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

Before you can ever get a bid for your commercial solar project, you have to contact a solar installation contractor to come out to your location and perform a site evaluation.  Actually, you should contact at least three contractors so that you have a set of bids to compare (more on that process below) - but how do you find them in the first place?  Well, you could choose based on who has the most ads on TV or the Internet, or you could rely on Cousin Billy’s recommendation - but somehow that just doesn’t seem sufficiently scientific for a project like this.  There has to be a better way - and there is.

If you remember that you need to find someone who will work NICELY with you, success is all but assured.  And no, we don’t mean nicely, we mean NICELY - as in:

N - NABCEP Certification
I - Incentive provider (CSI or local utility) connected
C - City building department experienced
E - Electrician on staff
L - Local or national?
Y - Years in business.

Focus on those attributes and you will have found a contractor who will inspire confidence and guarantee a successful project.  Let’s expand on why these particular attributes are so important.

NABCEP Certification

The North American Board of Certified Energy Practitioners - NABCEP for short - provides the most rigorous certification process of solar installation professionals in the industry.  Not to be confused with their Entry Level Letter that merely demonstrates that the person has taken an introductory course in solar,  the NABCEP Certified Solar PV Installer™ credential is the Gold Standard for installers and consumers alike.  Earning NABCEP Certification requires the successful candidate to have an educational background in electrical engineering or related technical areas (such as an IBEW union apprenticeship program), at least two solar installations as the lead installer, and the successful passing of a 4-hour written examination on all aspects of solar power system design and installation.

As NABCEP notes:

When you hire a contractor with NABCEP Certified Installers leading the crew, you can be confident that you are getting the job done by solar professionals who have the “know-how” that you need. They are part of a select group of people who have distinguished themselves by being awarded NABCEP Certified Installer credentials.

NABCEP’s website offers a database of all Certified Solar PV Installers - just enter your zip code to find the installers located near you.  It is with great pride that we point out that at Run on Sun, all three of our owners have earned the designation, NABCEP Certified Solar PV Installer™ - and we know of no other solar power company in Southern California that can make that claim.

Incentive Provider - CSI or Local Utility

A second source of solar installers is the Incentive provider such as the California Solar Initiatives’ Go Solar California website.  Every installer who has done a solar power installation for a CSI utility (i.e., SCE, PG&E or SDG&E) will be included on this list.  Unfortunately, there are no other criteria associated with getting listed - and there is limited verification done to guarantee that the listed installer is reliable.  If your job is in California, your contractor must be on this list - but this is a double-check only - not an ideal starting point for your search.

Another source for information about solar installers is your local utility’s point person for solar rebates.  This person deals with installers on a daily basis, and while s/he won’t give you a specific recommendation, they may be able to warn you off of an installer whom they have learned is less than reliable.

City Building Department

Similarly, the folks in your local building department deal with installers regularly as part of the permitting/inspection process.  Once again, they won’t be in a position to provide referrals, but they may be able to give you a warning if there are red flags associated with a contractor that you are considering.

Local or National?

Solar installation companies come in all sizes - from national organizations that have crews installing systems all across the country, to local operations that only work in a limited geographic region.  To be sure, there are pluses and minuses on both ends — maybe lower prices for the national chain due to economy of scale in their purchasing versus greater attention to detail from a local company that lives or dies based on how well it satisfies its local customer base.  And, of course, money spent on a local company tends to stay in the local economy - another consideration in tough economic times.

Years in Business

The last of the NICELY elements is to look at the number of years the company has been in business.  Again, this is not a perfect indicator – some recent ventures really have their act together and some long-standing enterprises have long since ceased to really care about what they are doing – but at a minimum you want some assurance that the folks you are doing business with know how to run a business. Otherwise you run the risk of having a largely useless warranty and no one to call if things go wrong.

We would recommend a minimum of three-to-five years in the business of doing solar, with preferably a longer track record of running a business.  Expertise in areas beyond just installing solar is also useful such as engineering, management and law.

The preceding is an excerpt from Jim Jenal’s upcoming book, “Commercial Solar Step-by-Step,” due out in July.

We wrote before about an upcoming study from the California Public Utilities Commission (CPUC) to determine the overall cost-benefit of installing solar.  Well in advance of that study, the investor-owned utilities (IOUs) in California are coming out swinging, with populist rhetoric about solar’s unfair impact.  But just because a utility says something, doesn’t make it true!  Here’s a quick take.

In the closing weeks of 2012 several news stories appeared, making the case for the IOU’s POV regarding solar.  (This one from the San Francisco Chronicle is typical: Solar Power Adds to Nonusers’ Costs.)

Their theory is that because solar system owners pay according to Net Metering - whereby excess energy produced during the day is used to offset (or net out) energy usage at night or during stormy days - they are not paying their fare share of other fixed costs of the utility such as for distribution and transmission facilities.

