Archive for March, 2009
The educational observatory in Chico, California was the city’s first all-solar building. And now, hardly more than a week after the police arrested a suspect in the case of the theft of solar panels off a Chico elementary school, the observatory might have to shut down its solar operations due to the theft of three of its roof-mounted panels. The director of the Chico Community Observatory said the facility will stay open to host a couple of field trips this week, but after that, it will have to close until the solar panels have been replaced. He noted that
burglary for profit may have been the motive in the crime, but said the panels were crudely removed by someone who probably didn’t know what they were doing.
To me, that’s almost the saddest part: that on top of wantonly wrecking the property of this nonprofit community organization, the thief (or thieves, seems more probable to me, considering the bulk and weight of the panels) knew so little about the technology at hand that the panels themselves were most likely damaged. If so, no one will be able to get good out of them now.
And why? Yeah, I was flippant in my first blog post on this subject, joking that at least we know solar panels are really popular now–people finally want to steal them! (Or at least a weird dark element of Chico society does.) But there is some truth here: solar is mainstream enough at this stage that mostly everyone knows it’s (a) a viable way to reduce your electric bill and get clean energy, and (b) very expensive. Most people don’t realize all the pieces that go into a solar PV system–I know because I talk to lots of folks who come to GetSolar to research solar. Maybe the thought is that if you can steal solar panels, you can get “free” electricity, without realizing the need for a master electrician to install the system, an inverter to convert the charge from DC to AC current, and all the myriad other elements of solar.
Another motive, of course, is the pure stupid malice behind so many acts of vandalism. But this particular kind of vandalism involves getting on top of a building, removing heavy pieces of advanced technology from their custom-fitted moldings, and having a plan to smuggle out the evidence. It’s a bit advanced for simple malice. And yet, who would buy obviously used (due to damage from the theft and transport) solar panels? Well north of San Francisco, Chico is not the kind of densely populated urban area in which such a product could melt effortlessly into a brisk black market trade. Urban, yes; and could panels be transported easily once stolen, also yes; but why Chico? It seems like too much of a coincidence that this city of just over 100,000 residents could be attracting “solar thieves” from other locations: it’s not like the Bay Area has a shortage of installed PV systems. We don’t know yet if the suspect the police arrested for the school theft was out on bail at the time of the observatory incident–that would certainly be a neat wrap-up, if it turns out to be the same suspect. But it might turn out that suspect was not responsible for either solar panel theft–and then it’s back to square one.
It’s sad that such a beautiful technology, being used for the good of a whole community, could get pillaged in this way. It’s not on the same level as poisoning the town well, but it’s still fiercely anti-social. Let’s hope the community of Chico, California isn’t deterred by this from pursuing solar, and that the police figure out the real story here quickly. Remember: always pursue solar projects with a trusted, qualified solar installer.
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(1) Cash. This is how P. Diddy rolls. If you can swing it, paying cash for your solar PV system is the best way to go, especially in times (like these) when credit is tight. Added bonus: you may get to share rank with America’s brightest stars, like Brad Pitt, Tom Hanks, Scarlett Johansson and Don Cheadle. Just check out BP’s Solar Neighbor celebrity participant list.
(2) Energy Efficient Mortgages (EEMs). For the rest of us mere mortals, the prospect of dishing out $30,000 in cash for an array of panels is a bit more daunting. EEMs can provide a helpful financing option. As outlined by the Energy Star website,
An Energy Efficient Mortgage (EEM) is a mortgage that credits a home’s energy efficiency in the mortgage itself. EEMs give borrowers the opportunity to finance cost-effective, energy-saving measures as part of a single mortgage and stretch debt-to-income qualifying ratios on loans thereby allowing borrowers to qualify for a larger loan amount and a better, more energy-efficient home.
To get an EEM a borrower typically has to have a home energy rater conduct a home energy rating before financing is approved. This rating verifies for the lender that the home is energy-efficient.
