Sunrock deploys innovative funding solution to bring solar to Arizona church
Sunrock Distributed Generation facilitated an innovative funding model to help the Palm Valley Church in Goodyear, Arizona, realize the benefits of solar. Along with installer Watthub Renewables, the two companies developed a 280 kW rooftop solar installation that will help reduce the church’s energy costs.
Financed by a solar service agreement designed to unlock the cost and environmental benefits of renewable solar energy for organizations of all sizes, the installation is expected to generate 495,000 kWh of electricity each year. Based on the size of the installation and the current grid electricity prices in Arizona, this is expected to reduce Palm Valley’s electricity costs by around 30% per year throughout the project’s lifetime — all without requiring any upfront investment by the church.
Under the terms of the solar service agreement, Sunrock provided 100% of the financing for the Palm Valley solar installation and will own and operate it for the next 30 years. It will sell all the energy generated onsite to Palm Valley Church at a discounted price compared to the cost of grid-supplied electricity. The estimated 30% bill savings could be even higher if grid energy prices continue to rise.
“Palm Valley Church is one of many local organizations in Arizona that are looking to make their operations more sustainable while also protecting themselves against rising electricity costs, especially following the 17% hike in grid energy costs introduced state-wide last November,” says John McDonnell, cofounder and principal of Watthub. “Typically, financing companies are only interested in funding very large projects, so until now, there have been very few, if any, opportunities to own a solar system for customers of this size. This is where Sunrock is bringing something new to the market. Its customer-centric approach to empowering communities with renewable solar power is a game-changer for operations like Palm Valley Church.”
Small commercial, sound investment
Sunrock CEO Wilson Chang estimated that he has been involved with funding more than $10 billion in solar assets, but he says the small commercial sector has “suffered from a lack of capital,” despite being “one of the most creditworthy” investment spaces.
“Historically, when people have come into the commercial space, they’ve only really worked with a company like Walmart or IKEA, anyone who has an A-plus S&P Moody’s credit rating, and if you didn’t have that high investment grade rating, companies just wouldn’t finance you,” Chang says. “That doesn’t actually align well with the number of commercial businesses out there or their credit quality.”
Chang explains that the commercial sector is filled with smaller and mid-size organizations that represent solid investment opportunities.
“It’s not like Joe’s hot dog stand. This is a company that’s been in the community, that owns its own real estate and has been operating for a long time,” he says. “Or it’s a nonprofit that’s been operating for 30 years, that’s very carefully managed and doesn’t have a whole lot of debt, if any, on the real estate itself.”
These types of companies make for a sound investment for solar development, Chang says, because they reliably pay their utility bills.
“Oftentimes, that’s the first thing that people pay,” he says. “If you’re saving somebody money against their utility bill, there is very little reason for someone to default on making that solar payment because they would just have to make a higher payment to the utility.”
What sets the funding model for a project like Palm Valley apart from larger corporations that are rated by credit agencies is that Sunrock conducts the financial underwriting of each of the off takers, Chang explains. Sunrock pulls the tax returns and reviews the companies’ financials to ensure the project is a good investment.
Small commercial space growing
Chang says Sunrock is targeting the small commercial space because it’s already a strong market for solar investment, and he expects it to keep growing.
“There are just tons of projects to do, and they’re actually very good credits,” he says. “They’re responsible businesses, nonprofits, or schools. They pay their utility bills, and we have the ability to aggregate a whole bunch of these projects together and get them financed a lot more cheaply than any individual solar company can.
“The other thing to remember is that commercial solar penetration is around 4% today. It’s going to be around 60-70-80%, and so we’re at the very early stages of a relatively large shift in how we generate energy. Solar and ultimately energy storage in a couple of years are going to be the big winners. The way the landscape looks today compared to three years, five years, 10 years out, it is going to be dramatically different.”
Located in a former multi-tenanted retail building, the Goodyear site is one of two Palm Valley Churches operating in Arizona. In addition to providing religious services, the church runs numerous classes and provides meeting spaces for community groups, resulting in high annual energy use. The decision to transition to solar was part of Palm Valley Church’s mission to improve the sustainability of its operations while also protecting itself from the rising cost of grid-supplied electricity.
Palm Valley’s leadership turned to Watthub and Sunrock to co-develop and fund the project. Watthub also enlisted its sister company, SunRenu Solar, which has considerable experience in developing mid-sized commercial solar projects, as an installation partner. A highly productive 622-panel solar system was built, using dc-optimized inverter technology to maximize energy production from the solar array and provide granular, module-level monitoring for ease of operation and maintenance.
As part of the agreement, the solar installation will be maintained under contract by SunRenu. This ensures that in the unlikely event of a performance issue or should parts need to be replaced, maintenance work will be carried out by SunRenu on behalf of Palm Valley and Sunrock. This allows Palm Valley Church to continue its good work in the community with no distractions, safe in the knowledge that it is also helping to protect the environment.
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