Tag: "verengo"

05/11/13

  11:11:00 am, by Jim Jenal - Founder & CEO   , 350 words  
Categories: Ranting

Solar Alliance Formed to Resist Utility Attacks

Facing a growing drumbeat of faux-populist attacks organized by the investor-owned utilities, a coalition of major players in the solar leasing industry has been announced to offer a coordinated resistance. Resistance is important, but it remains to be seen whether this alliance will actually represent the interests of the solar industry as a whole.

Yesterday we learned  (h/t Susan Frank) of the formation of The Alliance for Solar Choice, which described itself thusly:

The nation’s leading rooftop solar companies today announced the formation of The Alliance for Solar Choice (TASC).  TASC believes anyone should have the option to switch from utility power to distributed solar power.  Founding members represent the majority of the U.S. rooftop solar market and include SolarCity, Sungevity, Sunrun and Verengo.

TASC is committed to protecting the choice for distributed solar.  Most immediately, TASC will focus on ensuring the continuation of Net Energy Metering (NEM).  Currently in place in 43 states, NEM provides solar consumers with fair credit for the energy they put back on the grid, which utilities then sell to other customers.  In simple terms, NEM is like rollover minutes on your cell phone bill.  Monopoly utilities are trying to eliminate NEM to halt the consumer-driven popularity of rooftop solar, which is helping create thousands of local jobs around the country.

The website is bare-bones in the extreme - the only information to be found is the single press release.  No links to other supporters, not even a list of member companies beyond the four mentioned.  (There is a link to their Twitter page - with the somewhat unfortunately chosen “TASC_master” handle.)

Now there are literally thousands of solar companies across the country who are threatened by the push by utilities to roll back or eliminate net metering.  Why aren’t any of them included in this “alliance"?  How about a little outreach to the little guys, eh? For the moment we will suspend further judgment as we wait to see how this nascent alliance conducts itself.  Certainly having well-financed entities engaging in serious lobbying efforts could be a powerful countervailing force in the battles ahead. Time will tell.

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09/06/12

  06:47:00 am, by Jim Jenal - Founder & CEO   , 2795 words  
Categories: All About Solar Power, Residential Solar, Ranting, 2012

Outliers & Oddities - State of SoCal Solar 2012 - Part 3

This is it - time to name names and find out which solar companies are the good, the bad, and - if not ugly, at least Outliers and Oddities!


In Part 1 of this series we laid out our data methodology and showed some of the general trends in the costs of solar power systems in Southern California Edison (SCE) territory for the first half of this year.  Part 2 built on that to determine Who was Hot and Who was Not - and of course, being identified as Not Hot is certain to generate a lot more consternation than the other way around!

Now in Part 3 we turn our attention to some curious things that we have found in the data: Outliers who are charging way beyond any reasonable amount compared to their peers, or taking interminably long to complete projects, and Oddities - curious trends that defy easy explanations but raise questions about the State of Solar in Southern California.

Outliers

Last year when we analyzed this data, we discovered that there was one company that really stood out for being a bad actor when it came to over-charging on solar power systems.  That company was Galkos Construction, coming in at a staggering $13.32/Watt compared to an average of $8.91/Watt, nearly 50% above the average.  (We also noted that HelioPower, Inc. was the lowest in our analysis, coming in at just $6.56/Watt or 27% below the average.)  What will we discover in this year’s data?

First a reminder of how this analysis works.  Our focus is on systems in the residential market segment since that is the bulk of sales and also where consumers are at greater risk of being pressured into a high-priced sale.  (If you are installing a 500kW solar farm and you don’t do your homework, we have somewhat less sympathy for your plight.)  Moreover, since the residential segment in the CSI data is limited to systems between 1 and 10kW, there is not as much size difference to skew the pricing data.  We excluded systems that were “delisted” so only completed or pending projects are counted.  We included, as we did last year, both cash sales and leased systems (although that data has gotten more interesting as we will see later) to capture as many data points as possible. That subset of our data accounts for 8,977 systems with an average system price of $7.23/Watt (CSI Rating).

Finally, since we really only wanted to look at the behavior of the biggest players, we limited our analysis to only those companies with over 500kW of residential projects in the data.  As a result, no company had fewer than 80 projects on our list, and the largest had nearly 1,800!  These are big players indeed, and they should be able to demand tremendous pricing for their components - but do they pass those savings on to their customers?  When we apply this restriction to the data, our sample size is reduced to 6,095 systems (68%) with an average system price of $7.38/Watt - roughly 2% higher than the overall average!  Here are our results:

Outliers - 2012The bulk of our companies here, 9 out of 15, come in below the overall average for this group.  And once again, our friends over at HelioPower came in with the lowest system price at just $5.85/Watt.  Nicely done, for the second year in a row!  (Full disclosure - while none of our projects were in SCE territory during this period, our system price for the first half of 2012 was just $5.33/Watt.)

True Outliers: Future Energy, American Solar Direct and Galkos Construction (Again!)

While down significantly from the stratospheric heights of last year, three companies continue to soar past the $10/Watt threshold: Future Energy Corporation, American Solar Direct, and just like last year, Galkos Construction, Inc.  Each of these companies is $3/Watt above the average for the residential market segment.  To what can we attribute these crazy prices?  Future Energy and Galkos use Enphase micro-inverters (but so do we, and our prices are approximately 1/2 of theirs) and in any event, American Solar Direct uses SMA exclusively, so inverter price is not driving these costs.  What about panel choices?  No insight there, either: Future Energy uses SunPower, but American Solar Direct uses REC and Galkos uses Sharp (and each uses that brand over 90% of the time).  And they each bought a lot of panels: Future Energy bought 3,091, American Solar Direct bought 6,329 and Galkos bought 7,759.  Surely that much purchasing power can demand tremendous cost reductions to these companies.  Equipment choices are simply not driving these prices.