EEMs are typically used to purchase a new home that is already energy efficient such as an ENERGY STAR qualified home. The term EEM is commonly used to refer to all types of energy mortgages including Energy Improvement Mortgages (EIMs), which are used to purchase existing homes that will have energy efficiency improvements made to them. EIMs allow borrowers to include the cost of energy-efficiency improvements to an existing home in the mortgage without increasing the down payment.
(3) Power Purchase Agreements (PPAs). These arrangements provide a pretty cool financing solution, and by some estimates have been expected to account for three-quarters of all commercial and industrial solar sales in the U.S. Here’s Margaret breaking it down for us in a previous GetSolar post,
as opposed to leasing, wherein you pay a third party financier over time in order to gain ownership of the PV system, in PPAs the ownership remains with the financier. The owner of the building where the solar is installed now pays the financier a fixed monthly rate for electricity. The building owner benefits by having predictable, stable energy costs for the contracted term, and the financier benefits by receiving all the tasty tax credits attendant upon owning a commercial solar electric system.
(4) Leasing. This option works kind of like a car lease. Except that, instead paying in exchange for the use of the car, when leasing a solar PV system you make monthly payments in exchange for the elctricity it produces — eventually toward outright ownership, if desired. I presented it more clearly a few months ago:
It works like this: you put some money down, typically around $2,000, and agree to a 10-year agreement. The company installs PV panels on your roof and promises to pay for any maintenance, as needed, including the eventual replacement of the inverter. You pay them a monthly rate for the electricity that’s produced by the panels. If it works correctly, everyone wins: the company receives enough money to earn a worth-while rate of return. And you pay a monthly fee that’s lower than what you’d been paying to your utility before the panels were installed.
Note, however that if you lease a system, you won’t benefit from any of the available solar incentives, like the 30-percent federal tax credit.
(5) Collective bargaining. Like in any other market, there’s strength in numbers when it comes to purchasing solar. If Sue is going to buy 500 PV panels, and Jim is only going to buy 22, Sue will invariably get a better per-panel price. Collective bargaining for residential solar systems — quaintly dubbed “solar community purchasing” — has recently become popular in California, where there’s a high density of individuals interested in buying. An online group, 1BOG, along with GoSolarMarin, are leading the charge. While such arrangements yield undenaible benefits to consumers, they don’t come without their drawbacks, as Margaret explains:
But a good deal doesn’t make everyone happy. Unfortunately, a side effect of group purchases of this kind is that it makes it very difficult for the competition. It is not feasible for most installers to simply drop their installation price by 15-20%: their profit margins are nowhere near big enough to allow for that.
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Posted by Eric in Thursday, March 26th 2009 under: Solar Power Info
The stimulus package at the center of the Obama administration’s legislative efforts looks like it might do the trick for renewable energy. The New York Times’ Green Blog reports that stimulus money is assisting the solar (and wind) industries in weathering the economic downturn. This is fantastic news. We knew the package, which we followed on its path through Washington some weeks ago, was going to make a strong push for increasing the presence of renewables in the United States, but to see that this push will also carry with it some real help – real results – is heartening.
It’s too early to tell what the recession will mean for solar, but this is a good indicator that it won’t be anywhere close to a worst-case scenario.
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It’s a huge relief to many that the reality of climate change is sinking in for politicians, not to mention the general populace. Advocates of clean energy are, deservedly, among the happiest–yet for the first time, such advocates are finding themselves pitted against environmentalists, groups that have hitherto been strongly supportive of each other in the fight to get climate change taken seriously. Methods for addressing global warming have gone in hand in hand with the cause of clean energy activists: one of the largest-impact methods of reducing GHG emissions is to turn to low-carbon energy sources. Namely, renewable technologies like solar power, wind, geothermal and biomass.
So what’s the problem, you ask? The problem is that solar, like wind, needs a lot of room to do what it does. Turbine arms can catch only so much wind; photovoltaics panels can catch only so much sun. You need hundreds of acres to begin to supply a power plant on anything of a municipally useful magnitude. And because solar functions so well in the desert, where peak sun hours are usually untarnished by pesky things like cloudcover or rain, the vast empty tracts of our southwestern states have become the natural targets of solar developers’ plans. In one way, this seems perfect: largely uninhabitable land performing a highly valuable service for our communities. Such land can be found all over states such as Nevada, New Mexico, California, Texas–arid, unfriendly, and cheap. But, as Time, the New York Times, and others have been reporting, environmentalists say that solar presents more of a threat to the desert ecosystem than industry experts want to admit, and that we’re heading down the wrong path by pursuing these sites.
