Just in time for the 4th of July, we are offering a special Commercial Solar sale, as in a sale on our book, Commercial Solar: Step-by-Step. Starting at midnight on the 4th of July, the Kindle eBook price will be just 99¢, a savings of 81% off the normal retail price. But a price that good can’t last forever, in fact, it will just last for 24 hours so don’t miss out!
What’s that you say, you don’t own a Kindle? Well, there’s a Kindle app for iOS devices (iPad, iPhone), for Android devices, and a downloadable app for both PCs (get it here) & Macs (ditto)! This is a great way to read a book, super convenient for folks who travel, and you can even take it with you to show to prospective clients!
So don’t miss this chance to own the most popular book on Commercial Solar ever written! See for yourself why reviewers have said:
“There’s so much information that you need to know when thinking about installing commercial solar. As a solar pro, Jenal provides all of it to you, clearly and transparently. Through a combination of a fictional company going solar and Jenal’s added in-depth insights to each step, businesses and facilities will learn how to find quality commercial installers and what to expect during the installation process. He also covers financing, solar incentives, and key points to analyze in a solar bid.”
“Whether you’re a potential solar customer interested in how to go solar or a commercial solar sales professional, this is a must read.”
“This book is written for the commercial building owner or facilities manager thinking about Solar Photovoltaic installation. It is very informative and covers all the aspects involved in a commercial solar project. [An] engaging and humorous read.”
“Jim Jenal’s guide to commercial solar is a thorough, quick, and easy read. The text is manage-ably dense with information, but chatty and easy to understand. Jim knows what he’s talking about, which is nice for those of us who do not.”
So get ready to celebrate Independence Day and download your copy on the 4th!
Yesterday we wrote about how SCE’s residential customers who take service under the Domestic rate structure could see their bills rise by 12% or more starting with their June bills, and we warned commercial customers not to get complacent about their own bills. Today we drop the other shoe: GS-1 and GS-2 customers, the bad news starts now.
SCE’s commercial customers (what it refers to as general service, hence the “GS") are largely divided into two groups: those that pay only for monthly energy usage (GS-1) and those that pay for both usage and peak power demand charges (GS-2). You can use all the energy you want in a month, but as long as your peak power demand never exceeds 20 kW you will stay in GS-1. Once your demand sneaks past 20 kW however, you will be assigned to paying higher bills under GS-2.
Solar for GS-1 users is a no brainer, just as it now is for SCE’s residential customers. For GS-2 customers, however, the question is a tougher call since it can be very hard to know how well solar will coincide with a potential client’s peak power demands, and it is those demand charges that so drive the pain of GS-2 bills. Neither GS-1 nor GS-2 are tiered, meaning that every kWh of energy is charged the same. Under GS-2, however, demand charges are significantly higher during the summer than they are the rest of the year.
We said that you could use all of the energy you like and remain in GS-1 but that’s not strictly true—if your peak power demand stays below 20 kW you can only pull so much energy into your site. Let’s imagine a commercial entity that is right under that limit: say 19 kW peak demand and they sustain that demand for 10 hours a day, every day. The remaining 14 hours their demand drops to just 5 kW. Their daily usage averages:
Usage = 10*19 + 14*5 = 190 + 70 = 260 kWh/day.
Under the old rate, this maxed-out GS-1 customer would have seen a bill of $15,355 or roughly 16.2¢/kWh. (A bargain, by the way, compared to what a residential customer using that much energy would have paid.)
Under the new rate, their bill jumps to $16,777 an increase of 9.26%, and now they are paying 17.7¢/kWh.
We recently provided a proposal to a potential GS-2 client, so we will model their usage to demonstrate what the new rates will do to a GS-2 customer’s bill. Their usage has peak demands that average 119 kW per year, but spike as high as 167 kW during the summer. Their daily energy usage is substantial as well, ranging between 600 and nearly 1,000 kWh per day from winter to summer.
Under the old rates, they were paying some $56,873 or 21.73¢/kWh. The new rates will see their bill climb to $59,598, and increase of 4.79%, averaging 22.77¢/kWh.
