A key to the growth of solar, particularly commercial solar, is the availability of affordable storage solutions. Two recent developments suggest that we are about to see dramatic growth in this vital market sector.
One week ago the California Public Utilities Commission (CPUC) voted five to nothing approving a plan to require the three investor-owned utilities (SCE, PG&E, and SDG&E) to procure 1,325 MW of energy storage by 2020, with installation completed by no later than the end of 2024. Both SCE and PG&E are required to procure 580 MW each, with the remaining 165 MW allocated to SDG&E. 200 MW of that 1,325 MW total is to be interconnected at the customer’s site. In addition, the decision provides a timeline for this to happen with the first 200 MW to be procured by the end of next year.
Other electric service providers, like the munis, will have to procure energy storage equal to 1 percent of their annual peak load by 2020. Those storage systems can also include customer sited and/or customer-owned storage devices as long as they were installed after January 1, 2010.
Large scale pumped hydro storage (greater than 50 MW) is excluded from the program, but storage obtained from plug-in electric vehicles can be counted.
This is a tremendously significant decision as the mandate will surely drive R&D as well as deployment investment and help provide a ready market for these emerging technologies.
An announcement this week during Solar Power International shows how that investment is already starting to happen.
Stem - the company with the clever technology for using storage to “smooth out” the demand peaks that drive commercial energy costs - just announced a $5 million project finance fund with Clean Feet Investors (CFI). From the parties’ press release:
The new financing model, which Stem developed in collaboration with CFI, is designed to open access to a wider pool of customers by removing barriers to adoption, enabling up to 15 MW of energy storage to be deployed. With this financing capability, Stem hopes to follow the dramatic growth trajectory pioneered by the third party ownership model in the solar industry. Stem and CFI plan other innovative financing offers for customers including performance-based and shared savings financing solutions with the capital from this financing.
“In addition to breakthroughs in technology, Stem is focused on driving business model innovation,” said Prakesh Patel, Stem’s vice president of capital markets and strategy. “By working closely with CFI, I believe we have created a unique offering to help accelerate customer adoption of Stem systems. This transaction paves the way for Stem to become one of the first efficiency technologies to achieve bankability.”
“Deployment capital is essential for Stem to get their technology in the hands of their customers – many of whom prefer a “pay as you save” offering,” added Jigar Shah, a principal at Clean Feet, and founder of the largest solar services company, SunEdison.
Allowing companies to install Stem’s technology with little or nothing down will help those companies save money at the same time it allows Stem to ramp up. This is great news for the solar industry since it is posed to provide the energy that Stem’s system later distributes as needed to offset those costly demand peaks.
Of course, this isn’t exactly great news for the utilities who, if this technology were widely adopted, would see a huge revenue hit as more and more commercial customers were able to lop-off the most expensive energy they now have to procure. Whether it is the continuation of net-metering on the residential side or the ability to eliminate the worst of demand charges on the commercial side, the pressure on the utilities will only continue to grow. But for their customers, things have never looked brighter.
We have been teasing out bits and pieces of our new book, Commercial Solar: Step-by-Step, all summer as we neared the end of the publication process. Well today we can formally announce that it is available both at the Run on Sun Publishing eStore (where we get a better royalty - hint, hint!) and on Amazon.com!
Commercial Solar is intended for two primary audiences:
As the title suggests, the book provides an overview of the process by which an interested party - say, a facilities manager - can go from knowing next to nothing about commercial solar to identifying appropriate contractors to provide bids, analyzing those bids to make meaningful comparisons, determining financing options that are appropriate and even overseeing the actual installation process.
The book features a Foreword written by Boaz Soifer, VP of Sales at Focused Energy:
The material could be dry (much of the reading on this subject is), but is instead casual but precise, clearly laid out, and made accessible through handy use of a narrative in which the Facilities Manager of a fictional company undertakes a commercial solar project himself…
In his typical style—approachable, honest, quirky, and occasionally scathing—Jim has thoughtfully flattened out the complex world of commercial solar PV into an understandable roadmap that anyone can follow to project success.
Interested? You can download a two-chapter excerpt of the book for free, here. Better yet, you can purchase the book today from either our eStore or Amazon for just $9.95. If you are interested in bulk sales (i.e., ten or more copies), discounts are available. Please contact us at Bulk Sales for more information.
And of course, we welcome your comments either here on the blog or at Amazon. Thanks for your support.
It has been said that as with sausage making, one should never watch how legislation is actually made as the process, if not the end result, can be sickening. That adage seems to be playing out over the anti-solar/pro-solar legislation known as AB 327.
As originally drafted, AB 327 sailed through the Assembly, only to be "gutted & amended" in the Senate into legislation that many in the solar community saw as nothing short of an existential threat. Online petition campaigns were launched and one prominent solar company started robocalling to urge other solar companies to join the opposition.
(Note to colleagues: the only thing more annoying than robocalls are when the party behind the robocalls denies any knowledge about them - as this company did the three times that I called them. Bad way to build allies.)
Now the folks over at Greentech Media are reporting that the bill is facing additional amendments that might, perhaps, turn the bill into something of a win for the solar industry. The piece by Jeff St. John titled - AB 327: From California Solar Killer to Net Metering Savior? - does a fine job of tracking the twists and turns of this legislation and lays out what might be the road ahead. It is well worth the read.