Cost Caps?

The CSI program has talked about cost caps for a long time, and in the latest published CSI Handbook (from December 2011) we find this provision:

3.4.5 Limitations on Installed Cost

One of the goals of the CSI program is to support a reduction in PV system costs over time as defined by:

Total Project Cost ($)CEC-AC (Watts) = $/Watt

It is the intent of this program to make steps towards this goal. Projects applying and installing PV systems through this program should have their installed cost fall within a reasonable limit. The current average system cost of PV systems ranges from $7.36 to $8.41 per CEC-AC watt, fully installed. To ensure that the integrity of the program is maintained, the Program Administrators may require documentation for why system costs exceed the lower of either of the following:

  • $10.26/Watt; and/or
  • One standard deviations above the average cost per watt of all projects reaching Pending Payment Status within the last 12 months, whichever is less. (NOTE: As of 8/31/2011, the defined reasonable limit was $10.26 CEC-AC watt, but this value changes as costs decrease. The current limit is available at www.CaliforniaSolarStatistics.ca.gov)

Now this cost calculation is somewhere between the number we are using (which includes the design factor) and the nameplate cost (which is what solar companies typically report because it is the lowest and it also masks differences in equipment value).  What would happen if we were to re-jigger our cost values for our three Outliers to present their system costs as defined by the CSI Handbook’s Cost Cap section?  Here are the results:

Cost caps impact?

What do you know about that?  Future Energy’s average price is exactly at the limit stated in the CSI Handbook to avoid scrutiny by the Program Administrator!  What a coincidence!  To be sure, all three of these companies exceeded the $10.26 threshold: Future Energy (99 out of 171 times, 58%), American Solar Direct (68 out of 291, 23%), and Galkos (170 out of 482, 35%).

What to make of that?  For one thing, it shows that Cost Caps work - despite being dollars above the average cost of their peers, they each managed to at least have their average value remain under the cap.  For another, perhaps it would be useful if CSI published those companies that routinely exceed the Cost Cap in a given period?  If nothing else, it would help put consumers on notice in ways that they presently are not (unless, of course, they are reading this blog).

We would love to hear from Future Energy, American Solar Direct or Galkos, and we will be happy to print their explanations for these prices unedited, and in full.  (Of course, those responses are subject to further analysis.)

Not So Fast

Another type of outlier is the large solar company who signs a contract and then disappears for months on end while the customer waits, and waits, and waits (cue the Casablanca soundtrack).  For our same set of big time players, we decided to rank order them by the average time to go from the first filing of a rebate reservation request to the first completion date.  While there are lots of reasons for any one project to get delayed, for companies like these that install such a huge percentage of all systems, you would expect to see quick and efficient operations that deliver quality systems in short order.  Here is what we found:

Days to install - CSI/SCE 1H2012

(Wow - Do-it-Yourself’ers take the longest to get their systems built - who would have guessed?  Yet another reason why solar is not a DIY project!)

Now isn’t this interesting - Future Energy has the shortest time to install of all of these companies, taking roughly half the time to complete a project as its nearest competitor.  Maybe Future Energy customers are getting something for all of that extra money!  (Although a little research might reveal some cheaper, faster options…)

The average - which most of these companies cluster closely around - is still in excess of five months, far longer than most solar customers expect to wait.  But two companies - Petersen-Dean and SolarCity - have delays in excess of 7 months!  Perhaps being a huge company, like SolarCity, makes it harder to be responsive, but what is Petersen-Dean’s excuse?  They have 257 systems in this sample (compared to the 1,108 for SolarCity), not that many more than the 171 of our speediest company, Future Energy, and nowhere near the number of systems for Verengo which is actually doing better than the overall average at a delay of 134 days.

This got us to thinking - if we take the average number of days to complete as our benchmark, some companies will be working better and some worse than that average.  In other words, some companies are insuring that solar systems are installed faster, whereas others are, sadly, causing systems to be installed slower.  What is their cumulative impact?

To measure that, we came up with a new metric which we have dubbed the cumulative System-Years of Delay, or SYD (see Notes at end), which is the product of the total number of systems attributed to a company times the difference between the overall average time to complete and the time for this company, divided by 365. Companies that install faster than average under this metric will have a positive value, slower companies will be negative - thus the goal will be to have the largest value possible.  Think of this as whether a company is propelling the overall solar industry forward, or dragging it backward.  Here are our results (companies clustered around the average have been deleted for clarity):

Years of delayThis is a startling result - the two giants of the industry, Verengo and SolarCity, are at opposite ends of this scale!  Verengo, which has 1,791 systems in this subset, averaged 134 days to complete a project, 23 days better than the average for our major players.  Thus, it is propelling the installation of solar forward since it handles so many systems faster than average.  (Future Energy is way faster still, but has a small impact by comparison because it only installs a tiny fraction of the systems Verengo is handling.)  To be sure, Verengo’s 134 days is nothing to brag about, but in this crowd of relative slow-pokes, Verengo is clearly leading the way.

So what can we say about SolarCity?  Well, first, they are really slow - taking on average nearly two months (55 days) more than the overall average (of five months) to get a system installed.  (As with the fastest company comparison, Petersen-Dean takes substantially longer than SolarCity - 73 days worse than average compared to 55 - but they account for far fewer systems - 257 versus 1,108.)  But more importantly, SolarCity’s delays become a real setback for the overall industry given the large number of systems for which they are responsible.