But here’s the interesting thing about the new GS-2 rate: it is actually more beneficial to solar customers, since the increase is mostly in the per kWh charge. Indeed, when we model our potential client’s savings in Year 1 under the new rate as compared to the old, it increases by over $1,000—going from $14,808 to $15,818, a 6.8% savings increase for no additional out-of-pocket expense! Their payback now occurs in Year 6 instead of Year 7, their IRR increases from 12.2% to 12.9% and they will have saved an additional $12,000 in Year 10 than they would have under the old rates. (Combine the solar power system with intelligent storage and you are really on to something.)
SCE’s rates are going up for all classes of customers that we see: residential (12%+), small commercial (9%), and large commercial (4.8%). Solar can help all of these customer classes, and GS-2 customers can see an even greater savings from solar under the new rates than they could before. Oh, and SCE still has some rebate money for commercial projects, but that won’t last for long.
Stop suffering, start saving—make this the summer you go solar.
One of our astute readers contacted us to ask if we had noticed that SCE had just increased their rates—and dramatically. That got our attention so we decided to spend some quality time amidst SCE’s tariffs. The news is mixed: terrible news for people who are going to have to pay these crazy rates, but great news for everyone who can install solar. In fact, SCE’s new domestic rate is about all anyone would need to be convinced to finally make the switch to solar.
In case you did not know it, every SCE tariff—that is, the rate structures under which they bill their customers such as the Domestic tariff for most residential customers or GS-1 and GS-2 for most commercial customers—can be found on their website. If you know where to look. (Hint: look here!) Of course, when you do find what you are looking for, you are rewarded with something that looks like this:
This is one half of SCE’s Domestic rate (the delivery portion)—and this is about the simplest rate structure that they use! So it is not surprising that most normal people don’t really examine these things to see what is going on—they just groan and pay the bill.
But we suspect people will do more than groan when they look at their bills this summer.
We had been working on a solar proposal for a prospective client in SCE territory when we learned about the rate change. The client’s usage was relatively high, averaging 55 kWh/day over the course of the year; high, but still far lower than some of our clients. Under the rate structure in effect prior to June 1, this client’s annual bill worked out to $5,100 but after applying the new rates her annual total jumped to $5,750—an increase of a whopping 12.7%!
We will pause a moment to let that sink in.
What about that other potential client we wrote about, the one whose SCE bill already contained an incredibly misleading chart purporting to help her understand her bill. What impact will these new rates have for her? Under the rates in place before June 1, her total bill for the year was an already eye-popping $8,435—ouch! But under the new rates? Her new bill becomes $9,560—an increase of 13.4%!
So what is actually going on here? Turns out that the rates on the high end, Tiers 3 and 4, are the culprits, increasing by 16.4% and 14.8% respectively. Live in Tier 4 this summer and you will be paying 34.8¢/kWh for the privilege!
There is a silver lining here and that is that adding solar pays off better than ever. If your solar power system gets you out of Tier 4 alone, you will save thousands of dollars a year. For our prospective client who averaged 55 kWh per day, her savings come to $4,171 in Year 1. Even without a rebate from SCE (which for now at least has gone the way of the Dodo), her payback is in Year 5! After 10 years, thanks to these new rates, she will have saved an additional $25,000! And by avoiding a lease (this client is planning on using HERO financing), those benefits all go to her!
We have said it before and we will say it again: utility rates are only going up. While this example pertains to just SCE’s residential customers, guess what? You commercial customers are about to see your rates go up as well (more on that soon). And muni customers, now is not really the time to feel smug as your rates are going up too (and yes, PWP folks, we mean you!).
Give us a call and let’s see if we can’t help—contrary to the song, we’ve got a cure for these summertime blues!
We all know that solar is booming throughout the U.S. and especially here in California, but where in California exactly? What county leads the state in permitting new solar projects? Take a guess—the winner may surprise you!
We recently came across a publication that attempts to compile information regarding building permits throughout the State of California. The data reports the total number of permits issued by county and gives a valuation for those permits. However, since the value assigned to a project at the permit office is generally not verified against the actual price of the project, we aren’t looking at that data. Instead, we simply focused on the total number of permits issued in March of 2014 for new, solar PV installations.
Go on, take a guess…
Did you see that coming? We certainly didn’t!
Wow, San Bernardino you are kicking it, and in a big way, accounting for nearly 12% of the 3,901 new PV permits pulled statewide in March. The top ten counties listed here combined for 65% of all permits for the month. Solar hotspots indeed.
