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

As we witness events unfolding in Egypt and elsewhere throughout the Middle East we are struck by the desire of people everywhere to be free and to live lives of hope and self-determination.  But here at home we are reminded that instability in the Middle East means higher energy prices - both directly at the pump, and indirectly in the form of military and other costs associated with preserving the continual flow of oil coming to these shores. It is not a sustainable future, and as Americans we need to rethink how we fuel our lives.

Everyday nearly 3 million barrels of oil flow through the Egyptian-controlled Suez Canal, an amount equal to Canada’s entire daily oil production. Much of that oil is destined for the United States, which imports nearly 6 million barrels of OPEC oil each and every day.  As the widget to the right shows, oil prices are on the rise again, above $90/bbl as this is written.  If the situation in Egypt deteriorates to the point of disrupting the flow of oil through the Suez Canal, oil prices will likely spike to all-time highs.

It simply doesn’t have to be this way.

The new generation of EVs - like the Nissan Leaf - and plug-in hybrids - like the Chevy Volt - have the potential to lead the way to a new future of energy independence.  Combine them with a solar power system of your own, and your energy savings really mount up.

Let’s look at an example.  Take a Leaf with its 24 kWh battery pack.  It is advertised to get roughly 100 miles per charge, but let’s be conservative here and assume that it only gets 80.  Moreover, we will assume that our charging system is only 90% efficient so to fully charge that 24 kWh battery pack will actually require 26 kWh of energy.  At SCE’s top-tiered rate of $0.325/kWh, our Leaf costs 10.8¢/mile to power.  Compare that to the average gasoline-powered car on the highway today.  That vehicle, according to the Bureau of Transportation Statistics, averages 22.6 miles/gallon.  For gasoline priced at $3.50/gallon, that average car on the road today costs 15.5¢/mile to fuel. Let oil prices spike, and gasoline prices climb to $4.00/gallon (certainly well within the realm of possibility) and that cost per mile goes to 17.7¢.  That means if you drive 10,000 miles per year, your fuel cost alone in that typical American car will be $1,770/year and the Leaf - even using the most expensive electricity in SCE territory, will save you $690/year.

Now what if you powered that Leaf not from SCE’s Tier-5 electricity, but with solar power from a Run on Sun solar system? Assume that you installed a 5 kW system that cost $6.00/Watt to install (a reasonable cost).  That system would cost $30,000 to install. After rebates (from the utility) and a 30% federal tax credit, and the out-of-pocket cost is roughly 1/2 of that initial cost - say $15,000.  That means that the savings from driving 10,000 miles/year will pay for your solar power system in eight and a half years.  But during those years you will contribute zero pollution to the environment and never have to stop at a gas station again.

This is the way forward. This is the way to insulate ourselves from political instability while at the same time clearing our air and drastically reducing our greenhouse gas emissions.

For years detractors could say this wasn’t realistic - that the vehicles didn’t exist or that the economics didn’t pencil out. Those days are over.  The future requires a new way of thinking that will turn us away from the failed practices of the past.

In a mailing dated January 18, 2011, Pasadena Water & Power (PWP) sent its solar customers election forms to determine how they will be compensated for any surplus energy generated. We previously wrote about PWP’s proposal and the City Council’s adoption of that proposal for net surplus energy compensation. Here is our analysis of the current form and our recommendation.

As we noted previously, PWP’s compensation proposal fails to fairly compensate solar power customers for the excess energy that they produce.  The present form does nothing to improve on that situation, but does reveal that compensation on a monthly basis will not actually result in a check being cut unless and until the amount owed exceeds $50.  This is apparently another “administrative savings” for PWP that was not discussed when their proposal was brought before the City Council.

Curiously, neither the cover letter nor the form itself discloses what the actual compensation rates will be.  From our earlier post, here are the amounts:

While the compensation is greater under monthly billing, in neither case is the total compensation equal to the fully loaded PWP price which is closer to 19¢/kWh.  Since under the monthly billing option surplus energy credits are converted to cash (even though they are not paid to the customer until they exceed $50), you actually would lose money every month.  The better option is to roll your excess energy credits forward every month for the year, and that is especially true if you are only a net energy producer in some months, but a net energy consumer in others.

So here are our recommendations, box-by-box, on how to fill out PWP’s form:

1. Provide the required contact information here.
2. Check Yes.
3. Check the top box for “I prefer annual net metering.”
4. Check the box assigning the RECs to PWP.  At this time there does not appear to be a separate market for residential customers for their RECs. However, that is likely to change in the future and at that point you will probably want to rescind this assignment, but for now, you may as well get the extra 2.5¢ (just don’t spend it all in one place!).

It is unfortunate that surplus energy producers cannot receive full compensation for the value of the energy produced - just as it is unfortunate that we are seeing rebates disappear with no feed-in-tariff to take their place.  For now, the above recommendations reflect our best advice on how to maximize your benefit under the existing rules in Pasadena.

