Solar investment strategies have seen significant changes in recent years. Land that was once inexpensive and readily available has become scarce and expensive. Suitable sites near electrical transmission lines in the southwest United States have sold for as high as $23,000 per acre, a roughly 15,000% increase* over historical values.
How it Works
Before committing to a potential project, Brightfields confirms that adequate federal and state policy mechanisms are in place to secure the appropriate cash flows necessary for a successful solar project development.
Our energy team then fully assesses the legal, insurance and physical requirements necessary for brownfield site remediation or landfill modification. We then create a liability shield around the brownfield site, acquiring the property if necessary. This is accomplished using our related entity — Renova Partners LLC — that directly manages the brownfield clean up with the relevant government agencies and oversight authorities.
If the brownfield property is owned by a third party, Brightfields will lease the contaminated property from the owner. Typically the owner will remain responsible for underlying site conditions. However, in the event there are operations and maintenance conditions of a lease, for example, that give rise to potential ambiguity regarding responsibility for site conditions, Renova will assume any exposure to the liabilities relating to the site by contract to Brightfields.
Insurance and Indemnification
In the situation where a property transfer precedes the development of a brownfield solar investment project, Renova will acquire the contaminated property and manage any environmental liabilities. Next, Renova will lease the land to Brightfields and provide indemnification to Brightfields against underlying site liability. Where appropriate, Renova will secure its obligations with an environmental insurance policy or other acceptable financial instrument.
Once a brownfield is remediated, Brightfields begins the solar development process, including managing all of the necessary permits to qualify for the federal and state incentives. Brightfields also will secure an agreement with the local power company to send the electricity to the grid for local distribution.
With these steps accomplished, a landfill solar investment project is then ready for the investment capital that will take it through construction to commissioning and beyond.
* The Southwest Desert's Real Estate Boom. T. Woody. Fortune, July 11, 2008.