Look at it this way: SolarCity, just in this tiny slice of data, representing just a fraction of their overall industry impact, is responsible for the installation of 1,108 systems representing a total capacity of 5.5 MW of residential solar.  Assuming an average of 5 solar hours per day, for every day that SolarCity delays installing these systems, 27.5 MWh of energy is not being produced.  Factoring in their 55 day delay beyond the average of their peers means that 1.5 GWh of energy was not produced, and instead, 498 additional tons of greenhouse gases were emitted (see Notes at end). SolarCity’s delays are bad for the solar industry, and bad for the environment.

Oddities

Which brings us to the Oddities section of this post.  One year ago we stirred a bit of controversy by observing that SolarCity’s system prices for leased systems were far higher than what they reported for cash sales.  We thought this was odd because there was no similar discrepancy in the data for the other large player in the leasing space, Verengo.  So naturally, we needed to revisit that analysis this year and see if that trend was continuing.

Our analysis last year tried to focus on the most recent projects in the data, and so restricted the data set to just include “pending” systems, eliminating those that were installed or delisted.  Last year, SolarCity charged $10.06/Watt for its 468 leased systems compared to Verengo which only charged $7.63/Watt for its 482 leased systems.

Here’s what this year’s data reveals:

Leasing - SolarCity vs Verengo

First some mundane observations: while Verengo has increased its number of pending systems from a year ago by roughly 45% (consistent with the overall growth in this data set from a year ago), SolarCity actually declined by roughly 24% and Verengo now has nearly twice the share of this segment as does SolarCity.

But of course the shocking data point is SolarCity’s cost per Watt - all the way down to $6.61, and now tied (exactly) with Verengo!  This is a remarkable development given that the overall downward trend in prices over the past year was far, far more modest than the precipitous drop reported by SolarCity.

We decided to investigate this a bit further.  In particular, if the decline in SolarCity’s pricing was simply that they were better able than most to take advantage of lower equipment prices, we would expect to see a gradual decrease over time from last year’s high to this year’s low.  To test that hypothesis, we went back to the overall data set and expanded our analysis to look at all California data (i.e., including PG&E and SDG&E data in our analysis).  In addition, because we needed to go back to 2011 data, we included completed projects (i.e., “installed” in the data) as well as pending projects.  We then aggregated them by month and calculated the month-by-month average system cost from January 2011 to June of 2012.  Here’s what the data disclosed:

Oddity - SolarCity's dramatic price reductionFor thirteen months, from January 2011 through January 2012, SolarCity’s system costs were remarkably stable - at or near $10/Watt.  But then something amazing happened and in the space of three short months, SolarCity slashed its prices from $9.74/Watt in January to just $6.60/Watt in April - a drop of more than a dollar a Watt per month!  Now our buying power is nothing compared to that of SolarCity, but we certainly didn’t see price declines anything like that!

And then we remembered something else that happened back in late Winter and early Spring (although the memory is a little fuzzy given that we haven’t heard anything more about it since).  From Bloomberg.com (April 9, 2012):

Elon Musk, who leads Tesla Motors Inc. (TSLA), said an initial public offering of SolarCity Corp. may occur this year after a review of accounting, with an IPO of Space Exploration Technologies Corp. probable in 2013.

Plans to sell shares in SolarCity, which leases rooftop solar-power systems, won’t advance until “additional clarity on the accounting” for those leases is provided by auditors and the U.S. Securities and Exchange Commission, Musk said in an April 5 interview. Bloomberg reported Feb. 1 that the San Mateo, California-based company was seeking an IPO as early as last month, citing three people with knowledge of the matter.

“There is this question of how do you account for something when it’s a lease,” Musk said. “Not all of them are structured in the same way. We want to just double-check with our auditors and the SEC before we file to make sure the accounting is correct.”

Rumor has it that the SolarCity IPO may have stalled over concerns by the SEC regarding those very accounting practices.  If the need to “clarify” its accounting - specifically the manner in which it calculates the fair market value of its leased systems - is what is driving down this pricing it begs the question:  Will SolarCity voluntarily revisit the accounting for all of its previously leased systems and refund the excess federal tax credits and depreciation that it has received based on what its present conduct seems to concede was an overstated valuation?  Time will tell.


Notes

System-Years Delay

The SYD formula in full looks like this:

formula for system-years of delay

 

Where CountX is the number of systems installed by Company X, AvgInstallDays is the overall average for this group of companies (157 days) and InstallDaysX represents the average number of days to complete an installation for Company X.

 

SolarCity’s Excess GHG Emissions

Excess greenhouse gas emissions attributable to SolarCity’s delay was calculated as follows:  We used the EPA’s eGrid Calculator to estimate the GHG emissions from SCE’s energy production.  That figure comes to 659.6 lbs/MWh.  We calculated in the article that SolarCity’s delay accounted for 1.5GWh (1.512 GWh to be precise,  or 1,512 MWh) of energy not produced by those solar systems during the delay period.  That works out to 997,315 lbs of GHG or 498 tons.

08/29/12

  11:09:00 am, by Jim Jenal - Founder & CEO   , 1950 words  
Categories: Commercial Solar, Residential Solar, Ranting, 2012

Who's Hot and Who's Not?
The State of SoCal Solar - Part 2

In the highly competitive solar marketplace, some companies are thriving while others are withering on the vine.  It’s the age old question: Who’s Hot and Who’s Not?  In Part 2 of our series on the State of SoCal Solar, we will answer that question, and more!

In Part 1 of this Series we explained our methodology and looked at some overall trends in the data.  To identify the players in the SoCal solar marketplace, we extracted the solar panel and inverter data from our CSI data set.  (Unfortunately, the CSI data does not include any information regarding racking equipment used on a project.) While the CSI data allows for multiple different panels and inverters to be identified with each project, in reality the overwhelming majority of projects report only one panel or inverter choice.  As a result, we will continue our practice from last year and only look at the first choice reported for both solar panels and inverters.

