Elon Musk is a visionary and a showman, but occasionally his enthusiasm for his vision gets way out ahead of reality. Nowhere was that disconnect more on display than this past week when he made his much talked about announcement of the Tesla Powerwall battery storage system. While we share the vision for the potential of battery systems (such as the one Enphase Energy is set to release later this year, albeit in a far more understated fashion), when 38,000 people go online to order a product that doesn’t yet exist, it is time to debunk some of the more exorbitant claims made by Musk.
Here are the three biggest whoppers that Musk made during his Powerwall presentation (video below).
Musk touted the “peace of mind” that would come from having the Powerwall, and said, “if there’s a cut in the utilities you’re always gonna have power, particularly if you’re in a place that’s very cold, now you don’t have to worry about being out of power if there’s an ice storm.” (See video at 8:35.)
The Powerwall unit that Musk was talking about that was designed for “daily cycling” was a 7 kWh unit that is priced at $3,000. The average home in the Run on Sun service area uses 25 kWh/day. So a single Powerwall unit provides roughly one quarter of the energy demand of an average home. If your desire for “peace of mind” means running your home for a full day in normal fashion, you will need to purchase 4 Powerwall units (assuming you have the wall space to mount them) and that will cost you $12,000.
Of course, many outages last longer than a day. The longer you want to stay powered, the more units you will need.
Musk insisted that Powerwall has been designed to work with solar systems, “right out of the box." (See video at 8:25.)
Except… that the Powerwall is designed to fit between existing solar panels and the DC-AC inverter(s) in the system (i.e., on the DC side of the system). But here’s the thing - the vast majority of inverters are what are known as “grid-tied,” which means if the grid goes down, the inverter shuts off, and stays off until the grid comes back. If the Powerwall is on the DC side, there is no way for it to “mimic” the grid (which, of course, is on the AC side), and so the inverter will shut off. While the inverter could certainly be replaced with a hybrid inverter (that can work both independently and tied to the grid) such a replacement is a pricey undertaking and certainly not a plug-and-play installation.
But Musk, like the true showman that he is, saved his biggest Whopper for the end…
Warming to his subject, Musk really brought down the house with his most outrageous claim of all:
You could actually go, if you want, completely off-grid. You can take your solar panels, charge the battery packs and that’s all you use. So it gives you safety, security, and it gives you a complete and affordable solution. And the cost of this is $3,500." [Gasps and applause from audience.] (Video at 8:55.)
No. No you cannot.
Let’s unpack his statement. There’s two major claims here, neither of which is true. The first is that you could go completely off-grid, and the second is that it would cost you $3,500. So let’s start with the easy one to disprove, indeed, we already did above: this won’t cost $3,500. The Powerwall provides 7 kWh of storage. The average house uses 25 kWh/day. If the battery has to run your house for just one day, you would need 4 Powerwall units at a cost of $12,000. (The 7 kWh unit is the one designed for daily cycling - what you need to go off-grid, and it costs $3,000 - if you could actually purchase one, which you can’t.)
So that’s easy to debunk. But what about the second, more fundamental question. Can I use this Powerwall system to go off-grid without changing my middle-class, suburban lifestyle? For most folks the answer is simply, no. Here’s why. When you go off-grid you need to be able to meet all of your energy needs all the time without assistance from your local utility. To do that, you need a battery system large enough to last you during the longest typical shortfall of available energy (i.e., how many stormy/cloudy days in a row will you see), plus a solar array large enough to charge that battery on sunny days while meeting the household needs. Turns out, that is quite a lot of both.
Folks who design off-grid systems (very few of which are found in areas like Pasadena), typically design for three (or more) days of self-sufficiency (or autonomy, as they put it). For our typical, 25 kWh/day home, that would require storage of a minimum of 75 kWh. But according to Tesla, you can only stack a maximum of nine Powerwall units, which limits you to 63 kWh. Sometime around noon on that third day without sun, your house will shut down. Oh, and that much storage will cost you $27,000.
