How Does Solomon Energy
Make Money?
Copyright © 2015. Solomon Energy. All Rights Reserved.
Solomonenergy.com
How Does Solomon Energy
Make Money?
The Solomon Energy team advises large energy consumers on ways to reduce their
utility bills through renewable energy and energy efficiency technologies including:




Solar,
Cogeneration (also known as Combined Heating and Power or CHP),
LED lighting, and
Batteries.
Solomon Energy is compensated for its services in three ways:
1. Success Fees.
In most cases, Solomon Energy does not charge for its services unless and until a
project is completed and commissioned.
In what it called its Phase 1 process, Solomon Energy will work with its clients to
perform a free assessment of a number of potential energy savings strategies. Only if it
concludes that a client can reduce its operating costs immediately will it recommend
the client proceed to Phase 2.
In Phase 2, the client will agree to have Solomon Energy do a more detailed engineering
study. At this stage the client will agree that in exchange for Solomon’s investment of
time and money the client promises that if any energy contracting is done within the
next three years the client will insist that its contractor pay Solomon a fee.
Solomon’s fee – which will be paid by the contractor and not by the client – generally
equals approximately 5-10% of the gross value of the project. In the case of solar the
fee may be calculated as an amount – e.g., $.15 – per kilowatt hour of solar energy
nameplate Direct Current capacity before conversion into Alternating Current.
In addition to conducting preliminary engineering studies Solomon Energy will help its
client conduct an RFP process to seek competitive proposals for the project. If, after
making a recommendation, the client agrees to proceed with a contractor or vendor,
Solomon Energy will help its client negotiate contracts including construction contracts,
Power Purchase Agreement, real property lease agreements, client lease amendments,
shared savings agreements, or other documents.
Solomon will also help its client secure whatever state, local and utility subsidies are
available or tax benefits that are due.
1
Copyright © 2015. Solomon Energy. All Rights Reserved.
Solomonenergy.com
How Does Solomon Energy
Make Money?
Does Solomon Energy’s fee increase the cost of the project? Surprisingly no. To date
contractors have considered Solomon’s fee as comparable to the amount they pay their
own salesman to source deals. In the case of RFPs conducted by Solomon, contractors
are pleased to submit bids for projects that have been vetted already. Unlike many
projects they pitch in the ordinary course, projects brought by Solomon have a high
likelihood of success. Accordingly, the contractors know that if they inflate their bids to
include Solomon’s fee they risk losing the competitive bid process.
Finally, Solomon’s fee is only paid if and when a project is successfully completed.
Solomon Energy invests in its client’s success. Its interests are aligned with its clients.
If its clients do not succeed in completing a project, Solomon Energy does not get paid.
2. Consulting
Over the course of its four year history Solomon has been asked by some clients to
review bids or contracts submitted by contractors in response to solicitations
conducted by the client itself or by other consultants the client has hired. Many clients
find that they and their consultants are inexperienced when it comes to evaluating the
proposals they receive. They have difficult evaluating them and making an apples-toapples comparison. Or they are uncertain about how to obtain better contract terms.
Solomon has thus far conducted six consulting projects. In these cases it has been paid
an hourly fee – anywhere from $250 to 500/hour – depending on the scope of its work.
Solomon Energy consulting engagements have ranged from $3,000 to $20,000.
3. Energy Supply Brokerage
Many of its solar and energy efficiency clients have asked Solomon Energy to help
secure competitive bids for the balance of their energy supply needs, that is, those
volumes that are not offset by their solar or other investments.
In these cases, Solomon Energy’s subsidiary, Solomon Energy Advisors LLC, charges a
fee per unit of electricity or natural gas purchased on behalf of its clients. See How
Much Do Commercial Energy Brokers Get Paid.
Solomon Energy Advisors’ fees are among the lowest in the brokerage industry, running
between 2 and 5 mils per kWh and $.02-.05 per ccf.
2
Copyright © 2015. Solomon Energy. All Rights Reserved.
Solomonenergy.com