It is certainly true that solar customers pay less for distribution and transmission systems because those costs are tied to a customer’s total usage and is not simply part of the fixed “customer charge” that all residential utility customers pay - including solar customers.  But customers did not decide the nature of the utility’s rate structure, and presumably the IOUs were happy to charge more to cover “fixed costs” based on usage.  If that is the case, then it is equally fair to receive less from a customer with a lower monthly usage.

Moreover, the “analysis” being advanced by the IOUs ignores the benefit of that net energy being provided by solar customers - since that energy largely peaks alongside the utility’s peak demand, it offsets peak production energy costs for the utility.  Such “peaker” plants provide the most expensive energy a utility produces, so reducing that demand is actually a significant benefit to the utility.

At least one countervailing analysis asserts that solar customers are providing a net benefit: Solar Power Generation in the US: Too expensive, or a bargain? That study looked at all components of solar system benefits - including impacts on transmission and distribution - and concluded that solar power customers are actually subsidizing other users, even with solar deployment as high as 30% (the current net metering cap is just 5% and California is still a long way from reaching that goal).

Make no mistake, the IOUs are coming after net metering because it is beginning to affect their bottom line - and they can predict that as costs for solar continue to fall, that enormous potential for solar energy will hurt their business model.  The solar industry is in for a fight - and it will be a fight of existential proportions.

UPDATE - 3 - The Assembly Appropriations Committee voted 12-0 to send the Community Solar bill, SB843, to the Assembly floor for a vote.  Curiously, while all twelve Democrats on the Committee supported the bill, all five Republicans failed to even vote on the measure!  (Not exactly a profile in political courage.)  We will continue to keep you informed of the bill’s progress - since it was amended in the Assembly, it presumably must still be approved by the Senate even after the Assembly (hopefully) passes it on Monday - and the legislative session ends this month so this is in no way a done deal.

UPDATE - 2- SB843 is headed for a showdown hearing in the Assembly Appropriations Committee, Chaired by none other than Run on Sun favorite, Assemblymember Mike Gatto.  The folks over at Vote Solar have a webpage up where you can easily create a letter to your Assemblymember urging a Yes vote on the bill.  Please check it out!

UPDATE - SB843 has passed the State Senate and is now working its way through the Assembly where it was recently amended.  (The amendments appear benign.)  However, we have learned that SCE has come out in opposition to the bill for reasons that are not immediately clear (apart from the cynically obvious ones).  This means that your support is more critical than ever - please contact your State Assembly Member and urge their support for Community Solar!

Solar installations are sprouting up almost everywhere - and California leads the Nation with the most installed solar capacity. That’s the good news.  The bad news is that not everyone who would like to add solar, can.  Eco-minded renters, for example, are excluded - but so are homeowners who would love to put solar on their homes but have sites that are too shaded to be viable.  (Believe me, here in shady Pasadena we know all about that!)

So what can be done?  How can we allow rooftop-challenged individuals - and businesses - to participate in the solar boom?  The answer is “virtual net metering” or “community solar."  Under such a program, a solar power system is built and individual utility customers - homeowners, renters, business owners - own a portion of the system’s output.  The solar system “sells” the power directly to the utility and the individual participants receive a credit on their bill in proportion to their share of the system’s output.

For example, let’s say a typical Pasadena homeowner needs a 7kW system to offset their usage whereas a renter needs 1.5kW and a local small business needs 20kW.  A solar developer builds a 200kW system (maybe on a warehouse roof) and could sell corresponding shares to 8 homeowners, 16 renters, and 6 small businesses.  Everyone gets what they need - with no concerns about local shading, or roof ownership, or even leaking roofs!

This fabulous innovation in how solar is deployed could really take the lid off solar installations and greatly expand the universe of people who could “go” solar - even if they couldn’t install solar.  Indeed, one study asserts that providing this innovation in California alone would create 12,000 jobs, generate $7.5 billion in economic activity and generate $235 million in sales tax revenue by 2019!  And it would do this without any additional public funding.

Talk about a win-win!

But we aren’t there yet.  There is a bill pending right now in Sacramento - SB 843 -  that would make this type of community solar legal amongst the State’s three investor owned utilities: PG&E, SCE and SDG&E.

And that’s where YOU come in.

You can show your support for this innovative program by contacting your legislator NOW and ask them to support the bill.  Our friends over at Vote Solar have made this very easy - just click on this link.  (If the link doesn’t work right away, please try again later - this is too important to miss out on adding your support.)

We will be tracking this legislation and will update you on its progress.