What about the solar array side of the equation? Let’s start by asking how big an array can you fit on an average house? House sizes have trended bigger in the past couple of decades, so more recently built houses are an overstatement of the average house out there. Still, to have a starting point (and to give Musk the benefit of the doubt), let’s assume that our average house is 2,400 square feet (a fair estimate based on US Census data), and that it is optimally designed to maximize solar production: a near perfect square with a true south face, pitched at latitude (34° here in Pasadena), with no shading. Of course, we still have to give the Fire Marshall the desired setoffs so that gets us to 1,115 square feet of roof space (math available upon request), enough for 62 LG 305 solar modules, but because we need to use a hybrid inverter with fixed string sizes, we will drop that down to 60 solar modules. That yields an 18.3 kW system which at $3.50/Watt would cost a cool $64,000 - and be bigger than our biggest ever residential installation.
So the Sixty-four Thousand Dollar question becomes: How well will that do on meeting our needs? Per the CSI calculator, this maximal system will produce roughly 29,000 kWh in Year 1, or an average daily output of 79.5 kWh. (Less in the winter, of course, when you are most likely to see those cloudy days.) After providing for my daily needs of 25 kWh, I have 54.5 kWh to spare, not quite enough to fully charge my batteries (which require 63 kWh). A scenario where I have two cloudy days, followed by one partly sunny day, followed by two more cloudy days could easily leave you in the lurch. And for this you paid a total of $91,000! If you live somewhere with poorer weather than what we find in the Run on Sun service area (i.e., pretty much the entire rest of the country!) your performance will be even more dismal.
The sad part of this whole thing is that battery storage combined with solar is going to be huge, but not for the reasons Musk alluded to in his speech. The future of utility rates is the shift to time-of-use rate structures - a fact already well and painfully known by our clients in SCE territory, and soon to be seen by everyone. Time-of-use rates, where utility customers pay more for energy during the peak part of the day, are the only way to match utility costs with customer charges. (It is the head of the Duck in the famous Duck Curve below.)
That “overgeneration” that drives down demand at noon is presently fed back to the grid, where the grid operator has to modify the power mix to accommodate it - in essence, it is wasted. (Although presently, net metering customers get full retail credit for it - something, that in all likelihood, will soon go away.)
But add storage to the mix, and you shift that overgeneration from the middle of the day, to the evening peak hours, benefiting the time-of-use customer as well as the utility. It is the way to bring about a peaceful end to the utility-solar wars, and it is the true benefit of storage to solar customers - without oversizing either your solar array or your storage system.
So let’s all get excited over solar with storage, but for the right, and much more cost-effective reasons - and not the nonsensical hype being spewed by that super showman, Elon Musk.
Pasadena Water & Power (PWP) is about to slash its rebates by as much as 55% effective May 1 - the first rebate reduction in three years. Here are the details…
We have said it before and we will say it again, our hometown utility gets the highest marks for running the best, hands down, rebate program around. Their folks are responsive, they have offered a consistent program since we got into this business, and their rebates have been among the highest offered in our service area. The present rebate rates: $0.85/Watt for residential and small commercial, $1.60/Watt for small non-profit systems have been at that level since 2012 - even while system prices dropped by 25%. (For large systems > 30 kW, the commercial rebate was 12.9¢/kWh of actual production paid over five years, while the non-profit version was 24.2¢/kWh.)
But all good things must end, including these great rebates - and they will, come May 1.
The new rates are significantly less generous - $0.45/Watt for residential and small commercial, $0.90/Watt for small non-profit. For larger systems the change is even more dramatic, with the rebate payout now only covering two years of production (instead of five) at the rate of 14.4¢/kWh for commercial and 28.8¢/kWh for non-profit. (One bit of good news, the threshold for systems to be paid rebates over two years instead of at commissioning is going up from 30 kW to 100 kW.)
So what do these rebate reductions really mean? Let’s look at a few examples.
A typical residential project of 5 kW (AC) that submitted a rebate application before May 1 would secure a rebate worth $4,250 (as opposed to na da in SCE territory). That same system will only receive a rebate of $2,250 - leaving an even $2,000 on the table. Ouch!
A 50 kW non-profit project would earn, over the next five years, a rebate worth approximately $92,400. But after May 1, only two years of payments will be made worth just $44,600 - a 52% reduction, leaving $47,850 blowin’ in the wind. Double ouch! The one side benefit, since this project is smaller than 100 kW (even though it is over the old, 30 kW threshold) it could qualify for the up-front rebate of approximately $39,200 at the time the system is commissioned - less money overall, but you get it faster.
