Dr. Lewis - For the most part, DWP did a good job of bringing the FiT to the market. However, their failure to get projects farther along is very troubling and this delay in considering the proposed “tweaks” is perplexing.
it appears that you LADW is about as organised (NOT) as our UK government when it comes to renewable energy and feed in tarrifs. Forever ambiguous and always out of tune with the market.
Have a nice day
Dr. Terence Lewis. MSc.BSc.
We certainly do not need to exchange our present utilities for another (i.e., leasing companies) - which is why Run on Sun has never bought into the residential leasing programs. It is also why we are pleased to be offering two different loan programs to our clients which will save them thousands of dollars over what their savings would be from leasing. (See our solar financing page for more details.)
But that said, we still need to protect net metering, unless and until rate schedules are completely redesigned to properly account for the residential solar client’s contributions to the grid. As a statewide FiT is not in the cards anytime soon, this is the only game in town and we need to protect it.
We do not need to exchange One Utility for Another ( Solar Leasing Company ) Net Metering has allowed Middleman to take away your Earnings and Savings.
“The High Cost of a Solar Middleman
If there’s no such thing as a free lunch, then how can Americans get solar on their roof with “zero money down” and lower their electric bill? Solar leasing, as it’s often called, is a clever market solution to poor federal and state policy design that otherwise requires Americans to do financial acrobatics to power their home or business with solar.
But solar leasing adds significantly to the cost of solar energy.
New data from the Massachusetts Department of Energy Resources published last year suggests that state taxpayers that will pay (a lot) more to make solar easy to install for individuals and businesses, and to make solar energy lucrative for solar leasing companies.
The report estimates the necessary production based incentive (in dollars per megawatt-hour of electricity produced) to support the development of solar. Specifically, the researchers priced a “10-year levelized incentive…that allows system owners to achieve their target economic rate of return.” The analysis notably focused on ownership structures, either 3rd party ownership (solar leasing) or host ownership (owned by the home or business owner). The following chart shows the difference in state incentives necessary to support a small-scale (15 kW or less) solar array that is either owned by a 3rd party or the actual electric customer.
host v 3rd party ownership solar incentive mass
The bottom line is that leased solar arrays require more than double the incentive needed to support customer-owned solar arrays. Not only do leasing companies require more revenue, but customers of leasing companies get less than solar owners, because they presumably sign contracts for electricity that are less than the net metering they would receive in owning a solar array.
Why does solar leasing cost more ?
In the words of the report authors, “These transactions often require attracting additional tax-motivated parties to the project financing, and at considerable expense for transaction and capital.” How much more expensive? A host-owned solar array is expected to get financing at 4% interest and have a return on equity expectation of 4%. A solar leasing company is expected to pay 6% interest on shorter-term debt and to require 15% return on equity.
It might seem convenient to blame solar leasing companies for this problem, but they’re merely opportunists in a poor policy environment.
Making your money back on solar in America is complicated. It requires a combination of tax savvy, skilled navigation of state bureaucracies, persistence at a local permitting office and limited options for low-cost financing. Compared to Germany, with a simple, non-nonsense long-term contract that permits low financing costs and broad participation, America’s solar market is a joke (and the installed cost of solar is much higher as a result).
Furthermore, big banks have also played a role in inflating solar leasing costs to taxpayers, using a legal loophole to collect tax incentives based on (higher) estimated costs of solar installations instead of actual costs.
Leasing company SolarCity was notable targeted by the Treasury Department for its participation in the practice.
In other words, we pay twice for bad solar policy in America. Complicated tax incentive, interconnection, and contract policy makes solar cost more to install than in mature markets like Germany. Solar leasing middlemen simplify the complications, but at a price premium to (complicated) individual ownership.
Even though sunshine is free, no kind of solar power is a free lunch.” John Farrell
We All need as much roof top solar (& other local solar) possible. It saves habitat from large installations that take away nesting, feeding and other habitat for birds & animals (desert tortoise is a favorite of mine) and requires no huge transmission lines. Let’s encourage more local solar in all ways possible. It’s clean, it uses space already dedicated to housing or business & it gets shared locally when there’s more power generated than the solar owner can use at any moment! Everyone benefits when each individual installs and uses rooftop solar. The idea that solar owners are getting a free ride is misinformation perpetrated by those hoping to keep fossil interests in power.
Since EPBB rebates are paid based on the CSI data submitted - subject to possible field inspection/verification - there would be no reason to indicate the combinations you are describing unless that was what was actually built. No way to know for sure just from the data, but I do imagine that there are some systems being built with really bad orientations. Perhaps the consumer is properly advised, but perhaps the installer just takes advantage of the uninformed consumer.