Top Solar Panels

There are two statistics that are meaningful - the total number of panels utilized and the number of projects on which those panels were employed.  We excluded “delisted” projects from our analysis and we will further divide the universe of projects by residential or commercial.

Residential Trends

In the residential space, there are 97 different panel manufacturers listed, but only 15 of them accounted for more than 1% of the total sales volume of 228,372 panels.

Here are our results for the residential market:

market share of panel manufacturers socal 1h2012From this analysis it is clear that SunPower and Yingli rule the residential marketplace, combining for 37% of all sales and a comparable share of all projects.  New kid on the block, South Korea’s LG Electronics, has jumped out to a very strong start, coming in fifth place behind venerable contenders, Suntech Power and Sharp.  Also notable is that Sanyo - a long-time leader thanks to its great efficiency and thermal properties - has nearly fallen off this chart altogether. (Sanyo accounted for just barely 1% of total sales on just 0.8% of all projects.)

Those are the results for the residential market overall, but does it make a difference if you distinguish leased projects from cash purchase?  Indeed it does, with only three companies having more than 5% market share in both market segments: SunPower (22.8% purchased, 18% leased), Sharp (16% and 5.3%) and Canadian Solar (9.5% and 6%).  LG Electronics sold almost all of its product into the leased systems segment with a market share of 10.7% compared to less than one-half a percent in the purchased segment.  Altogether, the purchased market segment accounted for 65,841 panels sold whereas the leased segment dwarfed its older sister with 162,531 panels sold.

The top-five most popular residential solar panel models were: Yingli YL235P (21,098 units), LG Electronics 255S1C (15,970), SunPower 327NE (12,273), Suntech Power 190S (11,488) and SunPower 230E (9,069).

Commercial Trends

On the commercial side, there are 60 manufacturers listed, of which only 13 accounted for more than 1% of the total sales volume of 350,360 panels.  Here are our results from the commercial side:

Commercial solar panels, socal solar 1h2012 Suntech has taken over from SunPower the top spot in the rankings, accounting for nearly 21% of the panels installed and it did it with only 7% of the total projects.  In contrast, second place finisher, Yingli, had more than twice as many projects - 14.4% of the total - but its market share was only 16.2%.  While this select group were the only manufacturers to crack 1% of sales, the remaining manufacturers captured a whopping 28% of all projects.

The top-five most popular commercial solar panel models were: Yingli 230P (43,064 units), Suntech Power 280-24/Vd and /Vb-1 (65,475 - two variants), SunPower 327NE, Trina Solar 230PA05 (21,590) and Trina Solar 225PA05 (17,950).

Top Inverter Manufacturers

Analyzing inverter sales is a bit different since many projects have more than one inverter, and in the case of micro-inverters installations, there is one inverter for each solar panel.  For our analysis, we will just look at the number of projects with the manufacturer’s product listed as inverter number one.

Residential Trends

The CSI data reveals 24 different inverter manufacturers in the residential space, but only 8 of them cracked the 1% market share threshold.  Here are our results for the residential market:

solar inverter market share, residential segment - 1h2012SMA is still the leader, with 31% market share but it is losing ground to our favorite inverter manufacturer, Enphase Energy which now finds itself at 21% of the overall residential market.  When just leased systems are considered, Enphase falls to number four with just 12.7%, trailing SMA (32.4%), Power-One (21.7%) and SunPower (16.3%).

Buried amidst the 1% that is “other” are some very well known names that appear to have fallen out of favor, such as: Outback Power Systems and Xantrex, as well as newcomers SolarBridge and Enecsys.

Commercial Trends

When we shift our focus to the commercial segment the number of players drops to just 13, with only 11 cracking the 1% barrier.  Here are those results:

commercial inverter market share, soCal 1H2012 This is a very different graph.  SatCon Technology has a clear market lead, despite being dogged by rumors of its imminent demise.  SMA is second, but most of that is driven by sales of the same, small-scale string inverters that constitute its products in the residential sector.  Enphase weighs in at 3.5%, not a bad number considering that large-scale commercial sales are not its forte (although that may be changing).

Popular Pairings

While our CSI data set potentially allows for more than 2,300 different pairings of inverter and solar panel manufacturers, in reality the number of actual pairings is far smaller, with just five pairings accounting for nearly 48% of all projects.  Here are the top five pairs:

top five inverter-solar pairs, soCal 1h2012

SunPower - with its 19% market share pairings - clearly demonstrates the joy of vertical integration and a strong improvement over last year when that combination accounted for just 12.4%.  The Enphase-Sharp combination comes in at number 2, but at 8.5% the combination has fallen from 10.3% last year.  (Given that the overall market share for Enphase improved from last year, this “decline” really reflects a broader base of installation combinations.)  Yingli is well represented as is SMA (which, of course, is the dominant driver behind “SunPower” inverters which are mostly SMA inverters re-branded).  Nowhere to be seen in the top five is inverter manufacturer Fronius which last year accounted for two of the top five entries but this year did not exceed 4% in any pairing.  Likewise, last year’s panel leader, Suntech, failed to reach the top five this year and Kyocera was also pushed off stage with no pairing exceeding 2%.

Who’s Hot and Who’s Not?

Next, as we did last year, we decided to take a look at what pairings are the most, and least, costly, efficient, and ultimately, cost effective.  As we noted last year, choosing a second-tier (or third-tier for that matter) solar panel by no means assures you of getting the lowest system cost.  In fact, when we looked at the top ten solar panel manufacturers by average cost per CSI AC watt, the results are a bit startling:

expensive solar panels

None of these are top-tier panels, but they surely are commanding top prices!  Keep in mind that our overall average price across all systems (excluding delisted) is just $6.23/Watt and you can see that some seriously overpriced systems were built using these panels.