Desert ecology is nearly as fragile as the skin of a cactus is tough. It doesn’t make sense to the naked eye, but there you have it. Environmentalists, and desert residents who live near proposed solar plants sites because they love the look and feel of the desert, are deeply upset that solar developers seem to be ignoring their warnings about the damage solar could do to these landscapes and the creatures that live there.
One solution, argue the environmentalists, is to focus on distributed generation rather than power plants. Distributed generation would put more panels on the roofs of homes and businesses, avoiding centralized power plants for energy generation. The problem with this, argue solar proponents right back, is that the grid is left high and dry in that scenario–you need centralized power generation for reliability and best fucntioning.
Interior Secretary Ken Salazar will have his hands full trying to navigate the best path forward, keeping in mind responsibility to protect fragile ecosystems for the future while trying to push clean energy. I’m certainly not envious of the choices he’ll have to make. Because this is not a problem with an easy solution: how do you ascribe quantitative values to wilderness or to progress? The best environmental stewardship must combine efforts to protect our natural world with efforts to ensure that humanity’s ever-increasing drain on natural resources is met in the most efficient, cost-effective way possible.
There are so many bodies involved: local, state, and federal governments, private business interests, public utilities, residents of the desert (human and otherwise), and the urban dwellers who would benefit most from the potential desert solar power plants. To name a few. As the old saying goes, you can’t please all people all the time. But surely we can figure out a way to please most of the people, this time around–if clean energy advocates and environmentalists really can’t find common cause and work together, what hope is there for the rest of us? We all want a clean, secure energy future and a world with hidden wonders and great natural beauty. We’re still taking the very first steps to figuring out how this can be achieved, and I hope the tenor of the discourse improves soon. We’re not rivals, after all. We’re all on the same team–whether we like it or not.
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Posted by Connie Zheng in Tuesday, March 24th 2009 under: Commercial Solar, Solar Industry News
In case anyone is still doubting the Obama administration’s commitment to renewable energy, the Department of Energy offered its first loan guarantee in four years, worth $535 million, to Fremont, California-based solar company Solyndra, Inc. last Friday. Solyndra, a commercial solar panel installer whose photovoltaic panels use cylindrical modules to convert sunlight, will use the loan guarantee to build a commercial scale solar panel manufacturing plant in California that the DOE says will create approximately 3,000 jobs during its construction, over 1,000 once it becomes operational and hundreds more to install the panels themselves.
Not all is set in stone, however. Although Energy Secretary Steven Chu signed a “conditional commitment” on Friday, the deal still needs to pass the departmental credit review board for it to finalize. As a loan guarantee is not the same thing as a loan—rather than directly lending Solyndra federal money, the DOE is assuring that it will assume the debt obligation if Solyndra defaults on it—the company needs to make sure to have some form of equity on hand, though this is presumably not a problem if the DOE and Solyndra have already come this far in their agreement. (Don’t mean to be a Debbie Downer, but there is a recession.) Sources conflict over who is funding this venture: Solyndra’s press release stipulates that the government is providing the $535 loan, whereas the Reuters article above insists that the DOE is not providing the actual loan. (Any web detectives able to verify who the backer is?) In any case, the loan is set to finance 73 percent of the construction costs, and the loan guarantee is granted under Title XVII of the Energy Policy Act of 2005 and is funded as part of the stimulus package. If the deal is finalized, construction for the plant will commence later this year, with initial production in late 2010 or early 2011.
With Chu making the allocation of federal loans to energy projects a priority, I expect we’ll see some more news about federally-funded clean tech projects in coming weeks. And while I can’t predict with certainty whether or not the administration will be able to fulfill its pledge of doubling renewable energy production in three years and of generating ten percent of U.S. electricity from renewable sources by 2012, I’m certainly willing to bet on it. (But let’s not make the stakes too high, because I’m a destitute college student.) Any takers?