Say what you will about the California Public Utilities Commission (CPUC), but their recent rulings have been strongly in support of the solar industry and on May 24, they did it again. In a unanimous decision, the CPUC voted to increase the cap on net metering, overriding protests from some utilities and misguided “consumer” advocates.

At issue was the manner by which the statutory cap on net metered installations was to be computed.  Under existing state law, California utilities are obligated to accept net metering connections from solar power customers until the installed capacity of the utility’s solar customers equals 5% of the “aggregate customer peak demand."  The problem before the Commission was how to define the denominator: does aggregate customer peak demand mean the peak demand that the utility as a whole had seen (as the utilities argued) or was it the sum of the peak demand for each of the utility’s customers?

That turns out to be a very significant difference and the CPUC came down on the side of the solar industry.  As a result, the total amount of net metered capacity under the law will now be computed to be 5.2 GW compared to just 2.4 GW under the utility’s interpretation!

Unfortunately, the Commission didn’t stop there.  Part of the argument from the utilities was the claim - echoed by TURN - that net metering amounts to a “silent subsidy” from the general rate payer to more affluent customers who can afford solar.  In their ruling, the Commission authorized a study to investigate that claim and to quantify the cost-benefits of net metering to the larger rate paying community.  Wrote the Commission:

The goal of the study will be to provide the Commission and all interested parties, including the Legislature, with a better understanding of who benefits, and who bears the economic burden, if any, of the NEM program. The report should quantify the costs and benefits of NEM to participants and non-participants and should further disaggregate the results by utility, customer class, and household income groups within the residential class. The study should also seek to gather and present data on the income distribution of residential NEM participants. In order to assess the costs and benefits at various levels of NEM implementation, the above analyses should be conducted using multiple NEM penetration scenarios, including at minimum, the capacity needed to reach the solar photovoltaic (PV) goals of the CSI and the estimated NEM capacity under the five percent cap as defined in this decision. The results of such a study then can be used by the Commission to set future policy for the NEM program, with full awareness of the economic impacts of any policy choices on all classes of ratepayers.

Once the study is complete, the Commission is to promulgate new regulations regarding net metering based on that analysis.  All of this is to happen by the end of 2014 - but if new rules aren’t in place by then, net metering will be suspended until such time as they are!  Again quoting from the Commission:

We anticipate this temporary suspension in the NEM program, effective January 1, 2015, will remain in place pending the issuance of new rules at the conclusion of a rulemaking proceeding we will commence once the study described above is completed. Of course, if the study can be completed and the new rules are issued prior to December 31, 2014, then the suspension of the program in 2015 will not be necessary. But if the post-study rulemaking remains open and incomplete on January 1, 2015, then under the terms of today’s decision the program will be suspended thereafter, and the utilities will not accept any new NEM applications, until the new rules are issued and take effect.

At the risk of sounding cynical, this sure feels like an opportunity for the utilities to game the system and drag out the rule making if they cannot get the deal that they want.  This process will bear close observation!

As an aside, there was one odd detail buried in the decision - the numerator in that 5% computation is supposed to be the installed solar capacity.  However, the value used is “CEC-AC Watts” which is computed as the PTC rating of the solar panels used, multiplied by the total number of solar panels, multiplied by the efficiency of the inverter(s) used.  So for example, an installation of 20 LG 250 Watt solar panels driving 20 Enphase M215 micro-inverters would have a Nameplate power rating of 20 x 250 =5,000 Watts.  The PTC rating of the LG 250, however, is 225.2 Watts and the Enphase M215 is 96% efficient, meaning that the CEC-AC rating would be:

20 x 225.2 x 96% = 4,323.84 Watts

But here’s the curiousity - rebates aren’t paid based on CEC-AC Watts - they are paid on the CSI rating.  The CSI rating takes the CEC-AC rating and modifies it based on the actual characteristics of the site - shading, attachment method, azimuth and tilt.  This is certainly reasonable as all four of those factors combine to have a significant impact on the energy yield of the system - and that is what an EPBB rebate is supposed to be incentivizing.  So why doesn’t the net metering cap use the sum of the CSI ratings as its numerator?  And if it did, how big of a difference would it be?

We decided to find out.  We took the most recent CSI data set (dated May 30, 2012) and created a pivot table that would report by year and for each of the three investor-owned utilities ("IOUs")  subject to CSI, the sum of the CEC-AC and CSI ratings and then give us the ratio.  Here are our results combining all three IOUs in each year (in kWs):

These are very interesting numbers - the difference between the CEC-AC  rating versus the system-specific-corrections-adjusted, CSI Ratings is very small.  Now why is that?  The simple answer is that you can actually score higher than 100% when you go from CEC-AC to CSI.  How can that be?  And how often does that actually happen?

To probe a little deeper we decided to just look at systems installed in SCE territory.  Here’s what we found:

Indeed, over the total lifetime of the CSI project, systems installed in SCE territory have averaged 101.7%!