Still, I suspect it tells you something about the continuing horrors of doing business in the City of the Angels, when Los Angeles county, with five times the population of San Bernardino county, has roughly half as many permits in the month.
It will be interesting to follow this data going forward to see whether this month was a fluke or a continuing trend.
Yesterday we provided a recap of the results from the third tranche of LADWP’s Feed-in Tariff (FiT). Today we are going to look at the status of the program overall, based on the newly instituted FiT Dashboard found on DWP’s FiT website.
We are often critical of issues with utilities, whether its undue roadblocks to installing solar or outright hostility to the entire concept of net metering. So it is equally important to give credit where it is due, and the introduction of the solar “Dashboards” that are now featured at the DWP website is a great step forward in transparency and one that deserves to be widely imitated by DWP’s peers. Here is how DWP explains the purpose of their FiT Dashboard:
LADWP is implementing the largest FiT program of any municipal utility in the nation. As it goes through growing pains, we continually work to improve the experience of customers and businesses who participate in it. The goal is to achieve the target level of solar energy, catalyze the solar industry and create jobs, and streamline the process to increase efficiency. This Dashboard outlines the issues, actions taken, and plans for improvement. The graphs show the current and targeted FiT processing timelines, schedule, and status of projects from each allocation.
The data discussed below is from the Dashboard update as of April 7, 2014.
While the complete flow chart for LA’s FiT program is more than a shade Byzantine, the Dashboard highlights processing times associated with three key bottlenecks in that flow: the initial Technical Screening that takes place when a project application is first submitted, the interconnection study which determines the cost for the proposed project to tie into DWP’s grid, and contract execution for the PPA between the project developer and DWP. For each of these milestones, DWP has a goal of completing the work in four weeks. In each case, DWP is missing those targets by a lot.
As of this writing, DWP is taking, on average, 6 weeks to complete the initial technical screening, 12 weeks (3x the goal) to complete the interconnection study and 14 weeks (3.5x the goal) to execute the contract! Unfortunately, the Dashboard does not reveal how much of that delay reflects internal DWP processing times versus delays caused by the developer—breaking these delays down to reveal how that works out would be an important modification to the Dashboard.
While we can understand how incomplete applications and general, technical complexity could add delays to the first two milestones, we are baffled by the 14 weeks of delay in executing the contracts. These are standard form contracts which, at least according to the program guidelines, are not subject to negotiation. What could possibly cause a three-and-a-half month delay in getting those contracts signed? Alas, the Dashboard does not reveal an answer to that question.
Which brings us to the status of all project applications in the queue. Here’s DWP’s chart (click for larger):
The chart shows all 22 applications from the third tranche in the initial technical review as would be expected. Shockingly, there are still 13 projects from the first tranche, over a year ago, that are still hung-up in that initial review!
Missing from this chart is the number of projects that are designated as cancelled. By our count, there are 47 projects that made it through the lottery but have been cancelled for whatever reason. (The most likely reason would be due to learning that the cost to interconnect to DWP’s grid—the major wild card in the whole process—turned out to be too expensive. However, according to the data, only 21 of those 47 projects ever had the interconnection study completed, which means the majority of the cancellations had to be due to other, unreported, reasons.)
Seven projects from the first tranche are still waiting for the interconnection study to complete along with 37 from the second tranche. Thirty-four projects, 17 each from the first two tranches, are undergoing the mysterious contract review process. Only 9 projects have managed to get contracts executed and just two, both from the first tranche, have been commissioned. (The blue bars represent projects from the demonstration phase.)
That’s a lot of solar in the pipeline—hopefully DWP can get the cancellation rate down and the completion rate up in the coming months.
Again to its credit, the Dashboard acknowledges that the program’s overall status is: “Needs Improvement” and steps are underway to improve the process. Perhaps the most significant development is that DWP has assigned seven additional engineers to help work through this backlog. But the Dashboard makes clear that to get to target goals, DWP needs to climb a very steep hill: “To achieve target turn-around schedule, staff must complete 10 interconnection studies per week over the next 7 weeks and 10 contracts per week over the next 10 weeks.”
Bottom line - DWP is working on a big and complex program and the performance to date has been less than desired, but the institutional attitude seems better than expected. Hopefully DWP will be able to deliver on its targets in the next 10 weeks.
Of course, DWP looks positively stellar compared to the FiT performance of its neighbors, a topic we will return to tomorrow.
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