Thoughts on Solar by Run on Sun's Founder & CEO, Jim Jenal

Drive the freeways, ride the train from San Diego to Union Station, or fly into LAX and you cannot miss the obvious - Los Angeles has tremendous, untapped potential for solar growth.  Now a new report from Michelle Kinman at the Environment California Research & Policy Center, seeks to layout the case for Solar in the Southland: The Benefits of Achieving 20 Percent Local Solar Power in Los Angeles by 2020.  Here’s our take.

Potential as Far as the Eye can See

It is beyond dispute that there is a huge gap between the amount of solar that could be supported in the Southland versus the amount that is actually, presently installed. As Ms.Kinman’s report makes clear, even in the City of Los Angeles alone, that gap is enormous, as illustrated by this graph:

Citing a study by UCLA’s Luskin Center for Innovation, Kinman reports that the rooftops just in LA alone could support some 5,500 MW of solar power - of which a paltry 68 MW is installed today.  That is a lot of potential. But Kinman’s report doesn’t focus on adding all of that - rather she has documented dramatic benefits that would follow from just reaching the goal of 1,200 MW by 2020.

In addition to supporting some 32,000 job-years of employment (thank you!), Kinman shows that installing that much solar would also have these benefits:

• Reduce local air pollution and cut down on greenhouse gas emissions
  • This would be the pollution-reducing equivalent of taking 230,000 cars off the roads
  • 730,000 pounds of smog-forming pollutants would be eliminated
  • 1.1 million pounds of greenhouse gases would be eliminated
• Reduce the demand for water - already in tight supply in LA - by displacing the need for energy from local gas-fired power plants, LA would save 435 million gallons of water per year.

Kinman insists that this is an achievable goal, but one that would take “clear, strong and consistent direction and support” from the Mayor and the City Council to LADWP.  Some specific policy prescriptions include:

• Maintaining and expanding the existing Feed-inTariff program from the 150MW (targeted for 2016) to 600 MW by 2020
• Expand net-metering and rebates under the residential Solar Incentive Program to reach 280 MW of capacity
• Create specific policies to assist non-profits in adding solar since they cannot take advantage of tax benefits

Who Pays?

If we have one criticism of the report it is that it fails to identify funding sources - other than anticipated savings - to spur this growth.  For example, providing additional incentives for residential solar or expanding the FiT will come with a price tag.  Who is going to put up that money?  At a time when solar is under attack from investor-owned utilities for unduly shifting costs onto non-solar customers, the report misses an opportunity by failing to outline a mechanism to pay for its important goals.

Still, the report provides valuable documentation of the as yet unrealized benefits of tapping into LA’s solar potential; and in that it makes an important contribution to the ongoing policy debate.

Schools with solar installed just make sense on a host of levels.  They save the school money by reducing operating expenses which can then go to teachers and materials to advance the educational mission.  Solar systems are a natural teaching tool,  and they set a great example for the students who are learning life lessons on sustainability. With all that going for them you would think solar power systems would be popping up in schools all over the country - and you would be right, but we’ve got a very long way to go!

The good folks over at The Solar Foundation have started to compile the first ever National Solar Schools Census and it gives an interesting, if preliminary, take on the state of solar schools in this country. Based on the data they have gathered so far, they have identified the following:

That’s right, as of now less than 1% of the schools in this country have been identified as being “solar schools".  And yet, that tiny sliver of schools is saving over twenty million dollars a year while eliminating more than 140,000 metric tons of greenhouse gas emissions! Beyond a doubt, we have just scratched the surface of this terribly important solar market.

When you visit their site, you find this very cool interactive map:

The map allows you to drill down to any local area and see the penetration of solar in the local schools.  The color code is red for systems < 5kW, yellow for systems between 5 and 50 kW, and green for systems > 50kW (like our project at Westridge).  Interestingly, the biggest projects seem to be clustered out West.