One measure of panel performance (and the only one that can be teased out of the CSI data) is the ratio of PTC panel rating (meant to more closely reflect real-world conditions) divided by the nameplate panel rating (in STC watts), the higher the ratio the better.

The Sun Energy Engineering panels have a dismal 79.25% rating and the average across all of the panels listed here is under 85%.  By contrast, Sanyo panels have an average ratio greater than 89%, ten percent higher than third-tier panels from Sun Energy, yet the systems installed with Sanyo panels averaged $6.84/Watt!  (We note with dismay that the entry for Sun Energy panels represents only one system, installed in Malibu - perhaps this was an example of zip-code pricing?)

How do our top pairings rank in terms of dollar per watt?  Their numbers are all lower than what we see here, ranging from a high of $8.79/Watt for the average of combinations using REC panels to a low of $6.84/Watt for systems using Yingli panels.

What about efficiency?  Which equipment pairings produced the highest and lowest efficiency ratings (as measured by the ratio of CSI Rating divided by Nameplate)?  This is a more involved number, since it is not simply a function of efficient equipment (although panel PTC/STC rating and inverter conversion efficiency are both included) but also the specifics of the site - azimuth, tilt, shading and geographic location.  Nevertheless, good equipment certainly helps so let’s see where the numbers fall.  One additional restriction is required - we will limit this to the residential sector.  Why?  Because larger commercial projects often using tracking mounts that can have efficiencies greater than 100% and would skew our results away from the panel-inverter pairing.

So with that limitation in mind,the highest combination of panels and inverters in terms of efficiency is First Solar panels (thin film) combined with a Fronius inverter for a 90.51% efficiency score (thanks in part to the thin film panels great PTC to STC rating) while the lowest end is a depressingly low of 68.45% derived from MAGE Solar panels and inverters from SolarEdge.  (Not clear if even “power optimizers” can rescue a site with such dismal design characteristics.)

What about our most popular panel-inverter combinations - how did they fare on the efficiency scale?  Not surprisingly, the SunPower-SunPower combination is the winner at 84.38%, but four of our five favorite pairs are closely bunched: Yingli-SMA (83.28%), Sharp-Enphase (82.43%), and Yingli-Power-One (82.35%). The lone outlier was REC-SMA which came in at a relatively low 80.11%.

Who Uses What?

Finally, as we pivot from a pure equipment analysis to one more focused on the practices of the solar installation companies, we wanted to see what the biggest players are using and how does that affect their pricing?  Last year we looked at the top five players, but to give us a broader picture this time around we are looking at everyone with 100 or more projects (excluding projects that are delisted).  Here are our results:

who uses what, soCal csi data 1h2012

First a comment or two on who made the top five in this list - SolarCity and Verengo have swapped places, Galkos remains at number three (despite our observations about them last year) but REC Solar and Real Goods have been driven down the chart (to numbers six and twelve respectively) to be replaced by previously uncharted Elite Electric and American Solar Direct.  (We will have more to say about all of these folks in Part 3.)

Last year Kyocera was the panel of choice for two of the top five; this year Kyocera did not crack the top fifteen, although it was the second choice for SolarCity.  LG Electronics found a niche with Petersen-Dean (and was the second choice for Verengo), while Chinese panel manufacturers dominated the list, capturing five of the fifteen slots.  Indeed, the big winner on this list would have to be Yingli, increasing its share of SolarCity’s business from 48% last year to 66% now and pushing aside its countrymate, Suntech, to become the number one choice at Verengo.  It will be interesting to see how the ongoing trade dispute and imposed tariffs change these rankings next year.

Power-One gets the big boost this year in terms of inverter choices - elbowing past SMA for the top spot with overall leader, Verengo.  But if you want to talk brand loyalty, Enphase is the clear winner - when it cracks the list it is used more than 97% of the time!

Collectively, these fifteen installation companies accounted for two thirds of all the solar projects in our CSI data set - but did that translate into lower prices for their customers?  To answer that question - and a whole bunch more - in Part 3 we will turn our attention to Outliers and Oddities to discover the good, the bad and the ugly amongst solar companies.  You won’t want to miss it!

09/06/11

  11:00:00 am, by Jim Jenal - Founder & CEO   , 1922 words  
Categories: Solar Economics, Solar Tax Incentives, SEIA, SCE, Residential Solar, 2011

The State of Solar California - Outliers and Oddities - UPDATED x2!

UPDATE x2 11/8 - Solar City’s Jonathan Bass adds his perspective on our reporting about Solar City - see his response in the comments.

UPDATE  9/30 - We just heard from Jonathan Bass at SolarCity.  Details at the end.
(Still no word from Galkos!)


Editor’s Note: We have now done an updated analysis showing the same data from 2012.  You can read our 2012 Outliers & Oddities here.


In the first two installments in this series (Part 1 and Part 2) we looked at the most recent data from the California Solar Initiative (CSI) covering the first half of 2011 in SCE’s service area. Using that data we identified trends in cost, equipment and system efficiency.  Along the way, we stumbled upon some Outliers and Oddities in the data that left us puzzled and disturbed.  In this post we name names, specifically Galkos Construction (aka GCI Energy) and SolarCity.

Before we explain to you why they are featured in this post, we would remind our readers of the Solar Bill of Rights created by the Solar Energy Industry Association (SEIA) in the Fall of 2009.  We wrote at some length about the Bill of Rights when it was introduced, but we want to highlight now what then we termed to be, “the most important right of all:”

8. Americans have the right, and should expect, the highest ethical treatment from the solar industry.

Beyond a shadow of a doubt, this is the most important Solar Right of all if we are to build an industry that is respected and trusted by consumers throughout this country. This should almost go without saying - and yet, saying it, and living it, is extremely important.