As for limits, I would build a 270 system. I would build a system with part of the array at 90 (but not the entire array). The key is to make sure that the consumer understands the tradeoffs and that lower performing array faces will have a lower ROI.
Question on the CSI database. I was looking at the data describing system azimuth and it appears the numbers don’t make sense. About 30% of the reported systems are installed at an azimuth of 180 - due south. That much makes sense. The systems that don’t make sense are the ones with an azimuth of less than 90 and greater than 270. I’m confused? I suppose if the systems are flat enough you don’t care but these systems that have weird azimuths are not flat. Do you think is a simple issue of misreporting or are systems really built with an azimuth of 330 and a tilt of 30? Can you offer any practical upper and lower limits for system azimuth? I’m only trying to do some big picture screening of the CSI data and you’re one of the experts on this topic.
Appreciate any help. Merry Christmas.
Thanks for the kind words.
Of course, a major reason that the “empowering women” meme was so powerful at SPI is attributable to you, and Raina - and certainly Julia who has been walking the walk for a long time now. It is a great trend and I hope the hallways are filled with “powerful” women at SPI next year! (And wild horses will be needed to keep me away!)
Noticed Julia Hamm asked for feedback on the show. I attended and have talked with several folks post event. The consensus is the show was very productive for those attending. I for one was very pleased to see all the data points around empowering women with the industry and a call for more diversity. The general session on Tuesday morning which featured industry solar installation, utility and regulator representatives “switching hats” and speaking from each other’s point of view was one of the best sessions I’ve attended in 5 SPI’s.
Keep up the great work covering the industry, Jim!
Hi Julia -
I feel a bit awkward making a post based on a conference I wasn’t able to attend - much easier to do a preview than a review of same - but maybe what I can do is go down the same set of points and add my thoughts and links to some of the fine summaries by folks like Tom Cheyney and others.
ps - glad to see that you read the blog!
Jim - thanks for posting this blog. Now that SPI has come to a close, I’d love to see a response (based on what you’ve heard since you couldn’t make it) about how it measured up in the areas you highlighted. I am of course biased, but all of the feedback I’ve heard has been extremely positive, with many people commenting that this was the best SPI since 2010 for a whole variety of reasons.
Hi Carter -
Those are both good points. However, the exhibit floor is really directed toward installers and having the show outside of the largest solar market in the country for three years means that those installers aren’t seeing what those exhibitors have to offer. I suspect that is why the number of exhibitors is off whereas it grew every year that it was in the “Sunshine State"!
But I’m all for anything that improves our political clout!
In terms of the “why Chicago” question. This is a thing a lot of folks have been talking about since it was announced- and it’s important to keep 2 things in mind.
1) SPI is a political tool. The Governor of Illinois and the Mayor of Chicago along with a host of other politicians will visit the conference and see the strength of the solar industry. Bringing it to different cities helps increase the overall political support and action for solar. Plus it educates a deep bench of political figures in an area.
2) There are a ton of solar-related manufacturers in the Midwest. The fastest way to grow the solar industry’s clout and political power is to expand our tent and bring in a lot more solar-related companies. SEIA just did a big report about top brands that use solar- if those companies became SEIA members or political influence will grow a lot faster.
Here’s a map of solar companies in the Chicago area> https://www.facebook.com/photo.php?fbid=10151603934021324&set=a.10150311342766324.334182.96055281323&type=1
The amazing thing is Homeboy Industries (and other charities Everybody Solar helps) will be saving $3,000+ each year. That’s over $75k total savings - probably more with rate inflation!
Great blog post!
Read more at:
Hi Spiffy -
Thanks very much for the kind words - I really appreciate it.
As I understand it, an arc fault occurs when you have two faults on a PV string, the second of which is on the leg that is set to detect ground faults. When the second fault occurs, the inverter is isolated from the string (due to the GFDI circuitry) but because you have two faults, you can have a complete circuit w/in the array. That could be in a single string, or it could be downstream from a combiner in which case you will have a much bigger issue on your hands. It is my understanding that it was such a double fault situation that created the arc fault that lead to the fire discussed here:
Interestingly, the new Enphase microinverter - the M250 - should prevent arc faults since it can detect a fault on either leg of the DC connection. Of course, microinverters are far less of a concern for a dangerous arc fault since the DC “string” is only one module. (The earlier models, most notably the M215, had a more conventional GFDI circuit which could only detect a fault on one leg.) I discussed this benefit of the new M250 in this post:
It seems that the Australians are ahead of us on this, or at least they make is sound like they are.
