The ROI of solar-powered hotels
The ROI of solar-powered hotels
10 SEPTEMBER 2018 7:05 AM

Hoteliers powering their properties via solar energy are reporting cost savings and other returns on the investment.

GLOBAL REPORT—For some environmentally-conscious hoteliers, going green goes beyond reusing towels and asking guests to turn off the lights when they leave their rooms. Sustainability at some hotels starts at the source: Solar energy.

The return on an investment in solar energy is cost savings for the hotel, and even new revenue in some cases.

Developer, owner and operator High Hotels recently announced plans to install a $1.5-million solar array that generates 100% of the electrical power required to operate the 133-room Courtyard by Marriott Lancaster in Pennsylvania.

For the project, more than 2,700 ballasted photovoltaic panels will be installed on the roof of the nearby Greenfield Corporate Center, which the company also owns, allowing for a savings of more than three acres of open land. The solar array will produce 1,239,000 kilowatt hours of power for the hotel, which consumes 1,177,000 kWh. Any excess power will be sold to the utility company.

Russ Urban, president of High Hotels, said the decision to invest in solar energy is in line with the family-owned company’s culture.

“One of our core values is to make the world a better place to live. We try to be as green as possible. This is a large example, and it’s also the first time we’ve done solar power,” he said.

In some locations, solar power facilities just make sense.

A city like Lancaster might not get a lot of sun—something Urban said was taken into account and guided the number of panels and the size of the array—but sunny spots are a sure thing.

Due to its desert setting, the 32-room Tierra Atacama Hotel & Spa in San Pedro de Atacama, Chile, has enormous solar-power potential, which it is taking advantage of, said Miguel Purcell, executive director of Tierra Hotels.

The hotel is the first one in South America to produce solar-powered electricity with a hybrid system that can supply 100% of energy demands during the day. The site comprises solar panels that span 9,978 square feet, with 588 photovoltaic panels connected to five invertors and a battery bank with a storage capacity of 335 kWh.

“Solar power is a no-brainer in the desert,” Purcell said via email. “Since 2013, we had a turnkey off-grid system which produced 50% of our energy. But we wanted to go further. As guardians of the future, we wanted to reduce even more the use of fossil fuel, our carbon footprint and air pollution without compromising our guests’ experience.”

Las Vegas is another location primed for solar power.

“Sometimes markets in the west, we are seeing there’s not enough space for storage, like in California. In other markets like New England, there are not enough sunny days even though they are interested in increasing their green footprint. The market here is great for building solar-power facilities,” said Erik Hansen, chief sustainability officer for Wynn Resorts.

The company’s 160-acre Wynn Solar Facility is offsetting up to 75% of the 2,716-room Wynn Las Vegas’ peak power requirements. The facility will eventually be used to power the resort’s meetings-and-conventions space expansion in March 2020 with 100% renewable energy. The facility joins another one recently installed on the property’s rooftop covering 103,000 square feet that provides power directly to the resort.

High Hotels’ Pennsylvania installation comes with a 30% tax credit and a $504,900 grant from the Commonwealth Financing Authority through the Solar Energy Program, Urban said. Otherwise, the investment works like any other, he said.

“You probably don’t get the return on capital that you would normally want. It’s not a great investment opportunity if you didn’t feel you wanted to do something nice for the environment,” he said. “We are doing it primarily because we want to be good environmental custodians. We’re not losing money. We just aren’t getting the return on equity you would want if you were investing into real estate.”

Hansen said Wynn’s investment in solar energy is projected to save the company 20% in utility costs over a 10-year, fixed-cost deal.

He said hoteliers can go solar one of two ways: By building and owning a facility, or via a power purchase agreement. Wynn owns its rooftop facility, while it contracts with a third-party that owns and operates its other facility.

“The PPA gives us certainty in price going forward,” Hansen said. “We’re happy with that, especially since energy costs won’t go down anytime soon. They are going to start going up, so it’s a good hedge for us.” Additionally, Wynn can still qualify for energy tax credits.

But ROI doesn’t always have to be about money—nor is it always direct, Urban said. Guests will take notice of hoteliers going that extra mile for the sake of the environment, he said.

“We hope that guests will look at this and feel good about staying with us. Are they going to pay $5 more a night because we have solar power? No. But when considering us versus other options, they might think more favorably about us,” he said.

Hansen agreed, adding that meetings and conventions business is increasingly looking to hotels to be eco-conscious.

Also, savings on utility bills is money that can be put back into the resort, he said.

“What we normally would spend on power, we can spend to enhance our resorts and upgrade other technology such as LED lighting,” Hansen said. “Those funds can be put into enhancing the guest experience directly.”

1 Comment

  • Derek Abt September 3, 2019 7:29 PM Reply

    With a PPA, the ROI will be less. However, when purchasing a system (especially at a smaller scale with higher per-kwh rates), the average ROI over a 25-year period for a building with good exposure is around 15% depending on your location. Considering it also performs well during recessions, solar is a quality investment.

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