The data in the database is largely self-reported - for example, the Westridge project is not yet depicted on that map.  So there are undoubtedly many solar schools out there which have not yet been included in the database.  The Solar Foundation is hoping to cure that by getting folks to send them the information required to get your school listed.  If you are affiliated with a solar school and want to get it counted, please click here to send an email with the following information:

• School name,
• School address (including county),
• System size,
• How it was financed,
• Year it was installed, and
• Whether solar is integrated into curricula.

Here’s hoping that by the next update of the map - scheduled for this summer - we will have twice as many solar schools identified with lots more yet to come.

Year-end is often a time for retrospection, and few things are more popular this time of year then Top 10 Lists (unless it is kissing under the Mistletoe - to which we say, feel free to combine both!).  We decided to look back over our dozens of posts this year and highlight the 10 most popular based on our viewership data.

Each of these posts was viewed more than fifteen hundred times - which leaves us both humbled and very thankful indeed.

So here they are, our Top 10 Posts for 2012 (click on a title to read the post in full)…

#10 - SolarCity Files for IPO

One of the big stories of the year has been the on-again, off-again, on-again story of SolarCity’s proposed Initial Public Offering.  While cleantech IPOs have not been a very pretty site, there was much buzz about the SolarCity IPO as being a potential bellwether for a change in “green” fortunes.  SolarCity’s original confidential filing with the SEC coincided with a remarkable repricing of their systems as recorded in the CSI data:

By the time the IPO was publicly revealed in October, it was clear that one of the major risk factors facing potential investors was how the U.S. Treasury would treat the question of how SolarCity had valued its systems for purpose of claiming federal tax dollars.  A question, which we would note, still remains to be fully answered but the preliminary indications are not good for SolarCity and its existing investors.  For example, SolarCity revealed that for a limited number of systems, Treasury had reduced the allowable price per Watt from $6.87 to $6.00 for California systems and from $6.20 to $5.00 for Arizona - reductions of 12.6% and 19.3% respectively.  When applied to the $341 million SolarCity says it has claimed so far, that could be a $43 million haircut.

As of this writing, SolarCity is now saying it will go forward with a revised offering at $8/share - down nearly 43% from the midpoint of its earlier proposed range of $13-15.  Stay tuned, this story is far from over.

#9 - Q: What is more popular than Solar? A: Nothing!

In an election year it was not surprising that some echoes of that contest found their way into the posts for this blog.  One interesting point was the survey data about the popularity of solar among voters.  Didn’t really matter what your party affiliation, solar beat out all other forms of energy - heck, solar was more popular than chocolate!

Not that you could guess that based on some of the press coverage of the industry which seemed to have only ever heard of one solar company - Solyndra!

But voters’ belief in solar included putting taxpayer money behind it.  A full 64% of all voters - and an even more impressive 67% of the much courted “swing voters” - supported tax subsidies and other financial incentives for solar.  (By contrast, only 8% of all voters supported continuing subsidies for the coal industry.)

#8 - Non-Residential PACE Rebounds - at Least in LA County

One of the most written about topics on this blog has been the struggle to bring PACE financing to reality.  PACE - an acronym for Property Assessed Clean Energy - is a program that allows a property owner to finance a solar project by annual property tax payments.  PACE was all set to go in the residential market when Fanny and Freddy balked in the aftermath of the 2008 mortgage bubble crash.

But there is good news as the program has been revived for commercial property owners in LA County (and some surrounding counties as well).  The county launched a website and interested potential clients can learn more about the program there.  We are looking forward to doing our first PACE project in 2013.

#7 - CPUC Provides Progress on Net Metering

Most residential and commercial solar systems make use of net metering - that is, the method by which a solar customer gets credit for excess energy produced by their system during peak output versus the amount of energy actually purchased off the grid.  Those numbers are “netted out” and the customer pays if they are a net consumer and is given a payment (tiny though it may be) if they are a net producer.  Good deal all around, yes?

Well, not so much, apparently, if you are a utility.  Utilities in the state, particularly PG&E, have been trying to severely limit the number of solar power systems subject to net metering.  But in an important victory for the solar industry, last June the California Public Utilities Commission ruled that PG&E’s proposed way of measuring that cap was incorrect and in so doing, substantially increased the number of systems that California residents and businesses will be able to install.