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Posted by Adam Sewall in Monday, March 23rd 2009 under: Commercial Solar, Cost and Financing, Energy Efficiency & Green Building, Solar Homes Tags: Aspen Times, Colorado Solar, holy cross, Payback, ROI, solar pv, Xcel Energy
A lot of what we do here at GetSolar involves helping individuals and businesses answer the following question: Does solar PV make sense for me? The short answer, we usually say, is that there is no single answer — it depends. The ROI and payback for a particular system are the product of a host of different factors, ranging from the amount of shade that hits your roof, to the types of solar incentives (beyond the 30-percent federal investment tax credit, which is available nationwide) that are offered in your area. The bottom line? In some instances, a solar PV system offers a great return on investment. In other situations, where PV can offer only modest returns, some people still choose go through with their project because they believe it’s the right thing to do for the environment, and/or because they want to promote energy independence. Finally, there are scenarios in which solar PV just doesn’t make financial sense. Your roof gets no sun. You’re a renter. You live in Nebraska (where there are virtually no state-sponsored incentives for solar).
By filling out our Web form on our homepage, you can begin to see where along this spectrum you fall. Essentially, the form is the start a conversation that we hope will answer your questions and provide info on a number of different solar options.
Now that I’ve explained the “it depends” answer, it’s time to offer a response that doesn’t vary from case to case. It’s summed up in a basic rule of thumb: The more energy efficient your home or business, the better the return on investment on your solar energy system. The reason has everything to do with avoided costs. Compared to a conventional building with, say, an 8.1-kW PV system, an energy-efficient home or business can meet a larger portion of its electricity needs with that very same PV system. (Only in rare cases will a solar PV system meet all of a building’s electricity needs. Most solar PV owners still purchase some power from their utility.) In other words, the efficient building’s monthly utility bill will be relatively lower than that of the conventional building. These added savings — aka avoided costs — make a big difference month after month, year after year. In the end, combining a PV system with energy efficiency measures will lead to a better ROI and a faster payback period.
For a “real-world” example, check out this excerpt from The Aspen Times,
…more Roaring Fork Valley residents haven’t gone solar.
Richardson, the former head of the Aspen city government’s “Canary Initiative” to identify and reduce its carbon footprint, incorporated a photovoltaic system into the design of his Carbondale house. Five solar panels occupy a good share of his south-facing roof. The 1.68 kW system will probably produce about one-half of the electricity consumed in his high-efficiency house.
“I would have liked to go with a bigger system but cost was definitely a consideration,” he said.
A rule of thumb is that solar electric systems cost between $8 and $9 per watt to install in the Roaring Fork Valley, Richardson said. His system was installed for about $14,400. Xcel Energy offered a rebate of $3.50 per watt or about $5,880. Richardson also qualified for a $2,000 federal tax credit. That reduced his out-of-pocket cost to about $6,500.
Because his system will produce about one-half of the electricity he uses, it will offset the cost of installation in 10 to 12 years, he said. For him, the decision was a no-brainer.
Richardson said he would like to think that Carbondale is a hotbed of photovoltaic activity because of its hippie past and prevailing counter-culture mentality. But honestly, he said, it probably has more to do with the rebates provided by Xcel Energy.
Xcel has a limited service area in the Roaring Fork Valley that includes most of the town of Carbondale. Much of the remainder of the valley is served by Holy Cross Energy. As a small, nonprofit cooperative, Holy Cross isn’t in a position to offer as large a rebate as Xcel, a major statewide energy provider. Holy Cross offers a $2 per watt rebate to its customers that install photovoltaic systems. That difference is important, Richardson said, even though CORE offers additional rebates to Holy Cross customers to try to bring the rebate up to Xcel’s level.
