New offerings for managing and financing on-site distributed generation (DG) may avoid the usual problems with securing capital for such projects. Building owners need to sharpen their pencils, however, since these new choices offer both payoffs and pitfalls.
Several firms now offer arrangements under which the DG system is installed and owned by a third-party project developer who sells on-site power to the building owner. That owner pays little or nothing for the installation work, and instead obtains a guaranteed savings (against his normal electric rate) or collects rent for the space occupied by the developer's system. The DG developer pays all fuel and maintenance costs, manages the system, and sells as much power (and possibly thermal energy) as the building owner and his tenants require (up to the capacity of his system). To ensure an acceptable return, the developer seeks a long-term (e.g., 10- to 20-year) contract.