind generation devices, the property owners and developers bear the consequences (both positive and negative) for these installations. Pursuing alternative energy generation is not a decision to rush into if it means ongoing maintenance cost for buildings, or if the installation itself is prohibitive from a time/money/disruption standpoint. However, now that the government and large-scale investors have turned their attention to alternative energy, it may be time to take action.
- Unprecedented tax credits are motivating investors to install solar on large scale rooftops at no charge to the building owner, simply to package and sell the tax credits in the financial markets.
- Small-scale building owners can recoup the majority of their solar investment cost in rebates and grants within the first year of ownership, and generate revenue thereafter from selling electricity to tenants.
- Utilities are under pressure to use solar and wind energy in their Renewable Power Source (or Renewable Portfolio Standard — RPS) offerings. In 29 states they are likely to entertain higher rates for the electricity generated on roof tops.
RPS States in 2010, listed in alphabetical order: Arizona, California, Connecticut, District of Columbia, Hawaii, Illinois, Iowa, Kansas, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Oregon, Pennsylvania, Rhode Island, Texas, Virginia, Vermont, Washington, Wisconsin, Wyoming.
Another consideration is deregulation. Deregulated utilities create uncertainty in tenants’ revenue forecasts. In states with deregulated utilities, energy costs fluctuate at the discretion of the utility company. Tenants may appreciate fixed pricing for their energy for the next 20 years via wind or solar energy generation on the premises. For example, in Maryland (a deregulated state) utility rates have fluctuated by as much as 50 percent in a single rate hike. As energy demand increases 40 percent by 2035, more fluctuations in pricing are anticipated.
How it works for large roofs:
More often than not, large-scale solar arrays (one megawatt and above) are not purchased by the property owner or long-term tenant. Large scale arrays are installed at no cost to the property owner or long-term tenant by the local utility or a solar integrator. The energy generated is either: 1) sold back into the building at a fixed price for 20 years; or 2) sold directly into the local utility’s electrical grid at a fixed price for 20 years.
Who wants to rent your roof?
Your local utility company, solar integrators and private investors will be the most interested. Utilities are under pressure from state and federal governments to include both solar and wind power as part of their Renewable Portfolio Standard (RPS) requirements (see RPS in Glossary). As policies change within our government to enforce the use of green energy, local utilities are looking for locations to install solar and wind generation stations.
Design and operating countermeasures that may be necessary to assure long-term roof integrity include the following:
- PV system details should be accepted by the warranty roofing system manufacturer prior to installation.
- In areas of high rain/snowfall, increase flashing heights and roof drainage provisions.
- While PV systems are designed to withstand “normal” weather, they are not rated for hail, hurricanes, tornadoes or wind-blown debris. Repairs for damage sustained to the roof and the panels may require the temporary removal and reassembly of the rooftop PV system.
- PV installations increase the service traffic on the roof. To accommodate these effects, install protective walkways, increase membrane thickness, and add protective cover boards.
- To accommodate the effects of heat build-up and reflected ultra-violet frequently associated with PV systems, install a sacrificial membrane layer beneath the PV system to reduce heat build-up on the primary waterproofing membrane. Additionally, install additional membrane or coating layers at exposed vertical flashings to reduce UV exposure.
- Modern roofing systems, regardless of the amount of robustness built into the system, must be well maintained over time to assure optimal service life is achieved.