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Posted by Margaret Collins in Friday, March 20th 2009 under: Commercial Solar, Cost and Financing, Solar Energy Grants, Solar Energy Incentives, Solar Energy Tax Credits Tags: Commercial Solar, government, grant, incentives, ITC, NREL, PTC, subsidy
Up to their usual helpful tricks, the folks at the National Renewable Energy Laboratory (NREL) have once again teamed up with the Lawrence Berkeley National Lab to offer some much-needed guidance through the wealth of renewable energy incentive choices now available for commercial installations. They’ve just released a report that walks you through the differences among the feds’ new incentives: the production tax credit, investment tax credit, and cash grant options. Since you can choose one but you can’t choose them all, it helps to understand the real differences behind each option in determining which can be of most use to your business. Solar is not eligible for the production tax credit, but pretty much everything else is (geothermal, wind, biomass, hydroelectric, tidal…you get the picture).
The reason the government is trying to help us through the maze is that we never used to have all these choices. The choices are brand-new, dating only to President Obama’s economic stimulus package (ARRA 2009), which included about $40 billion for clean energy initiatives. Relying purely on tax-based incentives to incentivize a market that badly needs the growth doesn’t work so well when companies are experiencing heavy losses in a recession, reducing or totally eliminating their tax burden. Hence, a company that previously had only MACRS and the 30% ITC can now opt to change out the ITC for a PTC, or even–for a short time only, to be a real shot in the industry’s arm–the equivalent amount of the ITC in cold hard cash. The report explains:
Because the two credits are structured differently, and apply in different ways to different technologies, the choice between the two lends itself to quantitative financial analysis of the conditions under which either the PTC or the ITC would, at least in theory, provide greater financial value. Qualitative considerations may be equally important, however, particularly in instances where quantitative differences are modest.
It boils down to how dire your straits are. The PTC is potentially more lucrative than the 30% cash grant, depending on how well the market performs over the ten years during which the PTC will be viable, but well, who doesn’t love cash in hand? The report authors note that those companies able to venture out onto a limb a bit might find the idea of a healthy production credit alluring, but…
…some developers and project owners will nevertheless prefer the certainty offered by the ITC over the performance risk inherent in the PTC – even if the PTC promises a higher expected value.
Another big factor is how long the owner of a renewable energy system expects to hang on to it. If you’re going to sell within five years, the PTC makes more sense, as it’s an incentive that provides immediate value to new purchasers. The cash (or ITC, if you go old-fashioned on us) is applied over a 5-year period–and once it’s gone, it’s gone, providing little in the way of a carrot to potential buyers of the system. The ITC or cash, however, will be more appealing to those projects than want to take advantage of low-interest government loans to help finance the project; these are combinable with the ITC/cash, but not with the PTC.
The report doesn’t detail solar–it focuses on quantitative and qualitative analysis for wind, biomass, geothermal, and landfill gas, since these are the technologies that stand to gain most from the PTC for which solar is not eligible. But becoming intimately familiar with them is the best way to decide how best to take advantage of federal support for your solar installation–it pays to know the whole picture.
Thanks to Renewable Energy World for pointing this out. And download the full report here (PDF).
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While AIG chief Edward Liddy was taking a pounding from the House Financial Services Committee, AIG Financial Products Corp. (AIGFP), an AIG company, announced on Wednesday its sale of its interests in three solar PV plants in Spain. The three plants — operated variously by City Solar, Proener and SunPower — represent a combined 35 megawatts (mW) of capacity. According to AIGFP Cheif Operating Officer Gerry Pasciucco, the move “continues AIGFP’s ongoing program of investment portfolio dispositions, further reducing its overall risk profile.”
It’s evident AIG needs all the help it can get in terms of freeing up cash to shore up its balance sheet and, thus, reduce its “risk profile.” But, in light of the firestorm over AIG bonuses, the timing of the sale strikes me as somewhat odd. While such plants require a tremendous amount of capital to construct, once their built they’re fairly reliable investments in terms of cost and cash flow. (Put differently, the demand for electricity is relatively inelastic.)
In the end, cash is king, I suppose — just ask those of AIG managment who were granted bonuses. Ulicia Wang from GreenTech Media puts it aptly: “AIG said it’s selling its assets to (hopefully) improve its business prospect. Owning solar power plants is apparently not a prudent idea when business is faltering, but giving out multimillion-dollar bonuses is.”
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