A new study out of Purdue University, and widely reported in the mainstream media (like this article in the Los Angeles Times - Electric car utility bills can shock) suggests that Californians who purchase electric vehicles or plug-in hybrid vehicles are in for a shock based on the high-cost of electricity for recharging their vehicles. The study’s authors claim that because California’s largest utilities (such as SCE) use a “tiered” rate structure, someone purchasing a plug-in hybrid could pay as much as 60% more in annual electricity costs than they would otherwise.  For that to be economical, the cost of oil would have to rise to between $171 to $254 per barrel, the authors concluded.

Wow! Shocking indeed - if it were true. Fortunately, it is not.

First and foremost, most utilities, including SCE, already offer special rate structures for EV/PHEV owners that are “time-of-use” rates.  Indeed, SCE has two specific time-of-use rates that are applicable to EV/PHEV charging and which can bring electric rates for vehicle charging down from the roughly thirty cents/kWh assumed by the authors to as low as eleven cents/kWh.  These rate options include the ability to have a separate meter solely to monitor the energy used to recharge the vehicle.  Since both the Nissan Leaf and the Chevy Volt allow the owner to program the start time for charging, it would seem to be pretty simple for these owners to take advantage of the cheapest electricity rates available. (Of course, if you are generating energy from solar during the day and recharging during the night, you would save even more!)

The Purdue authors claim to have developed a “model that would simulate energy use by Californians…. [that] closely aligned with actual energy use in California.” So how is it that they overlooked these existing rate options, to say nothing of the solar PV-EV connection?

Maybe, just maybe, the problem lies in the lead author’s true area of expertise - agricultural economics.  Indeed, Professor Wallace “Wally” Tyner’s primary area of research appears to be in biofuels, particularly involving that great scam, corn-based ethanol.  Here’s the description of his research from the Purdue website:

Professor Tyner’s research interests are in the area of energy, agricultural, and natural resource policy analysis and structural and sectoral adjustment in developing economies. His work in energy economics has encompassed oil, natural gas, coal, oil shale, biomass, ethanol from agricultural sources, and solar energy. Most of his recent work has focused on economic and policy analysis for biofuels.

Why is it then, that mainstream media accounts of this very “scary” report  fail to mention the bias of the lead researcher?

The actual math here, even assuming worst case factors, still tilts heavily toward the adoption of EVs.  Take a Nissan Leaf that has a 24kWh battery pack and claims 100 miles per charge.  Ok, we are all skeptics here, so let’s assume 80 miles per charge.  What is the cost per mile to drive your new Leaf? Our “skeptical” range estimate yields a range per kWh of 80 miles/24 kWh = 3.33 miles/kWh.  If we assume that charging occurs in the top tier of SCE’s tiered rate structure, the cost is roughly $0.30/kWh.  So, at $0.30/kWh and 3.33 miles/kWh we get $0.09/mile.

What is the cost per mile for a typical American passenger car?  According to the Bureau of Transportation Statistics, in 2008 (latest data available) the average US passenger car got 22.6 mpg. If we assume an average fuel price of $3.00/gallon (don’t you wish), then the cost per mile for the average US passenger car today is $0.133/mile.  If you are keeping score - the Leaf, even given a host of assumptions intended to favor the conventional car, is four cents/mile cheaper.  For the average passenger car in the US that travels roughly 12,000 miles/year, that works out to an annual “fuel” savings of $511/year.  Let the price of gasoline go up, or make electricity cheaper, and the savings are even greater.  If charging costs $0.12/kWh and gasoline costs $3.50/gallon, the savings shoot up to $1,425/year!

But as we already noted (but the authors ignored), there are rate options available now that make electricity cheaper.  And if you offset your highest time-of-use energy usage with the energy from your own solar power system - while you charge your EV with the extremely cheap energy in the off-peak time block - you get the best of both worlds!

Solar PV and EVs are a match made in heaven - despite those “shocking” stories coming from the thinly-disguised Ethanol lobby.

Back in September we wrote about the sorry state of affairs at Glendale Water & Power where solar rebates were being suspended until this coming July. We just received some additional information from the folks at GWP and we wanted to share that with you. In response to our inquiry about the status of the rebate program, we received the following response:

If the system size is greater than 30kw, we will not be accepting commercial applications for the next five years. If the system size is less then 30kw, customer’s application will be placed on our waiting list. Please be aware that our 2011 waiting list is full. We’re now accepting applications for our 2012 waiting list.

Yikes!

So a solar program that had previously provided some of the best rebates around, is now out of the commercial rebate business for the foreseeable future and no new system application below 30 kW, residential or commercial, will receive rebate funding for another 18 months!

Not exactly a recipe for solar jobs growth in Glendale!

(Editor’s Note: This is Part 2 of our end-of-the-year Solar Economics series. 
You can read Part 1 - Solar Tax Policies - here.)

One of the most important factors in the growth of the local solar industry has been the availability of utility-based rebates for solar power installations.  This year has seen a lot of developments in this area, and unlike the tax arena where the news is all good, the simple, sad truth is that rebates are declining throughout Southern California, with some utilities suspending their rebates altogether and others threatening to do so.  Will the defeat of Prop 23, assuring that AB 32 will go into effect after all, mean that there will be additional funds injected into solar rebates?  Will a feed-in-tarrif finally take hold in California?  And where are rebates now, anyhow?  We will try to answer some of those questions in this post.

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