Monday, November 13, 2006

GM buys energy from own roof

Monday, October 30, 2006
Jill Donnelly / New York Times
A solar energy system atop a General Motors Corp. warehouse in Rancho Cucamonga, Calif., will provide half of the building's electricity.
GM buys energy from own roof
Big companies can get cheaper rates with solar systems installed on their buildings by others.
Claudia H. Deutsch / New York Times

General Motors Corp. liked the idea of using the sun to power its buildings. But until recently, one immutable economic fact held GM back: The upfront costs were simply too high to justify the ultimate payoff.

GM is not alone. Even solar energy's biggest fans concede that the high investment costs have kept companies from pursuing what is arguably the cleanest, most renewable and least politically sensitive energy source around.

But now, GM and a small but growing number of other companies and municipalities are getting solar energy from systems installed by others. Even though the installations are right on their own roofs, they buy the electricity much as they would from a utility's grid. And because the companies that paid for the systems will get a steady income, they can provide power from the sun at competitive electricity rates.

Since June, the roof of GM's parts warehouse in Cucamonga, Calif., has been host to a photovoltaic array with the ability to generate as much as 1.5 million kilowatt hours of electricity a year. The installation, which GM expects will provide half of the building's electricity, cost GM nothing.

A solar developer called Developing Energy Efficient Roof Systems -- commonly called DEERS -- bought the equipment with money it raised from private financiers. DEERS and its investors own the cells; GM signed a long-term contract to purchase the solar-generated electricity from them at a discount to the prevailing rate for electricity in the region.

These days, with that rate at 9 cents to 10 cents a kilowatt hour, GM expects that the solar system will reduce its overall electricity costs by 10 percent a year.

GM is already negotiating with DEERS to put a similar solar array on a warehouse in nearby Fontana. "The savings are small, but it's exciting to create such an environmentally sound project without any need to shell out capital," said Kamesh Gupta, manager of planning and programs for General Motors Energy and Utility Services, which purchases all the energy used by GM.

Similar deals are cropping up elsewhere. Some specify that the users pay the solar developers a fixed rate for electricity, while others specify a fixed discount to the going rate.

Other factors are involved as well. The parties generally negotiate who will retain credits for reducing carbon emissions. When the developers and their backers keep the carbon abatement credits, they generally plan to sell them to companies that might otherwise have trouble complying with rules planned in California and expected elsewhere aimed at limiting global warming.

The electricity users could do that, too, but some of them might also use the credits to offset emissions from other parts of their operations.

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