The utilities did get something in return, however, a study to be performed this coming year to assess the costs and benefits of “various levels of [net metering] implementation."  This will be a very important study and it may well have far reaching impacts on the growth of solar in California.  Needless to say, the solar industry will need to be heavily involved in monitoring this process as it is certain that the utilities and their lobbyists will be pushing hard to get a result in their favor.

#6 - Power to the People - Support SB 843!

One of the frustrations of running a solar company is that there are potential clients out there for whom their own solar power system simply cannot work.  Their roof might be all wrong, or the shading from surrounding trees simply cannot be overcome.  Or they might be renters, or a commercial business with a relatively small, weak, roof that doesn’t match their load.  Whatever the case, but way more often than we like, we simply have to say no.

Community Solar - the goal of SB 843 - could go a long way toward solving that problem.  Under a Community Solar program, a system developer could sell shares in the output of the system to any customer of the utility where the project is located.  Those customers could purchase just the amount that they needed, unconstrained by the happenstance of roofs, or landlords, or loads.  The system provides its power directly to the grid, and the utility bills the customers based on their share of the energy produced (much like the “green energy” that some utilities now allow their customers to purchase).

Up against the end of the legislative session and facing still opposition from the utilities and their allies in the legislature, SB 843 died in September.

The good news is that the bill is slated to be reintroduced next year.

#5 - Westridge Project Grabs Pasadena Weekly’s Green Issue Front Page!

We’d be lying if we didn’t admit that our favorite project this year - at least in terms of coverage on this blog - was our install at the Westridge School for Girls here in Pasadena.  Seven different articles chronicled that project from our initial selection, to a series of step-by-step construction stories, to reporting on the accolades that the project garnered for both Westridge and Run on Sun.

Micro-inverter manufacturer Enphase Energy featured the project as one of their Projects of the Week, the City of Pasadena cited the project in selecting Westridge for a Green City award, and Pasadena Weekly put the project on the cover of their annual “Green Issue."  Some great PR for a great project with a great client.  We look forward to doing it again with the folks at Westridge real soon.

#4 - LADWP Updates FiT Status

LADWP continues its slow march to rolling out a FiT and our #4 post detailed the latest status update from DWP.  Alas, we still haven’t seen data from the demonstration project released and as near as we can tell, the “standard” contracts for those approved projects are still being finalized long past the October-November timeline that was announced with this update.

Will this program roll-out in January as scheduled?  Seems unlikely, but stay tuned!

#3 - Vote Yes on 39

Voters in California put their votes where the polls said they would be - supporting Proposition 39 that would greatly increase funding for energy efficiency and green energy projects with 60% of the vote.

Amidst rumors of possible legal challenges, the fight over, and potential implementation of, Prop 39 will be one of the big solar stories in 2013.

#2 - Centex Clouds Solar Tile Repairs

Mega-home builder Centex of the Pulte Group has a problem with some of its highly-touted “solar homes” - the homeowners cannot use their solar power systems because of faulty roofing tiles that threaten to catch on fire.  The manufacturer has gone out of business and while Centex has said that they will pay for repairs, they are asking homeowners to sign a pernicious release that could leave them exposed if there are problems with the repair down the road.

After we originally wrote about the problem, we were contacted by one of the homeowners asking for our help.  We got Centex to admit that they might conceivably waive the release requirement but apparently only if the homeowner is willing/able to push back - hard.  Frankly, we think that Centex should just step up and do the right thing - but if they are unwilling to do so, we sure would like to see the authorities provide whatever extra encouragement is needed.

Despite only being published a short time, this story jumped to be our second most popular post of the year and it would make our year to be able to report that this ultimately has a happy ending.  We’re still waiting.

And Our #1 Post of the Year:
Outliers & Oddities: State of SoCal Solar 2012 - Part 3

Once again, our most popular post for the year was our annual examination of the Outliers and Oddities as determined by analyzing the CSI data for the first half of the year.  Since it was published on September 6th, it has racked up more than 4,000 views!

