There’s no doubt the opportunity for RV and boat storage facilities is tremendous today. The expanding demand for outdoor recreation, combined with the low development and operational costs, translate to a business with significant ROI for property owners.
But today’s RV and boat storage customers are increasingly sophisticated. They want more than just a gravel spot to park a vehicle. They need a place to safeguard their “dream”—a facility that provides amenities that reflect and enhance their self-image. At the same time, RV and boat storage facility owners need to grow and diversify their revenue streams. Rental income is often static, leaving managers seeking new opportunities to grow their businesses.
Solar power fulfills the needs of both supply and demand; adding steel-constructed canopies that produce green power to RV and boat storage delivers sun protection for vehicles, more revenue to owners, and a more upscale and amenity-filled experience to customers.
Bob Hayworth, founder of Baja Construction, is an early developer of solar-equipped RV and boat storage facilities. His first project, Executive RV & Boat Storage in Oakley, Calif., which was cash-flow positive in 18 days, provides renewable energy for 2,000 homes in the area.
“Like Moses parting the Red Sea, all the local roadblocks disappeared when I said ‘solar,’” says Hayworth. In fact, the outdoor recreation town known as the “Gateway to the Delta” that initially resisted the project, ended up unanimously green lighting it, and today bills itself as the “Solar Gateway to the Delta.” “In my experience, anyone attached to a solar project gets a ‘green glow.’”
Now veteran of numerous solar projects, Hayworth shares his five “must-haves” for developing successful solar RV and boat storage projects.
The 5 Keys to Solar Success
Now veteran of numerous solar projects, Hayworth shares his five “must-haves” for developing successful solar RV and boat storage projects.
1. Optimize Site Location
Yes, the sun is needed to produce solar power. Surprisingly, that’s not the major consideration when choosing a site for solar-equipped RV and boat storage. Four hours of peak sunlight is all a solar system needs for optimal production. The solar module size, make, and model will determine the efficiency of the system. The rule of thumb is an economy module with lower efficiency is fine in a state with strong peak sunlight. By comparison, states with fewer peak sunlight hours can be just as ideal for solar modules, however they will require more efficient solar equipment.
Proximity to middle-class suburbs and recreational areas is critical. Hayworth’s pioneering Oakley Executive facility (see sidebar “Solar Powered Success”) is positioned halfway between the San Francisco Bay Area and Sacramento metro areas, providing access to the popular Sacramento-San Joaquin River Delta area within 60 minutes. Customers may ask: How far is the closest campground, beach, or national park? Where’s the cheapest gas station? The better the surroundings, the better the revenue potential. Researching local laws, building codes, and zoning restrictions is also critical. It is not necessary to be a real estate or green energy expert, but homework will prevent vulnerabilities.
Scan the area for other RV and boat storage facilities. Even if there are others, are they solar-equipped? The more competitive information acquired, the better. After identifying a potential site, examine the neighborhood. Walk the site. Feel the soil and look for water runoff. Does the property have a septic tank or leach field? If so, what is its condition? Hiring inspectors is a key due diligence item.
However, just because the property is for sale and is good for solar does not mean its desirable to RV and boat storage customers. This is not the self-storage market. The majority of solar and standard covered RV and boat storage customers look for storage places that attract their same demographic makeup. Be mindful that today’s RV and boat brands come with high price tags; A desirable, pre-owned motorhome can cost $95,000 while the cost of a smaller new one starts at $80,000. These high-end toys often bring high-end tenants who have high-end expectations.
2. Leverage Revenue Streams
There are many revenue opportunities associated with solar RV and boat storage. The main power of solar involves leveraging the wide array of incentives and tax credits available from municipalities and power companies (see sidebar “Revenue Streams from Solar Power”). This is another must-consider aspect of site selection.
“The benefits move around like mercury,” says Hayworth, who has dealt with varying credits and incentives in California over the years. North Carolina State University and the U.S. Department of Energy maintain the most current source of clean energy incentives at www.dsireusa.org.
Federally, a tax credit enables developers to deduct 26 percent of the cost of installing a solar power system from taxes. These tax credits can significantly lower the upfront cost of solar power, which accelerates a path toward ROI. Hayworth’s federal tax credits from the Oakley Executive project alone have hit $3 million.
