A little over three years ago (my how time flies), we installed a 52kW solar project at the Westridge School for Girls, here in Pasadena. At the time, the project got a fair amount of attention (including an award from the City), was featured in a video (watch it here), and was the lead story in Enphase Energy’s Summer 2012 Newsletter.
Three years down the road, the folks at Enphase decided to circle back and check-in to see how the Westridge project had performed over the years - both in terms of saving money for the school, as well as being incorporated into the curriculum (another key goal of the project).
The article, titled — Solar on the Roof, Power in the Classroom — details how the Westridge Solar system has outperformed the modeled performance, producing 105% of the expected yield. That overproduction actually benefits the school twice: most obviously by lowering the bills that much more, but secondarily, by providing a larger than expected performance-based rebate payment.
Beyond that, however, the system has also proved to be an effective teaching tool, allowing Westridge students to analyze the copious amounts of data provided by the Enphase microinverters through the Enlighten, cloud-based data reporting service. One science class, for example, was able to discover how analyzing that data could detect the occurrence of a partial solar eclipse.
We are very proud of our partnership with Westridge and we look forward to doing another project with them in the near future.
Likewise, we are grateful for partners like Enphase Energy who are as committed to producing long term solutions as we are. That is one powerful pairing!
Recently a potential client was asking us about an oddity in their Pasadena Water and Power (PWP) electric bill. PWP has a tiered rate structure, but the most visible component of that tiering, the Distribution charge, steps up above 350 kWh of usage in any one month, but it steps down above 750! Which lead us to the question, are PWP’s electric rates regressive?
PWP’s Residential rate structure, like many utility tariffs, is a model of complexity. On your bill there are a number of obvious charges, and a few that are not so obvious. The obvious ones are on the right-hand-side of the bill and include a Customer charge, a Distribution charge, a Transmission charge, and an Energy charge. (The not-so-obvious charges include those related to public benefit programs and paying to put power lines underground.)
All of these obvious charges are tied to the customer’s usage, but only one, the Distribution charge, is tiered. At or below 350 kWh of usage per month, the customer pays just 1.5¢/kWh. Between 351 and 750 kWh of usage the Distribution charge increases dramatically all the way up to 11.65¢/kWh, nearly an eight-fold increase! Ok, the whole point of a tiered rate structure is to discourage higher use by making you pay more as your usage increases. But PWP’s rate then does something truly odd - above 750 kWh/month the rate comes down, dropping from 11.65¢/kWh to just 8.5¢/kWh! What sort of an incentive is that?
That rate design is certainly counter-intuitive, to say the least, but is it regressive? In other words, is there a point at which a large residential user ends up paying less per kWh than does someone who uses less? To find out, we modeled daily usage from 10 kWh/day all the way up to 60 kWh/day. As a reference, a typical Run on Sun client in PWP’s service area averages around 25 kWh/day. Since the Transmission and Energy charges are adjusted higher in the summer months, we broke out the overall rates seasonally as well.
Here are our results (click for larger):
The blue line is the winter rate and the orange is summer. If you use a tiny amount of energy you will pay between sixteen and seventeen cents per kWh, with rates rising sharply until you get to 25 kWh/day. Beyond that, the rate of growth flattens out markedly, but it never dips down. (That is true even if you carry the analysis all the way out to 200 kWh/day!)
Contrast this with the SCE Domestic rate - that is a truly aggressively progressive rate structure with energy charges of 14.5¢/kWh for those using within the smallest (baseline) tier of energy, going all the way up to 30.8¢/kWh for energy used in the fourth tier, which kicks in for monthly usage above approximately 900 kWh.
So no, PWP’s Residential rate is not regressive, but by flattening out the rate for usage above 25 kWh/day, it sends at best a mixed signal if the utility is trying to encourage its customers to reduce their usage.
How does this relate to solar? Well, if your usage is above 20 kWh/day you are spending at least 20¢/kWh whereas the cost of a solar power system will be less than half of that! So yes, in PWP territory - and particularly while they still have rebates in place - installing solar will still pay you big dividends.
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.
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.
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