Navigating the intricate path toward obtaining Notice to Proceed (NTP) status for commercial solar projects requires a delicate balance of considerations. Developers face the challenge of addressing the requirements and interests of multiple stakeholders, all while ensuring the project remains financially viable and environmentally impactful. To secure investors, it is crucial to present a compelling case that demonstrates the project’s long-term viability and profitability. This aspect holds even greater significance for project buyers seeking complete project construction financing.
What is NTP? Notice to Proceed (NTP) means that a project has received all local, state and federal non-ministerial permits and approvals. Utility and RTO (Regional Transmission Operator) interconnection approval has been received, including estimated costs and timelines. An insurable owner’s title policy is in place. The overarching meaning of NTP is that the project is ready to start construction aside from ministerial permits (you apply and get them, e.g. building and electrical permits).
Here are five effective strategies developers can use to successfully navigate the journey toward obtaining NTP for commercial solar and solar + storage projects and satisfy all stakeholders.
1. Ensure viability of a project: Identify optimal locations
While aiming for the long-term success of a project, it is crucial to meticulously assess and select the most suitable locations, especially in the case of solar projects. Conducting comprehensive feasibility studies and site assessments becomes paramount in this process. These endeavors involve identifying potential obstacles that could impede or jeopardize the project and gathering essential data concerning the final system design and associated budget. Developers can assure investors that their financial investments are safeguarded by delivering a project that considers all relevant site-related variables, maximizes energy production, and aligns with customer objectives.
To ensure site viability and fulfill system design requirements, developers should conduct rigorous technical audits of the physical and electrical infrastructure at the chosen sites. Trained solar technicians and engineers should collect all necessary data early in development. This information confirms the project’s feasibility and provides insights into system design needs. Factors to consider include proximity to existing infrastructure like access roads and transmission lines/the electrical grid and any site usage that may interfere with project construction. Additionally, regional temperature, shading levels and deviation from true south should be evaluated.
For facility installations, developers should seek buildings with expansive and flat roofs, ensuring they can accommodate a solar system with an operational lifespan of at least 20 years. Engineers must account for the structural rating of the structure, the location of HVAC systems, roof drains, vents, wiring and cabling configurations and the age, quality and components of the facility’s electrical infrastructure. In the case of canopy installations, a thorough assessment of the parking lot’s suitability for the system is essential.
Ground-mounted systems have their own specific set of criteria. Ideally, these systems are sited on open land with ample acreage, but forested sites can also be suitable. Factors to examine include grading costs to prepare the site for construction, site elevation, topography, vegetation and soil composition. Complex locations, such as brownfields or landfills, demand careful consideration due to potential complications. While these sites may offer advantages like good sun exposure, road access and transmission corridors, they can also present challenges related to special costs, permitting requirements or the need to address site toxicity. For instance, a landfill site must be properly permitted and capped or closed.
A clean title on the property is critical. Title issues on real estate can easily tank a project by rendering it uninsurable. It is paramount that issues are identified early in the development process. Examples of title encumbrances include utility easements, abutter encroachments, tax liens, recreational vehicle trails, an incomplete chain of ownership, etc.
In assessing site feasibility, it is critical to consider the influence of state and local policies. Developers must factor in subsidies, rebates, tax incentives and net-metering opportunities. Some states have supportive policies to meet Renewable Portfolio Standards, with legislation encouraging alternative energy development and carbon emission reduction. It is also crucial to consider the availability of specific financing options. For example, legislation enabling Commercial-PACE exists in 37 states and the District of Columbia. Moreover, understanding the impact of review processes required by federal, state and local regulators for building permits, environmental permits, zoning and utility interconnection standards is vital.
2. Cultivate strong partnerships with local stakeholders
Developers must prioritize positive relationships with key individuals such as abutting and nearby landowners, community leaders and government officials. These partnerships are essential for obtaining necessary permits and financial support, while also assuring investors that the developer is committed to addressing the interests of all stakeholders and gaining their support.
Developers should actively engage influential community members, subject matter experts, and state and local government representatives from the beginning. This includes collaborating with entities like state and city energy offices, local utilities, relevant community-based organizations, tribal communities and higher education institutions. Establishing an advisory committee or consulting an existing local task force can be highly advantageous. By fostering support and providing education on the benefits and processes involved in commercial solar development, misinformation can be prevented, misconceptions can be corrected and concerns can be addressed proactively early on in the development process.