Could you comment on arc fault protection and it’s use in fire prevention and safety? It is my understanding that micro-inverters are not necessarily immune from arcing and that nothing will ever completely eliminate the threat, except maybe something at the level of every single module.
As you know, my solar business does deal with this issue from a preventative standpoint, however, I don’t need to be an expert (nor will I ever be), but I’d love to be able to direct my customers, particularly residential installers, somewhere.
Thanks for the in-depth report. Your content is like non elsewhere, and you are providing a real service to the industry.
P.S. I happened upon this, for those who really want and need to check into the issue in depth. http://bit.ly/18q37nb
A project can end up delisted for any number of reasons - the client could run out of money and not go forward. (We have had that happen!) Or there could be a falling out between client and contractor - or the originally listed projects could have been entirely speculative - it is really impossible to say from the data why the project ended up delisted.
But having 4 out of 5 projects ending up delisted seems like a red flag.
what does it mean when a project gets delisted? that the project didn’t happen? or just that the application for an incentive got rejected (and therefore project probably, but not necessarily, didn’t happen). and what can we infer from a company having a large percentage of projects delisted? is it that they are trying to reserve space in the queue for available incentive money by sending in applications for projects that aren’t necessarily going forward?
Minor correction - we originally overstated the decline in the number of exhibitors. The actual numbers as released by Intersolar have now been used in the text and we apologize for any confusion the original numbers might have created.
Great seeing you at Intersolar - sorry we never got to really talk.
Excellent summation of Recom’s marketing efforts! So glad to see you calling them out on it. You can never go wrong appealing to the lowest common denominator apparently…I was very disappointed to see how they were promoting their products.
Women in solar have worked hard to be taken seriously in a more male-dominated industry (and I am not meaning that in a bad way, lol). I feel like this year’s entire Intersolar experience took a step backwards in this regard.
While no one literally patted me on the head I felt like they did verbally (i.e., you can pronounce photovoltaic correctly!).
Thank goodness for reasonable-thinking people like yourself who see through the garbage!
I should have mentioned this in the post, but I would love to collect emails that folks send to the Recom folks for their sexist marketing. So I will start with mine:
Mr. Tunyan –
I have just posted about Intersolar NA on my blog and in that post I have called out you and your company for hosting the worst example of sexist marketing at the show. Frankly, you and your company should be ashamed of your alleged “marketing” strategy. It demeans women and it demeans the industry.
Here’s the link, should you care to see what I have written: http://runonsun.com/~runons5/blogs/blog1.php/solevents/intersolar-2013-hot-not
I hope going forward you will reconsider how you present your products to the public.
NABCEP Certified PV Installation Professional ™
Founder & CEO, Run on Sun®
Love that graph from CALISO. It’s interesting the way the the types of renewables balance each other out. I wonder if something morning-specific will crop up in the next few years that will even out that lull between 7-9am?
Jim, it’s great to hear you’ll be writing and publishing a book about commercial solar! Looks like I’m the 5th commenter (whee), but I’ll surely also be buying a couple more copies to pass around.
PS: Excellent quote about being audacious.
Good point but it comes down to rate design. The folks pushing for net metering did not design the rate structures used by the IOUs - they did (subject to approval by the PUC). But since non-solar customers are subject to the same rates, the utilities are equally impacted by energy efficiency measures which are having a much larger impact on energy usage than residential solar - at least so far.
As usual the truth will be somewhere in the middle: net metering is an excellent push for decentralized energy production, but on the other side, someone needs to pay for the infrastructure. That someone will be the remaining people, exclusively using energy produced elsewhere. Obviously, this only works as long as at least 80% of customers are not producing their own energy….
In The Netherlands, where I live, the net metering obligation for utilities is considered the major subsidy for PV energy.
Actually, @eesmc, the balance may be even better for smaller inverters: since they also have a limited efficiency (up to 97% at full use) that goes DOWN when they’re not used up to 100% of their capacity, it may well be that a somewhat smaller inverter delivers more electrons in the end.
No microinvertors here, but I have a similarly limited system: I have a 4370Wp system myself, consisting of panels in 2 different directions, and coupled to a 4kW inverter with 2 followers. I rarely saturate the inverter at all, but it is truly used from sunrise to sunset. This may be better than using a 5kW inverter and all panels in the “optimal” direction.
Jim Jenal is the Founder & CEO of Run on Sun, Pasadena's premier installer and integrator of top-of-the-line solar power installations.
In addition, Run on Sun offers solar consulting services, working with consumers, utilities and municipalities to help them make solar power affordable and reliable.