State tax credits are nothing to sneeze at either. The State of California has evolved its tax incentives since Hayworth developed the first phase of Oakley Executive. Solar improvements in California are exempt from property tax increases. At launch, Hayworth’s $11 million Oakley project was deemed 70 percent solar related, which reduced the annual state tax obligation from $120,000 to $50,000.
By reselling renewable energy at that time, he was able to secure a 20-year contract with PG&E to buy back the 1.5 megawatts of power he produced at 12 cents per watt. The result was a $400,000 guaranteed annual income from solar and a quick approval from his lender to proceed with development.
Indeed, lenders are often much more eager to consider loans to solar-equipped RV and boat storage projects because of their diversified revenue streams. There are also “green banks” that specialize in funding renewable and clean energy projects.
The “green glow” of solar also extends a halo over Hayworth’s monthly rental rates. Phase 1 occupancy of 347 spaces took three years to fill but brought in $1 million per year when full. It remains at 100 percent occupancy year-round. The facility now has 415 spaces and caters to owners of all vehicles, including motorhomes, campers, and boaters. The project expanded into Phase 2 and Phase 3 in the ensuing years, with each development offering different but additional benefits. While costs and incentives vary widely from locale to locale, the business case for solar remains compelling (see sidebar “Penciling Out Solar’s Potential”).
Studies show that about 35 percent of RV and boat storage consumers are willing to pay a little bit more for eco-friendly services. Hayworth has seen the results firsthand at his Oakley Executive facility where renters are willing to pay two to three times more for covered spaces. What’s more, these solar-covered spaces often start a positive conversation about the benefits of green energy and the environment.
In addition, the higher price point for space rental also attracts a more upscale and reliable tenant: Only one negligent tenant has been removed from Oakley Executive since its opening in 2013.
3. Insist On Quality Construction
After working with many solar development projects, Hayworth no longer hears about solar systems for building rooftops. Steel canopies are now the preferred solar installation by far. While rooftop mounting systems are at the mercy of the pitch of a building’s roof, it’s mechanical systems, vents, and nearby landscaping and trees, solar canopies benefit from optimum sun exposure. Importantly, rooftop systems do not qualify for the additional tax credits or accelerated depreciation allowed for “elevated solar support systems” and related “solar improvements.”
Baja Construction insists on steel construction for many reasons. Steel is the least expensive and most durable building material available. It gives design flexibility and is hazard resistant. Baja uses steel for the RV carport structure’s entire mainframe, columns, beams, and purlins. And because most of Baja’s installations are prefabricated, pre-galvanized steel, construction time is reduced, which saves developers money. These structures are built to withstand wind and extreme climates, with the capability of bearing loads of up to 60 pounds per square foot. Additionally, maintenance required by steel is minimal and its surface can be customized to any color or texture desired.
Importantly, steel is sustainable and 100 percent recyclable—a key factor in green building. When looking to attract investors, building with steel is considered part of the sustainable proposition and will open up more conversations with financial institutions, investors, and permitting departments.
Another lesser-known advantage to steel structures is insurance savings. Most insurers offer customers savings and rebates when steel structures are on the property. These structures are less likely to need structural repair and, thereby, cost less to insure.
Hayworth also invested in the exterior appearance of Oakley Executive. There is an attractive, 14-foot perimeter wall surrounding the development. This perimeter serves as a windbreak, keeps down dust from surrounding vineyards, and provides an added level of security. The facility’s entrance also has mature landscaping, giving the impression of a country club rather than a storage lot.
4. Maximize Amenities And Marketing
From its inception, Hayworth knew his Oakley project would aim for the high-end of the recreational market. Starting with its branding as the “Oakley Executive RV & Boat Storage,” the project aimed to deliver its customers premium amenities as part of its vehicle storage rental.
In addition to a paved, angled space with shade coverage, customers have the ability to wash their vehicle when they return, recharge its electricity, dump its tanks, and refill propane canisters. There is a manager on site every day to greet customers as well as computerized 24-hour gate access. The on-premises customer facilities include a conference room, WiFi, coffee and water service, and bathroom, as well as shower facilities so that customers can refresh themselves before heading home.