Strong relationships with government officials and community leaders can facilitate access to viable locations and potentially expedite the often lengthy permitting process. Engaging with property owners is crucial, as they are integral members of the community and stand to benefit significantly, whether they are farm owners, local businesses, major corporations or nonprofits. Developers should take the initiative to educate landowners about the advantages of hosting a solar project, such as consistent revenue generation through lease payments, increased property value and anticipated return on investment.
3. Enhance project performance through streamlined engineering and transaction team operations
By leveraging the expertise of their teams, developers can optimize energy production and minimize development costs, making their projects more appealing to investors. Several crucial factors are evaluated by investors when considering solar project investments.
First and foremost, thorough due diligence is necessary, addressing issues such as the compatibility of construction and project contractors, comprehensive disclosure and adherence to legal requirements and an accurate estimate of energy production. Consideration must also be given to interconnection and transmission requirements, as well as conducting proper risk assessment and allocation.
Developers must establish the viability of their projects through comprehensive economic analyses. This involves determining solar production estimates and collecting relevant data to assess construction costs, site suitability and the potential for energy storage if applicable. Teams should present a detailed analysis of the system’s potential based on energy data, utility bills and the energy needs of buildings, municipalities or off-takers involved.
Project execution plans should demonstrate clear cost-effectiveness. Design and construction should be carried out in a manner that maximizes profitability, safety and longevity, considering factors like equipment selection, labor, component spacing, panel tilt, orientation, string configuration and access requirements.
Teams should also exhibit strategic cost management, including efficiently handling landowner and property tax payments. Strategies like pre-purchasing equipment at discounted prices, especially for items with long lead times, such as transformers, switchgear and modules, can help control costs. Minimizing transmission and interconnection fees can be achieved by choosing sites close to substations.
When partnering with an engineering firm, it is crucial to collaborate with a specialized firm experienced in commercial solar projects, given their complexity in areas such as safety, effectiveness and permitting. However, having in-house engineering expertise offers significant benefits due to their deep understanding of project intricacies. Through thorough pre-project planning, potential issues can be effectively addressed during development, mitigating future problems.
4. Form a team of accomplished project managers and contractors
Achieving NTP for a project requires the expertise of a reliable team experienced in project management, development and construction. This instills confidence in investors and stakeholders, ensuring the project can be completed within the designated timeframe and budget.
The prime contractor or Engineering, Procurement and Construction (EPC) firm, whether internal or outsourced, should possess a comprehensive understanding of all project aspects, both major and minor. They should have a well-established commissioning and quality control process and be adept at managing schedules, incorporating buffer periods to accommodate unforeseen setbacks or potential deadline extensions. Their project managers must demonstrate effective management of materials and equipment and possess knowledge of relevant regulations and local codes.
Maintaining open lines of communication between construction managers and the developer or project owner/buyer throughout the entire system development cycle is crucial. This facilitates the early clarification of expectations and constraints.
5. Obtain the necessary development capital to secure optimal project locations
To build out a deep pipeline of projects, developers must secure adequate development capital. Pre-NTP investments should cover expenses such as site lease options, interconnection and equipment deposits, permit fees and other associated development costs. However, investors who provide this kind of funding need a clear path toward achieving NTP.
Several indicators demonstrate project viability to development-stage investors. These include strong indications of executing a solar energy revenue contract, such as ongoing negotiations for a Power Purchase Agreement (PPA) or being shortlisted in a Request for Proposal (RFP) process or capitalizing on a Feed-In-Tariff program or Community Solar Subscription Program. Investors also look for preliminary impact studies conducted by local utilities, progress in obtaining local, state and federal permits, and establishing site control through lease options or purchase and sale agreements.
Furthermore, technical considerations related to system configuration and equipment selection should be thoroughly addressed. It’s important to note that investors take into account the duration from project financing to the operational date and evaluate the level of risk involved in reaching NTP when structuring their developmental investment.
An easier path to productive, profitable solar projects
In the dynamic and competitive landscape of commercial solar projects, not all investments are created equal. With competition for investors, developers are constantly seeking ways to gain an edge and secure vital investor support. By implementing these five strategies, developers can elevate their projects, ensuring they stand out as superior contenders toward achieving NTP.