New Alpaca Field Study: Solar Energy Generation & Storage
Authors: Daniel Fetner & Brian Shah
Is solar energy finally having its ‘day in the sun’?
As part of our ongoing thesis-driven research program, we’re excited to share that Alpaca is launching a new field study centered around solar energy generation and storage.
Real estate accounts for about 40% of all global emissions — most of which comes from day-to-day building operations. Solar is not only one of the most effective ways to reduce real estate’s carbon footprint, but also an increasingly important lever to drive down costs and grow the bottom line.
Solar capacity in the US has grown at a staggering 33% CAGR over the past 10 years.
In 2021, almost 50% of all new electrical capacity added to the US grid came from solar — a new record.
Its share of total US electrical generation has increased from a mere 0.1% in 2010 to about 4% today.
We currently have 120 GW of installed capacity nationwide — enough to power 23M homes — and all signs point to continued rapid growth.
Historically, the vast majority of solar capacity has come from single-family homes and utility-scale developments. With multi-family buildings and commercial properties, it was often difficult to overcome the ‘split incentive’ problem — i.e., owners have to make the upfront capital investment, while the cost savings mostly accrue to tenants. Metering and roof space create additional complications.
However, this dynamic is changing quickly due to a range of financial, regulatory, and technological factors. Photovoltaics have become significantly more efficient, which means fewer rooftop panels are needed. Government incentives at both the federal and state level have reduced the capital required to install a solar array. At the same time, stricter regulations are coming into effect. For instance, NYC’s Local Law 97 will require most buildings over 25,000 square feet to meet rigorous energy efficiency and greenhouse gas emissions limits by 2024. Furthermore, real estate investors are increasingly taking sustainability into consideration when making capital allocation decisions.
As our team digs deeper into the solar space, we look forward to engaging with founders, investors, regulatory experts, and other thought leaders. Please don’t hesitate to get in touch!
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