Of all that we reported on in this very lengthy (2795 words - yikes!) post, perhaps the most troubling was what we documented with this graph:

This graph shows how the extraordinary delays in installing systems by industry-giant SolarCity is retarding the progress of the industry in meeting consumer needs and in protecting the environment.   Word to the wise, bigger isn’t necessarily better and “free” may not be all that it is cracked up to be!

Looking Ahead…

That’s our recap on the year - our best year ever.  We are really excited for 2013 as the economy continues to improve and we finally have the uncertainty of the past twelve months behind us, we are expecting great things from the year ahead.  And, of course, you can continue to expect our mostly informed, somewhat irreverent take on all things solar.  Thanks for your support and encouragement - especially you, Vick!

Happy Holidays!

Amidst the multitude of measures on next Tuesday’s ballot, Proposition 39 has garnered little media attention. For proponents of renewable energy, however, it might be the second most important vote you can cast on Election Day. Here’s our take.

Prop 39 seeks to close a loophole in existing state tax law that allows multistate corporations to decide for themselves how to calculate their taxable income.  Present law provides either of two methods, the “Three-Factor Method” or the “Singles Sales Factor Method” as explained by the independent Legislative Analyst:

• “Three-Factor Method“: This method uses the location of the company’s sales, property and employees.  When using this method, the more sales, property or employees the multistate business has in California, the more of the business’ income is subject to state tax.


• “Single Sales Factor Method“: This method uses only the location of the company’s sales.  When using this method, the more sales the multistate business has in California, the more the business’ income is taxed.

Under Prop 39, the first method would be repealed and every multistate business would pay state income taxes based on the proportion of its actual sales in California.  Frankly, this only seems fair - if a company is deriving 75% of its revenue from sales in California, why shouldn’t it pay taxes on that 75%?  Moreover, the other method allows a multistate company to reduce its California taxes by moving employees or property out of the state - why would we want to provide a financial incentive for them to do that?  Indeed, this is such a common sense modification to the tax code that, according to Prop 39 proponents, it has already been adopted by both red and blue states including New York, Michigan and Texas.

Ok, so this makes sense as a measure of tax policy, but why should renewable energy proponents be backing this measure?  Simple — Prop 39 splits the money it raises for the first five years between the General Fund (which will boost school funding thanks to Prop 98 and help close California’s budget gap) and a special fund to support energy efficiency and alternative energy projects in the state.  (After five years, all of the money raised goes to the General Fund.)

Specifically, Prop 39 would create the Clean Energy Job Creation Fund to provide financial support for projects at schools (including public schools, colleges and universities) and other public buildings as well as support for innovative public-private partnerships like PACE programs.  The ballot measure also creates a Citizens Oversight Board to provide for audits of the program and complete documentation of how every dollar of the Fund is spent.  (You can read the full text of Prop 39 here.)

Prop 39 has extremely broad support (see a larger list here) including from the following:

• Former Secretary of State George P. Shultz (Co-Chair)
• Los Angeles Business Council
• American Lung Association/California
• Coalition for Clean Air
• California Alliance for Retired Americans
• California Federation of Teachers
• Los Angeles Conservation Corps
• Natural Resources Defense Council (NRDC)
• The Nature Conservancy of California
• Planning and Conservation League
• Sierra Club California
• Communities for a Better Environment
• Solar Energy Industries Association (SEIA)
• The Fresno Bee
• La Opinión
• Los Angeles Times

Here’s a one-minute video from the measure’s sponsor:

We hope you will join us in supporting this tremendously important - if largely unheralded - ballot measure.

We spent last week at Solar Power International in Orlando thanks to our friends at Enphase Energy - here is our recap.

Rocking with Enphase

As we noted in our pre-show post, we were invited to attend SPI this year at the invitation of Enphase Energy, the company behind the most successful (but certainly no longer only) micro-inverters on the market.  This was our second consecutive year at SPI courtesy of Enphase and a better host could not be found.

Last year we were part of their Installer Challenge where six installers from around the country participated in a good-natured competition to demonstrate how easy it was to install the  Enphase M215 product with its plug-in cabling.  We didn’t know it then, but very soon we would be installing more than 200 M215’s on the Westridge roof, and in doing so, earn our second invite.