In our view, if we become aware of situations that don’t live up to that Right, we have an obligation to point them out so that our potential clients can make the most informed decisions possible. 
In honor of that principle we present today’s post.

Outliers: Galkos Construction

In looking at the data, from time-to-time a data point would jump right off the screen.  For example, examining all of the residential projects in our data - both “completed” and “pending” but excluding “delisted” - we find that the average installation cost in CSI Rating AC Watts is $8.43/Watt (in DC or nameplate Watts that average becomes $6.99).  As we noted in Part 1, that number has decreased over time and also decreases as system size increases.  Still, given that the residential sector (as designated in the CSI data) only consists of systems between 1 and 10 kW, you wouldn’t really expect significant price variation between installers over a six month period.

But you would be wrong.

Who Charges What?

Here is a chart of the Cost per Watt for the largest installation companies in the SCE service area (you can click on the chart to see it full size):

First, let us give credit where it is due.  The low end outlier is HelioPower, Inc., at $6.56/Watt, and they did it with an efficiency factor of 87% - second best of anyone on that chart. Nice.

But who is that way off in left field?  Coming in at a staggering $13.32/Watt - a full $1.40 higher than their nearest competitor and more than twice what HelioPower is charging - is Galkos Construction, Inc., also known as GCI Energy, out of Huntington Beach.  For that money, they must surely be offering only the most efficient and sophisticated technology, right?  Not so much.  To the contrary, the average installation efficiency for Galkos is only 84.9% - the second worst on the chart and well below the average of 86.11%.  In fact, 99% of the time Galkos appears to use Sharp panels - not exactly an exotic solar panel brand - and in particular the Sharp ND-224UC1 panel (66.5%). A quick Google search reveals that the Sharp ND-224UC1 can be purchased, at retail, for $2.65/Watt or less.  Given that Galkos handled 400 projects in this data set, it is hard to believe that their price for all of their equipment, particularly the Sharp panels, would not be heavily discounted.

Quality Counts

Quality, of course, is important, and the data does not reveal - though the Internet hints at - the quality of installations from Galkos.  Here is how the company describes its own product offerings (from the “Services” page of their website):

Solar by GCI [Galkos Construction, Inc.] Energy
GCI Energy is the largest solar company in Southern California with over 30,000 customers. So you get the most knowledgeable professionals, excellent customer service and a better price.

GCI Energy solar offers the highest efficiency solar panels on the market - those manufactured by Sharp. With Sharp Solar Panels, GCI Energy can tailor a solar panel installation to your specific needs and lifestyle, so you get maximum performance without a maximum investment.
(Emphasis added.)

Does Galkos actually have 30,000 solar customers?  Certainly not (nobody does).  Are they providing “a better price"?  It is not clear what their standard of comparison might be - but their price is not better than any of their major competitors in that chart.  And of course, the statement does not define what they mean by “the highest efficiency solar panels on the market,” but it seems unlikely that Sharp would make that claim.  Here’s one chart that concludes that they couldn’t (note the efficiency of the SunPower and Sanyo panels first, then search for Sharp).

All we can say in response is, caveat emptor.

Oddities - SolarCity

Now we turn to the Oddities section of this post.  Unlike the outliers, which were always of interest to us, we were not looking for the oddity we report here - it literally just jumped out at us.

Sold versus Leased

Question: What is the difference in reported cost between systems sold directly to the end customer and those that are leased (i.e., have a third-party owner in CSI parlance)?

The initial difference that we stumbled upon was so startling that we knew we needed to narrow our focus and control for as many variables as possible to isolate that one factor.  To achieve that end we restricted the data to those residential systems (i.e., between 1 and 10 kW) that were “pending” in the CSI/SCE data (thus, the newest proposed systems in the data which, based on our Part 1 analysis should mean the lowest cost systems). That way our project sample would be as homogenous as possible, eliminating cost variations based on system size and timing.

Given those restrictions, the top 5 installation companies in which the system is owned by a third party are: Verengo (482 systems), SolarCity (468), American Solar Direct (124), Sungevity (99), and HelioPower (63).  Of those five, only two also have direct sales projects pending: Verengo (7) and SolarCity (9).  Let’s see how they compare:

Lease impact on costs - SolarCity vs Verengo

What is going on here?  For Verengo, as the number of systems increases - which it does in going from sold systems to leased systems - their cost per Watt decreases - which is what we would expect.  But not so for SolarCity - even though they are leasing 50 times as many systems as they are selling, their cost for the leased systems went up - way up - as in up by $3.12/Watt!

(One possible explanation for this discrepancy would be that SolarCity uses much more expensive equipment in their leased systems than they do in the ones that are sold.  But they don’t.  On their sold systems, SolarCity always selected a Fronius inverter and their panel choices were split among Yingli (56%), Kyocera (33%) and Sharp (11%).  On their leased systems, SolarCity selected Fronius inverters 98% of the time and again split their panel choices among Yingli (68%), Kyocera (28%), and BP (3%)  with the remaining 1% scattered among Suntech, Sharp and Sanyo.  In other words, there is no significant difference in SolarCity’s equipment choices between sold and leased systems.)

Why Does this Matter?

Why does this significant cost differential matter, you might ask?  After all, customers aren’t paying that price - they are paying on a lease so the “cost” of the system doesn’t matter to them, all they care about are their lease payments.  True enough - unlike the case with our Outlier above, the end customer is not the victim here.

