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Building on its commitment to increase the use of renewable energy resources in the U.S. and throughout the world, UPS (NYSE: UPS) has invested in two solar power projects at its distribution facilities in Parsippany and Secaucus, New Jersey that showcase the business benefits of owning and operating sustainable energy systems.
The 1.2 megawatt Parsippany project was completed in the fall of 2012 and the 1.2 megawatt Secaucus project is planned for completion in the spring of 2013. The completion of these projects will expand UPS’s solar power generating capacity from 360 kilowatts to 2,760 kilowatts and will produce in excess of 3 million kilowatt hours of renewable energy per year. The combined power produced from these projects is equivalent to providing electricity for more than 300 homes annually.
Solar Power: A Viable Business Model
At UPS, investment in renewable energy production is subject to a rigorous evaluation for return on investment. UPS has created a viable business model by developing, engineering, purchasing, overseeing construction, and operating the solar panel arrays in-house. By utilizing a direct ownership approach, UPS has uncovered valuable best practices to produce a strong return on its investment in current and future developments. A typical model is to outsource roof space for solar panels to a third-party in return for discounted energy rates for 20 years. UPS decided to finance and build its own solar projects following a drop in solar panel installation costs, continued improvements in the technology and the availability of supportive government incentives.
“Federal and state government incentives encouraged our investments in solar energy sources,” said Steve Leffin, director of global sustainability at UPS. “We develop, engineer, own and operate our solar capacity, which is a departure from contracted power-purchase agreements in which a company pays a solar power provider for a set price of electricity for 20 years. Under this arrangement, we not only benefit at UPS, but can also help community power grids by providing a hedge against possible energy price hikes during peak usage times.”