A commercial project of 150 kW under today’s rebates would earn roughly $148,000 over five years, but for rebate applications submitted after May 1, that rebate drops to just $66,900, a reduction of 54.7% leaving nearly $81,000 waving bye-bye. Brutal.
All is not lost, yet. We still have a month and if you act RIGHT NOW you can still take advantage of the higher rebate rates! To lock-in the higher rebate, we need to get your energy usage, do a site evaluation, send you a proposal, have you accept the proposal and sign a contract, and we need to get your rebate application on file before May 1. (I feel a bit like our friends at KPCC - “we need 67 people to call in the next five minutes to meet this challenge…") Yeah, that’s a fair amount of work in a short time, but if you jump on this opportunity, we can make it happen and you can save some serious money! So don’t miss the boat… Call us, or click on the “Let’s get started” link here to begin.
SolarEdge has gotten a fair amount of buzz this week thanks to their IPO, but it made us think that maybe it was time to revisit the question—who really has the edge: DC-to-DC “optimizers” like SolarEdge or Enphase microinverters?
|Which would you choose?|
|Enphase Microinverter||SolarEdge Optimizer|
In our view this is a bit of a “no-brainer” and it really comes down to the following three reasons:
Reason #3 - Integrated Grounding — In every solar array, all metal surfaces have to be grounded for safety. Enphase microinverters now feature integrated grounding, which eliminates the need for a separate equipment grounding conductor. SolarEdge does not have this feature and, depending on the jurisdiction, may require the use of a dedicated copper conductor to be run from one unit to the next. This increases both labor costs as well as part costs (copper is expensive these days!). Far better to have that grounding built-in at the factory than assembled on the roof.
Reason #2 - Easier Installation — Beyond the need for that equipment grounding conductor, the SolarEdge system requires the installer to not only mount the optimizers on the roof beneath each panel, but it also requires the installer to mount one or more heavy (51 to 88 pound) inverter(s) on the wall. In contrast, Enphase combines everything into one unit, so there are no heavy inverters to mount to the side of the client’s house.
Reason #1 - Greater Reliability —The number one reason for us at Run on Sun is the greater reliability you get from using Enphase. Frankly, the SolarEdge approach combines the worst of both alternative approaches (i.e., string inverters versus microinverters). You are still putting power electronics in the demanding environment of a roof, AND you have combined that with a single point of failure with the inverter back on the ground! When you use Enphase microinverters you eliminate that single point of failure and you are going with the industry leader in creating reliable, roof-mounted power systems.
Put all of that together, and we think Enphase microinverters provide the greatest value to our clients, which is why we feature them in all of our solar power systems, despite the occassional “buzz” other approaches might generate.
Last I checked, people keep having babies, so the demand for homes is not going to slow down any time soon. But the fact is, times are changing. What was valuable in your home when you bought it may not be as important to prospective buyers today.
The challenges of climate change are becoming more widely accepted—a New York Times poll found that 83% of Americans now believe global warming will be a serious problem in the future. Thankfully, gains in residential energy-efficiency improvements offset more than 70% of the growth in both the number of homes and increasing footprint sizes, according to the US Energy Information Administration (EIA). However, these gains in recent decades will need to significantly improve to make any kind of difference in terms of climate change.
But there is hope! The trend toward more efficient homes in the housing market is already getting attention. After surveying both home builders and home buyers, the National Association of Home Builders (NAHB) reported that Millenials want energy-efficient appliances and features as well as smaller homes. Smart technology such as programmable thermostats will also become the norm. Respondents said they were willing to pay 2-3% more for better energy-efficiency if they could see a return through lower electric bills. Respondents also said they’d be happy to sacrifice extra finished space for a more affordable first home.
If you are a home owner you should be tapping into the energy-efficiency trend to not only lower your utility expenses but improve the marketability and value of your home. If you follow our blog you may have seen our recent post discussing new evidence supporting the idea that solar increases property values. While installing a solar system is the granddaddy of all home energy-efficiency projects, we at Run on Sun always encourage clients to address low hanging fruit first, and make sure your energy usage is as low as possible. This will lower the size of the solar system you need to offset your usage, and thus, the overall cost of your solar investment.