Recall, however, that for systems that are leased, the third-party owner - presumably SolarCity and its investors in this case - receives both the rebates and the tax benefits associated with the installation.  While the rebates are independent of the system cost (they are paid based on CSI Watts), not so for the tax benefits.  Commercial operators   (even though these are residential installations they are treated as commercial projects for tax purposes) are entitled to both a 30% tax credit as well as accelerated depreciation based on the cost of the system.

For the 468 systems that SolarCity is leasing, their total cost is $24,261,735 to install 2,412 kW.  If those installations were billed out at the $6.94/Watt they are charging for their sold systems, the installed cost would be $16,739,280 - a difference of $7,524,037.  At 30% for the federal tax credit, taxpayers are giving SolarCity an extra $2,257,211 - just from six months worth of installs in only the SCE service area.

Wow!

In the words of the 70’s pop song, How long has this been going on?

How Long Indeed

We decided to find out.

Although all of our analyses up until now in this series have been restricted to the first half of 2011, the actual data set contains entries from the inception of the CSI program.  Thus we can look at all of SolarCity’s installs going back to 2007 and compare them as we did for the 1H2011 pending installs above.  We will use the First Completed date to group these by year and analyze only “installed” - and not “pending” applications.  Here’s the data:

SolarCity Installed cost 2007-2011 - sold vs leased systems

The answer would appear to be, almost from the beginning!  Back in 2007, Solar city sold ten times as many systems as it leased.  By 2008 the ratio was down to 4-1 and ever since then leasing has been SolarCity’s predominant business strategy with the ratio of leased to sold now standing at nearly 16-1 in 2011.

Bottom Line

What, then, is the cumulative impact to SolarCity’s bottom line from this trend throughout California?  We aren’t in a position to calculate the depreciation benefits (since that is a function of the system owner’s tax bracket) but we can readily calculate the added value derived from the 30% federal tax credit due to this increased cost per Watt.

Here is our plot of the cumulative effect of those year-by-year increases:

SolarCity additional federal tax credits year-by-year and cumulative

After a slow start in 2007-08, SolarCity’s “model” really took off and has garnered the company an extra $3,000,000+ each year since 2009 (and, of course, 2011 is not yet over) for a total excess accumulation of $10,619,000.  Depending on the investors’ tax bracket, the depreciation could be worth nearly as much as the tax credit.

Double Wow!

UPDATE 9/30 - We have now heard from SolarCity

We just heard from Jonathan Bass, Director of Communications at SolarCity who took exception with our report, although he did concede that he could see how we could have reached the conclusions we published in light of the CSI data.  We encouraged him to please send us a written response in as much detail as he chose and we would publish it in its entirety.  While he agreed that SolarCity would be publishing its response, he did not commit to publishing the information here.

In any event, when we hear more we will update this post again.

What’s Next?

No doubt there is more that we could do with these revelations - but wouldn’t it be better for those with actual oversight obligations to examine this data as closely as we have and to take appropriate action?

As always, we welcome your comments - and if we hear from any of the folks named in this series we will be sure to update the appropriate post.

08/30/11

  09:25:00 am, by Jim Jenal - Founder & CEO   , 1292 words  
Categories: All About Solar Power, Solar Economics, SCE, Commercial Solar, Residential Solar, 2011

The State of Solar California - Part 2: Who's Hot and Who's Not?

Yesterday we wrote about our most recent foray into the California Solar Initiative (CSI) data and how that data revealed trends regarding the costs of solar in SCE’s service area during the first half of 2011. We continue today with a look into the equipment that was specified for these projects and explore who’s hot and who’s not.

CSI Data Generally and Equipment Specifically

As a reminder, our data set for this analysis consists of an extract from the CSI Working Data from 8-24-2011 that includes data for SCE installs where major status activity took place during the first half of 2011.  That data set consists of a total of 6,306 projects of which 698 are “delisted” (meaning the project’s rebate reservation has been cancelled for some reason), 3,131 are “installed” (completed or in some stage of rebate payment) and 2,477 are “pending” (in some stage of the process from initial rebate application filed but no rebate claim yet filed).  For today’s analysis, we will exclude the “delisted” projects from our data, leaving a total of 5,608 projects to analyze.

CSI tracks data about equipment used on projects in great detail.  In particular, for every project, CSI allows for up to seven different panel manufacturers and ten different inverter manufacturers!  So how many of our projects use multiple panels or inverters by different manufacturers?  We would expect not many, and the data supports that surmise.  Only 11 projects reflect two different solar panel manufacturers on the same project and in most of those cases the installer has substituted one solar panel for the one originally designated.  (Indeed, one project reflects four different panels being identified to CSI for the same project, finally settling on what appears to be two 180 Watt panels plus six 175 Watt panels feeding a single string inverter - curious design, that!)  Similarly for inverters, only 24 projects have two different inverter manufacturers specified and no project reflects more than two.  Given that, our analysis will only look at the first specified panel and inverter manufacturer.

Solar Panel Trends

So what is happening with solar panels?

solar panel manufacturers, CSI data 1H2011Overall, there are 85 different panel manufacturers included in the data; however, most of them account for very few projects.  If we apply a reasonable filter to this data and only look at solar panels that appear in 50 or more projects, the number of represented manufacturers drops from 85 to 14, and the total number of represented projects falls from 5,608 to 5,079.  In other words, those fourteen manufacturers account for 90.6% of all of our projects, as demonstrated in this first graph. In fact, the distribution is even tighter with only five manufacturers exceeding 10% of the total: Suntech Power (18.7%), Sharp (14.8%), SunPower (14.3%), Kyocera (12.8%) and Yingli Green Energy (10.8%).