Oakley Executive has realized premium rental prices and enviable occupancy by offering these amenities to its upscale customers. Renters pay $180 to $280 more for solar-covered spaces. Market studies have shown that about 35 percent of RV and boat storage consumers are willing to pay a little bit more for eco-friendly services.
In addition, Hayworth says the higher price point for space rental has also attracted a more reliable tenant. Only one negligent tenant has been removed from Oakley Executive since its opening in 2013.
Another key Oakley Executive’s success was its marketing efforts. Community networking is key to marketing any RV and boat storage facility, but especially critical to generating excitement around solar-equipped developments.
Once the management team is in place, they can visit nearby RV and boat dealerships to provide info about the new facility. These dealers are happy to know about additional storage capacity to facilitate sales of new vehicles. Working with local leaders and influencers in the recreational community can lead to referrals as well, since high-end RV owners network with other RV owners. The same goes for high-end boat owners. Word will spread fast that a new upscale storage facility is coming to the area.
Using the word “solar” in advertising and marketing is also key. RV and boat storage customers are an educated group that will be intrigued with the solar canopies, wanting to know more about the technology and its impact. They are “outdoors” people and care about the environment.
5. Watch For New Opportunities
As Hayworth witnessed the incredible success of Oakley Executive’s first phase, his decision to expand to Phase 2 was a “no brainer.” He already owned two acres of the original parcel and purchased an adjacent half acre. Phase 2 added 67 more solar covered spaces and another 1 megawatt of electricity to its grid-tied solar system. Where Phase 1’s initial PG&E contract created a bankable annuity used as income to secure financing, a new contract with Marin Choice Community Energy did the same for Phase 2 at 12 cents per watt.
Developers looking at the space might consider selling electricity on the spot market, the next wave of big revenue generation in solar. Utilities are often forced to purchase additional power on the spot market during summer and other peak times. These contracts pay much more for green power when it is available.
This trend is also pushing solar producers to look at batteries to store solar power produced by panels and guarantee outage-proof power. Batteries can hold power during sunny days for use during cooler afternoons and evenings. New technology makes power systems resilient and more affordable. In fact, being on-and-off-grid is now possible in some states. And given California’s susceptibility to wildfire, the potential of an off-grid solar system to supply power during a natural disaster is more important than ever. Not to mention, the wave of electric vehicles coming down the pike (i.e. trucks, RVs, and boats) that will all need a place to park and charge.
One trend is certain: New solar power technological advances and market demand will continue to arrive and present more revenue-generating opportunities for RV and boat storage owners for decades to come.
Amenities: This world-class facility covers 11 acres with 415 covered parking spaces. It is positioned halfway between the San Francisco Bay Area and Sacramento, providing access to the popular Sacramento-San Joaquin River Delta area within 60 minutes. The fully paved facility oﬀers covered parking, 24-hour video surveillance, computerized gate access, a dump station, propane fills, and battery charging. Tenant amenities include Wi-Fi, conference room, and a bathroom with a shower.
Solar: The steel shade canopies are customized to include solar panels in their structure. Designed and built by Baja Carports, the solar canopies cover the owner’s vehicle and produce roughly 4,250,000 kilowatt-hours of renewable electricity every year.
Return: Oakley produces far more power than the business operation consumes, which allows the excess electricity to be sold back to the local utility company on a 20-year ﬁxed rate contract valued at $510,000 per year.
Revenue Streams From Solar Power
The government and utility programs that provide revenue to RV and boat storage projects are constantly evolving. Here are the need-to-know basics for developers.
Rebates: Money paid upfront by the local utility company to help purchase a solar system. A rebate will help lower the capital amount needed to borrow to finance a solar project.
Feed-in Tariffs [FIT]: These payments come from the utility company for any excess solar-powered electricity gained from solar systems. These payments vary state to state. Some utility companies may be willing to purchase the entire output of electricity produced by a particular system at an agreed-upon price.
Solar Renewable Energy Credit [SREC]: These incentives are much like a FIT but they use a different approach. Though they vary by locale, some states will issue a SREC for installing a solar system depending on its production [kWH] output. The normal credit is an SREC credit for every 1,000 kWh produced by the solar system. Depending on the price of the SREC, it can be sold for cash; that’s in addition to the amount already being saved. SRECs are traded and their price is variable.