Way too much of the energy we consume is wasted through poor insulation, leaky ducts, or inefficient household appliances. Fixing these problems can cut energy costs up to 25% for the typical home. One option is to ask a professional energy auditor to find exactly where your energy is going (we have some folks we can recommend). However, many energy saving tips are intuitive…installing double pane windows, better insulation, CFL or LED light bulbs, and ENERGY STAR appliances are all ones you’ve likely heard before. Others may be lesser known such as using power strips to avoid vamping power. And if you have a pool, upgrading that antiquated pool pump could save you a lot!
Once your home is up to snuff, going solar is a great investment to make your home even more desirable in the current housing market. Call Run on Sun today for a free site assessment!
UPDATE: See end of post for National Renewable Energy Laboratory (NREL) report findings regarding solar leasing vs loans.
In the debate of owning versus leasing solar panels, the folks over at NPR weighed in with a story last week that caught our eye, er, ear. While it offers a fair explanation of some of the pros and cons, we don’t think it did a good enough job of highlighting just why that solar lease should be avoided. Here’s our top 5 reasons to avoid a solar lease.
As we noted in our recent post about solar ownership boosting your home’s resale value, if you don’t own the panels on your roof, they aren’t an asset toward boosting your home’s value.
Leasing companies tout that they cover the maintenance on your solar system, but the truth is that most maintenance is already covered by product and installer warranties. (For example, Enphase microinverters come with a 25-year warranty - longer than the typical lease term.) For most residential system owners the only maintenance their systems need is to wash the panels off with a hose.
The NPR story suggests that to own solar requires a very “hands-on” approach, with the homeowner being forced to navigate the shoals of rebates, tax credits and permitting on their own. Nothing could be farther from the truth. A reputable, local solar installation professional, like Run on Sun, will handle all of those messy details for you.
If you decide to sell and you have a leased system on your roof, your prospective buyer has to not only meet your required offer, they also need to satisfy the leasing company’s qualifications to assume the remainder of your lease. A buyer might qualify for a mortgage, but not satisfy the credit requirements of the leasing company, and even if they do, they might not be interested in the hassle of dealing with a lease payment for the remainder of your twenty-year term.
Bottom line, this is the number 1 reason to avoid a lease. But don’t take our word for it, let’s look at what one of the largest solar leasing companies says, right there in the tiny print on their website:
Savings on your total electricity costs is not guaranteed. Financing terms vary by location and are not available in all areas… A 3 kW system starts at $25-$100 per month with an annual increase of 0-2.9% each year for 20-30 years, on approved credit.
Just how bad a deal is that? Well, let’s take a typical 3 kW solar project. That is really small, so the cash price from a local installer is probably around $4/Watt - which works out to $12,000 up front. However, if you own, you receive the rebate (if any) and the tax credit. In PWP territory, that rebate works out to roughly $2,200 but in SCE territory, the rebate is zero. So to take the worst case example for ownership, we will assume no rebate. In that case, the tax credit is worth 30% of $12,000 or $3,600 leaving the ultimate cost to own at $8,400.
Now what happens in a lease for that same system? No rebate or tax credit goes to you - the leasing company pockets those. What about your payments? Well, let’s take the middle ground suggested in the leasing company’s quote above and look at a cost of $60/month in year 1, with an annual increase of 1.45%.
The orange bars are the annual payments which in year 1 amount to $720 (12 x $60) and by year 20 have increased to $947.
The red bars are the cumulative cost of leasing solar. By year 11, the owner has come out ahead. By the time the lease ends in year 20, the solar leasing customer will have paid $16,567 in lease payment - nearly twice what the system purchaser paid - and they still will not own the system on their roof!
While it may be true that not everyone can afford to purchase a solar power system outright, that is changing as solar becomes more affordable for more people. Plus, with the emergence of solar loans, which can provide for little or no out-of-pocket cost while still retaining the benefits of ownership, cash-constrained consumers can still go solar without resorting to the leasing trap.
For all of these reasons, and a whole bunch more, we at Run on Sun have never offered residential leases, and we never will. If you want to go solar but avoid the pitfalls of leasing, give us a call - we are waiting to help!
UPDATE: Two reports from NREL bolster our conclusions above: “To Own or Lease Solar: Understanding Commercial Retailers Decisions to Use Alternative Financing Models,” and “Banking on Solar: An Analysis of Banking Opportunities in the U.S. Distributed Photovoltaic Market“. Analysts found that businesses that use low-cost loans to purchase a PV system and homeowners who use solar-specific loans can save up to 30 percent compared with those who lease a system through a third-party owner.