But with the end of the legislative session looming - all bills must be passed by September 13 - time is tight for this process to be done correctly. Moreover, given that the CPUC is due to release a study on the costs and benefits of net metering, it is hard to understand the rush to try and get this bill passed now. The legislative process would be far better served - that is, we would have a far more appetizing result - if we were to take a pass on AB 327, digest the CPUC study, and get all stakeholders to the table to craft a long-term solution.
Will that happen? Well, betting on nothing happening is always a safer bet than on the right thing happening, particularly in the crunch time that marks the final two weeks of the session. A break in the action might not be the result we would most relish, but it is probably the most palatable result that we can achieve.
A coalition of major utilities is calling on the California Public Utilities Commission to develop regulations that would require the use of so-called “smart” inverter technology on a “fast track” to address “issues” arising from the growing adoption of solar. But that got us wondering - is this really a concern now and is a fast track response appropriate?
(H/t, Solar Industry Magazine.)
The utility group, which calls itself WEIL, for Western Electric Industry Leaders, issued a letter on August 7 urging regulators to require the adoption of smart inverter technology, citing an “immediate need for the new solar generators that residents are placing on the grid in ever increasing numbers to be fitted with ’smart inverters’ to provide the necessary voltage support for us to integrate these resources effectively and prevent costly future renovations and reliability impacts." Wow, that sounds dire - solar power systems that residents are adding to the grid could create “reliability impacts". Quick, do something!
The letter continues:
However, if smart inverters are not installed, these voltage swings [due to PV output variability] can potentially damage utility equipment and residents’ home appliances; increase overall cost of maintaining the grid; require continued installation of larger, more expensive alternatives; and could even contribute to distributed outages.
Is there a single, documented case of PV variability causing damage to home appliances? If there is, WEIL has certainly not identified it, although the prospect sure sounds scary.
To support all of this doom and gloom, the WEIL folks - headed by San Diego Gas & Electric - have produced a white paper that they claim provides “empirical support for smart inverters." But here’s the thing - it really doesn’t. First of all, where they set out to gather data in support of their contentions, the looked at systems far removed in size (and location for that matter) from what “residents” are installing on their homes. In talking about intermittency issues, the system that they looked at was a 1 MW (AC) PV farm on the end of a rural distribution circuit. Not clear how that is supposed to tell us about the impact of a 5kW system on an urban resident’s home. They then applied modeling analysis to a 2 MW PV system to show their improvement. Again, interesting - and possibly compelling for 2 MW systems - but irrelevant to the issue of what sort of inverters should we be installing on residential projects. Indeed, the smallest system that they even discuss is a 240 kVA inverter - still not relevant to the broader issue.
So they couch their scary letter calling for immediate action in terms of residential systems - but their “supporting” white paper says nothing at all about such systems. Nice.
Moreover, SDG&E touts the enormous penetration of solar onto their grid as a justification for the need for immediate action, noting that as of the end of January this year, they had 162.5 MW of customer owned PV capacity. They also cite how Germany - where solar is so popular - has recently had to adopt expensive retrofits and we should avoid that fate.
But let’s break this down.
According to the California Energy Commission’s February 2012 forecast for SDG&E electricity planning, 162.5 MW of capacity works out to roughly 3.6% of SDG&E’s current peak demand of approximately 4,500 MW. That same document predicts that by 2022, the highest estimate for PV from self-generation will be 350 MW out of a forecast peak demand of 5,500 MW - that is 6.4% under the most aggressive predictions for PV penetration (although I know our friends down in San Diego are hoping to beat those numbers). By comparison, renewables in Germany are around 23% of peak demand today - six times what they have in SDG&E territory and nearly four times what they expect to have by 2022! So where’s the fire?
“In circuits that have a decent amount of penetration – about 10 percent to 15 percent – you can start to see significant waveform changes, as you’ve got clouds coming over, systems switching in and out,” Niggli said.
Kinda makes you wonder how many circuits supporting residential solar customers are seeing penetration of 10 to 15%. Our guess is none, but in any event WEIL certainly doesn’t cite to any.
Moreover, inverters in this country have to satisfy a number of technical standards which in many cases are in direct conflict with what the utilities are now seeking. In particular, two features regarding expanded capacity to handle frequency variations and low voltage situations violate the anti-islanding requirements applicable to US inverter designs. Which is particularly ironic given that those requirements are there, not to protect household appliances, but to keep utility workers safe. Bottom line - until those requirements are changed, no inverter manufacturer can certify a product for sale with the “smart” features utilities are claiming they must have now.
So what is the real agenda here? Is there an “immediate need” for these new features to protect homeowners from scary PV? Not so much. Or, is there an immediate need on the part of the utilities to slow the march of solar until they can figure out Plan B? That seems far more likely.
By all means, let’s make solar as “smart” as we can, and if regulations should be modified to help make the transition to a clean energy economy smoother, then they should be modified. But spare us the scare tactics - it does nothing to improve the credibility of the utilities that signed on to WEIL’s Chicken Little letter.
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.
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.
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.
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.
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.
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.
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