Having achieved substantial success in the residential market, Enphase is working very hard to make in-roads in the commercial sphere - and thus our install at Westridge fit nicely into that narrative.  We participated in a panel with a group of other installation companies that have also incorporated Enphase into commercial projects and we did a pair of one-on-one interviews that showcased the Westridge project and our experience using Enphase.  We also got to speak to a fair number of visitors to the Enphase booth (which was always crowded) and we even got a sneak peak at a prototype of the next model (which we can’t comment on now, except to note that some installer-requested features will be included - stay tuned!).

It was a great way to see the show and we can’t thank Kady Cooper and everyone at Enphase enough - you folks rock!

Oh, and one other point.  Pretty much every large company at the show hired local “talent” to help host their booth.  Most companies that do that, seem to think that it makes sense to have these women wear outfits that are more akin to what you would see on a dance floor than at a solar installation. As the father of a 16-year-old daughter, it was really satisfying that the two women who were brought in by Enphase to help host their booth wore outfits just like all of the other Enphase employees.  Another example of how Enphase Energy is a class act.

Stars of the Show?

Enthusiasm Gap

As great a time as we had at the Enphase booth, we would have to say that overall, the show was a bit of a letdown, as was the show in Dallas last year.  We admit to our California bias, and we mean no disrespect to solar fans in Dallas and Orlando, but the crowds just never came anywhere near what saw filling the aisles in Los Angeles two years ago - despite a significantly worse economy in 2010.  Not clear that Chicago will be able to reverse that enthusiasm gap (and also not sure whether we will be there to find out), but we expect things to bounce back when the show moves to Las Vegas in 2014.

Trending

If there was one discernible trend at the show, it was that AC-modules - whether fully integrated or by way of the abundance of micro-inverters on display - are here to stay.  We think the reasons for that success are pretty compelling (as we have noted before) but it certainly looks like the panel and inverter makers have come around to that point of view - however grudgingly that may be.

Storage - Not Yet Ready for Prime Time

A number of companies were talking about energy storage and a presentation at the KACO booth declared that local storage was the future of solar.  That may well be, but none of the products that we saw at the show, including those from KACO and Samsung, appeared to be ready for deployment anytime soon.  Still, the prospect of potentially generous incentive dollars for such storage - assuming the CPUC can ever implement the existing law - means that this will continue to be a hot topic and one which we intend to cover in greater depth in the future.

LG Bounds Up the Learning Curve

We wrote last year about the introduction of LG Electronics into the U.S. solar market and this year they became our “go-to” panel of choice for working with the Enphase M215 micros.  Well it is apparent that LG is paying attention to their feedback as they had a couple of significant announcements.

First, their existing panel products, notably the 255 Watt panel that we will be using for the rest of the year, is getting a frame redesign that will make the overall panel 11% lighter without sacrificing strength or durability.  Also, the panel now has clips on the back side to hold the panel leads in place so you cannot have them getting crushed by the panel frame when you stack them prior to installation.  These are relatively minor changes, but they show a great attention to the type of details that make an installer’s life easier, and even safer.

The other announcement was that of their upcoming 300 Watt, 60-cell panel that is due out next summer.  We had heard rumors that LG was about to announce such a panel, and now they have - of course, next summer is a long way off.  It will be interesting to see how this new panel meshes with the new Enphase micro-inverter which will most likely also debut sometime next year.

President Clinton Rocks the House

To be sure, the biggest hit of the conference was the speech delivered by President Bill Clinton, fresh off his tour-de-force at the DNC the week earlier.

President Clinton did not disappoint, taking on the new role of Cheerleader-in-Chief.  Often touted as the smartest guy in the room, the former President displayed detailed knowledge of the solar industry and he both exhorted and chided the crowd for not getting their successes before the public.  “Most people don’t know that there are 100,000 people working in the solar industry,” Clinton reminded the audience.