Solar Inverter Trends

Inverter manufacturers - CSI data 1H2011

There are twenty-three different inverter manufacturers represented in the CSI data, reflecting the greater complexity of inverters and the more rigorous path required to bring an inverter to market in the U.S.  Filtering for manufacturers represented by ten or more systems cuts the list from 23 down to just 13.

SMA America is the runaway winner in this competition.  Under their own label, they account for 35.4% of all of these projects.  Moreover, the majority, if not all, of the “SunPower” inverters are actually re-branded SMA inverters.  When the SunPower inverters are added in, SMA accounts for a whopping 48.2%.  That leaves only six other manufacturers to exceed even 1% of the total: Fronius USA (19.8%), Enphase Energy (15.2%), PV Powered (5.5%), Kaco New Energy (3.1%), Power-One (3%) and SatCon Technology (3%).

Two things of interest in those last numbers - the inroads of relative newcomer Enphase Energy (which was only founded in 2006), and the inclusion of SatCon, since alone among that list, it only sells central inverters for the commercial market (where it is dominant).

Popular Pairings

That is how the different manufacturers stack up head-to-head, but what about combinations?  Are there pairings of  panels and inverters that are most commonly preferred?  The data reveals five combinations that account for more than 5% of the total: Suntech panels with SMA inverters (13.5%); SunPower panels with “SunPower” (i.e., SMA) inverters (12.4%); Sharp panels with Enphase micro-inverters (10.3%); Yingli panels with Fronius inverters (8.2%); and Kyocera panels with Fronius inverters (8.2%).

Winners and Losers

While certain pairings are popular - are they cost-effective and how well do they perform together?  We decided to look at system combinations from an average $/Watt perspective and from an average CEC efficiency perspective to see what jumps out of the data.

Here’s the first thing that struck us - picking a system with lower-tier panels does not guarantee a lower installation cost.  In fact, many of the bottom-tier panels (none of which made the cut in our discussion of panel manufacturers above) had install costs well above our overall average for the data set ($6.37/Watt).  For example, we found a handful of systems using solar panels from such luminaries as Apollo Solar Energy, SET-Solar, and REC ScanModule where the average installation cost was more than $10/Watt!

Who was on the very low end of the install cost curve?  Gloria Solar, Suniva, Kaneka, Silray and Solaria each had a handful of installations that were below $4.50/Watt.

More significantly, how did our most popular pairings perform?  Here’s the data:

Cost Effectiveness of Popular Panel/Inverter Pairings
Combination Average Cost $/W
Suntech & SMA $5.01
SunPower & SunPower $8.49
Sharp & Enphase $11.62
Yingli & Fronius $9.58
Kyocera & Fronius $9.79

What is up with the Sharp & Enphase combination?  While Enphase installations are known to cost a bit more than a comparable string inverter installation (confirmed by our own experience), they certainly don’t cost $5/Watt more!  Rather, it turns out that the overall average for all Sharp-based systems is $8.53/Watt (nearly $2.00/Watt above the average) with prices ranging from a low of $6.17/Watt (when paired with a Solectria inverter) to a breath-taking high of - are you sitting down? - $19.30/Watt when paired with a Sharp inverter.  So who installed that system, you ask?  You’ll learn all about it (or at least all that we can tease out of the data) later in this series.

Shifting our attention to efficiency, thin-film module maker First Solar gets the highest overall ranking, 91.7%, thanks to its extremely high STC to PTC ratio.  On the more embarrassing end of the scale, Sunlan solar brings up the rear, averaging only 80.7%.  From our list of the most popular solar panels, Sanyo (long a Run on Sun favorite) does the best, averaging 89.3% across a variety of inverter combinations.  The rest of the top five are: Canadian Solar (87.6%), SunPower (87.5%), Suntech (87.2%), and Schuco (87.0%).  The bottom-five of our best selling panels?  That dubious honor belongs to: Sharp (86.0%), BP Solar (85.8%), ET Solar Industry (85.6%), Trina Solar (85.5%), and REC Solar (85.1%).

As for our five most popular pairings, here is the data:

System Efficiency of Popular Panel/Inverter Pairings
Combination Average System Efficiency
Suntech & SMA 87.2%
SunPower & SunPower 87.1%
Sharp & Enphase 85.2%
Yingli & Fronius 85.6%
Kyocera & Fronius 86.0%

That is a pretty tight grouping, with a total range of just 2%.  To break out of that mold with a conventional panel/inverter pairing, the Sanyo & SMA combination is your best bet, weighing in at 89.5%.

Who Uses What?

Finally, we decided to see what equipment combinations are preferred by the biggest installers in the market.  The following table lists the top-five installers and reports the number of projects in the data, their most frequently chosen solar panel (and % of times used) and their most frequently chosen inverter (and % of times used).

Top-5 Installers by # Projects - Preferred Equipment
Name # of Projects Panel Mfr (%) Inverter Mfr (%)
Solar City 910 Yingli (47.8%) Fronius (95.5%)
Verengo 688 Suntech (91.7%) SMA (81.7%)
Galkos Construction 401 Sharp (98.5%) Enphase (99.0%)
REC Solar 207 Kyocera (42.5%) SMA (75.4%)
Real Goods Solar 165 Kyocera (54.6%) SMA (65.5%)

Collectively, these 5 installation companies accounted for 42.8% of the projects in the CSI data.  Certainly companies this large must have some real clout when it comes to negotiating prices, thereby allowing them to pass along those savings to their many customers. 
Or do they?

Find out in our next installment!

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Jim Jenal is the Founder & CEO of Run on Sun, Pasadena's premier installer and integrator of top-of-the-line solar power installations.
Run on Sun also offers solar consulting services, working with consumers, utilities, and municipalities to help them make solar power affordable and reliable.

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