(The numbers drop off in San Diego Gas & Electric to ~98% whereas in PG&E territory the average drops to 96%.)

Still, as a solar installer, we had to admit that these numbers were troubling - we’ve done lots of rebate calculations since 2007 and we really don’t recall seeing design factor scores greater than 100%.  An hour of experimentation with the online rebate calculator confirmed that experience - we could get configurations to equal 100%, but not exceed it.  So what was the source of these results?

Then it hit us - we were calculating based on EPBB rebates - which makes sense because that is where the CSI rating is reported.  However, larger solar systems receive PBI rebates - payments made based on actual performance over five years.  What would happen if we distinguished PBI from EPBB rebated systems - would that explain our difference?  Indeed it would - check this out:

How about that?  From 2006 to 2009, neither rebate method averaged over 100%.  But starting in 2010, PBI rebates consistently averaged over 100%, even while EPBB averages remained largely unchanged.

So why the difference?  In July of 2009, the rebate calculator was changed.  (You can find links to both the current and the old calculator on the CSI website.)  It appears that the real difference in how the two calculators work is for PBI rebates - where it allows the design factor to exceed 100%.  More importantly, the new calculator takes into account single or dual axis tracking configurations for PBI rebated arrays.  Scanning the data, we discovered a site that actually has a recorded design factor of 148%!  This is a 1MW system and you can see how a substantial number of comparably sized installations using single or dual axis tracking would really skew the results.

So now we understand where the numbers came from, but we are still somewhat troubled by our results.  Are any of these utility-scale systems operating under net metering rules?  That seems highly unlikely.  And assuming that is the case, shouldn’t they be excluded from the net metering cap computation?  In which case, using the CSI rating would add an extra 5% to that numerator, and that would be a good thing!  Any CPUC Commissioners or other insiders who might care to educate us further, please do so in the comments.

The California Public Utilities Commission (CPUC) has just rejected the anti-solar Network Usage Charge (NUC) proposed by San Diego Gas & Electric (SDG&E).  We first wrote about this cynical attempt by SDG&E to penalize solar customers back in November.  At that time we reported that SDG&E was claiming that solar customers “do not pay their fare share of costs incurred on their behalf by SDG&E to provide service, including use of the distribution system."  SDG&E made this claim despite being unable to identify what those costs actually were, and while ignoring the clear subsidy that solar customers provide to SDG&E by reducing their distribution costs by producing energy at the point of consumption.

SDG&E’s scheme to address this so-called unfairness was to impose a Network Usage Charge that would be applied to all residential customers.  SDG&E’s fig-leaf claim of ratepayer fairness could not hold up to scrutiny.  Since only solar system owners actually export energy back onto the grid, they would be singled out for the additional charge.  We doubted then that the CPUC would manage to do the right thing, given their dismal performance in setting up the compensation structure required by AB 920, and predicted that this fight would have to be won in the state legislature.

We are pleased to report that (at least this time) our skepticism was unfounded.

Commissioner Mark J. Ferron rejected SDG&E’s proposal, using language directly from the arguments of the solar community.  Ruled Ferron:

My concerns about the legality of the current proposal are based on the following analysis: The last sentence of subdivision (g) of Section 2827 [of the California Public Utilities Code] in essence provides that a utility may not create a “new charge” that would increase an eligible customer generator’s costs beyond those of other customers in the same rate class who are not eligible customer-generators. SDG&E’s proposed NUC is a new charge. While the NUC rate would apply to both customer-generators and those who are not customer-generators, it would apply differently to customer-generators, who would pay the charge on both incoming and outgoing power under SDG&E’s proposal. By contrast, the non-generator customer would pay a NUC only on incoming power. Thus, as proposed, the NUC might be viewed as imposing costs on customer-generators beyond those imposed on other customers in the same rate class. Further, the immediately preceding sentence of subdivision (g) states that “The charges for all retail rate components for eligible customer-generators shall be based exclusively on the customer-generator’s net kilowatthour consumption over a 12-month period, without regard to the eligible customer-generator’s choice as to from whom it purchases electricity that is not self-generated.” SDG&E’s NUC proposal raises concerns under this provision was [sic] well, because the NUC would base the generator customer’s charges on network usage that is unrelated to net kWh consumption.

Noting that the NUC proposal could have impacts in other IOU areas (both PG&E and SCE intervened on behalf of SDG&E’s proposal), Ferron ordered SDG&E to go back to the drawing board on their proposed rate structure filing and to produce one without the NUC by February 17, 2012.

This is an important victory for the existing Net Metering law in California and it means that - for now - utilities will not be able to tack on discriminatory charges onto their solar customers.  Nicely done, Commissioner Ferron.