“You are going to win this fight,” the President insisted, “the only question is when and how."  What was needed was for solar to reach the sort of “tipping point” which would make that ultimate success inevitable.  But we certainly aren’t there yet, which is a shame given that “the United States leads the world in its potential for solar so we must also lead the world in installed capacity - but we are not."  A lot of that is a reflection of different policies between countries that have adopted solar with gusto, like Germany, and the more tepid policy response of the U.S.

But those of us in the solar industry are in the “future business” and “you have to take risks if you are going to go to tomorrow’s dance."  We should embrace those risks because we are in such a fortunate position:

The greatest human tragedy in this country today is the crushing unemployment.  Millions of Americans wake up every day with no hope that today will be any better than yesterday.  But you are so very fortunate because you get to get up every morning, look at yourself in the mirror and say, “Today I’m going to do something great!"  You just have to keep doing it until we reach that tipping point.

Thanks for the encouragement, Mr. President, we’re working on it!

Winner of the “Oh No, You Didn’t Go There” Award
Tie: SMA & Shoals Technology

SMA

SMA, one of the leading inverter manufacturers in the world, had a tortured product “near roll-out” during SPI and in the course of same made possibly the worst ever argument in support of their product from a solar company.  Here’s how it played out.  After initially dismissing the introduction of micro-inverters as a fad that would never catch on, SMA has now had to introduce their own micro-inverter product, but they remain deeply ambivalent about the whole thing.  Nowhere was this more on display than their presentation about the “virtues” of their new product during SPI.  We attended one of these schizophrenic productions and came away not only scratching our head, but seriously annoyed.

We were fundamentally puzzled by a presenter who spent the first half of his presentation questioning why on earth (or more accurately, on the roof) anyone would ever want to install a micro-inverter in the first place.  He then abruptly shifted gears to sing the praises of his product, and then introduced perhaps the most significant non-starter concept at SPI: the hybrid PV system, which to SMA means installing both micros and a string inverter on the same project.  (Do I really want both AC and DC conduit runs coming down from the roof?  Is anyone going to do this?)

Perplexed by the whole thing, I went up after the presentation to hear what else he would say.  The conversation promptly shifted to warranties, specifically, how long would the SMA micro’s be?  Well, we were told, the product is still in testing (with UL) so he couldn’t definitively say.  “At least ten years, hopefully 15,” he said.  (Now mind you that CSI rules require at least a 10 year warranty, so we weren’t really breaking any new ground here.)  “But wait,” said one of the installers standing by, “I have to compete with the 25-year warranty that Enphase is offering.  How am I supposed to compete with that if all you offer is 10 or 15 years?"  SMA’s spokesperson responded by belittling the idea of a company that has only been in business a short time offering a 25-year warranty, calling it not credible.  “Maybe,” said the installer, “but once I submit my bid, I’m not there to make that argument to the customer.  So I’m at a disadvantage if the guy bidding against me submits a bid that offers a 25-year warranty.”

Clearly frustrated by this predictable turn in the conversation, SMA’s spokesperson decided to pull out his trump card: “Look, you wanna talk 25-year warranties, you wanna know who else had a 25-year warranty?  I’ll tell you who, Solyndra!”

Oh.. No… You… Didn’t!

At that point my head completely exploded.  As an industry we simply cannot use Solyndra to make cheap points.  We are attacked time, and time, and time again about the Solyndra situation and yet, here was SMA’s spokesperson going there with great relish. Just plain stupid - and frankly, totally unnecessary.  Come on, SMA, you are better than that.

Shoals Technology Group

But while SMA’s speaker gets the award for most inappropriate comment, far and away the worst offender at SPI was a company called Shoals Technology that used the show to kick off an ad campaign for a product they called “Nice Rack” with photos of buxom women exploding out of their bikini tops.  We alluded to this in our recap of the InterSolar conference, but obviously they did not get the hint.  And then when lots of folks started to complain, they really earned the tin star with clusters for boorish behavior beyond the pale.  You can contact their CEO, Dean Solon, by way of LinkedIn, or you can go to their contact page to let them know what you think of their sexist behavior.  This is not the way to grow this industry, guys.