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  • Panels ~ 60% Inverters ~ 10% BOS ~ 30%
  • Provides greater transparency of system performance, hence a better return on investment
  • CSI - California Solar Initiative is a ten-year incentive program that aims to install 1,750 MW of new, solar-produced electricity by 2016, moving the state toward a cleaner energy future and helping to lower the cost of solar installations for our customers. PG&E's portion of the statewide goal is 746.8 MW.
  • CSI - California Solar Initiative is a ten-year incentive program that aims to install 1,750 MW of new, solar-produced electricity by 2016, moving the state toward a cleaner energy future and helping to lower the cost of solar installations for our customers. PG&E's portion of the statewide goal is 746.8 MW.
  • Program started January 1, 2007 – December 31, 2016 Purpose – To provide incentives for installing eligible solar photovoltaic (PV) systems on new homes Statewide Goals – To create a self-sustaining market for solar homes where builders incorporate high performing solar systems PV system size 1 kW AC or larger (> 5 kW requires justification) – letter signed by CEPE Architect, or engineer or electrical contractor with C11 license stating that the system size will not exceed the household load. Must be sized to offset the end-use consumer on-site electric load Incentive based on the estimated performance of the system and calculated using the CEC PV EPBI calculator Building must achieve energy efficiency beyond current Title 24 Grid connected with eligible utility New, certified system components listed on the CEC’s eligible equipment list Ten year warranty on system components & labor Third-party field verification of energy efficiency measures and PV system (HERS rater) Equipment seller must be registered with the CEC NSHP Tier 1 $2.50 or $2.60/watt $3.30 or $3.50/watt 15% better than T-24 ES appliances OR NSHP Tier 2 $2.50 or $2.60/watt $3.30 or $3.50/watt 35% better than T-2 40% reduction in cooling ES appliances
  • Track 1 Update: To date, there are 134 active projects, which account for 6.8MW and $23M. At this time, there is ~$8.5M in available funding Track 2 offers higher, grant-style incentives through a competitive application process. Applications are submitted in the first and third quarter, and awarded in the second and fourth quarters of the year. At this time, the MASH PAs are reviewing the first round of submissions from Q3.
  • SF – 3 to 6K for residential, upto 10K for commercial. Low income residents may qualify for another 5K The Sonoma County Energy Independence Program (“SCEIP”) provides financing (“SCEIP Financing”) for the installation of energy efficiency improvements, water efficiency improvements and renewable energy sources that are permanently fixed to real property (“Improvements”) in Sonoma County. Property owners will repay SCEIP Financing through an assessment levied against their property which is payable in semi-annual installments on property tax bills. The requested assessment amount (including contingency) is equal to or greater than $2,500 and is less than $60,000; and SCEIP funding is available.
  • Replaces the $2000 cap Allows AMT (alternative minimum tax) filers, businesses and individuals, to take the credit as well Extends Bonus Depreciation Last year, Congress temporarily increased the amount (50% of the cost of capital investment) that businesses could write‐off for capital expenditures incurred in 2008 to $250,000 and increased the phase‐out threshold for 2008 to $800,000. The bill would extend these temporary increases for capital expenditures incurred in 2009. Accordingly, until the end of 2010, business taxpayers are allowed to write‐off up to $125,000 (indexed for inflation) of capital expenditures subject to a phase‐out once capital expenditures exceed $500,000 (indexed for inflation). (Div. B, Sec 1202, p. 74)
  • 50% Bonus depreciation – means businesses may accelerate half the future depreciation amount into the 1 st year. i.e. if the first year depreciation is 20%, then may also depreciate the 40% more (half of the 80%) totaling to 60% for the first year. Not to exceed 80K for 2009 and 500k for 2010.
  • The Sonoma County Energy Independence Program (“SCEIP”) provides financing (“SCEIP Financing”) for the installation of energy efficiency improvements, water efficiency improvements and renewable energy sources that are permanently fixed to real property (“Improvements”) in Sonoma County. Property owners will repay SCEIP Financing through an assessment levied against their property which is payable in semi-annual installments on property tax bills. The requested assessment amount (including contingency) is equal to or greater than $2,500 and is less than $60,000; and SCEIP funding is available.
  • Resident Benefits to consider: No upfront cost Predetermined electricity rates for the duration of contract Resident not responsible for O and M Resident to also consideration: Transaction costs Admin costs for separate bill Changes to facility may be prohibited Resident does not own the RECs Mostly for commercial vs. lease is mostly for residential
  • Think of it as a car lease – someone else owns the system but you get to use it, or in this case you get the energy that’s produced from it for a monthly fee that’s lower than your current electricity bill. $2000 fee to install a 4kW system 4kW system with a monthly bill of $225 would see reduction of $150 Difference between a PPA and Lease PPA resident doesn’t own the system and is paying for a fixed monthly cost for the duration of the contract Lease resident is paying for the system and not just the energy produced from it and the monthly cost is designed to increase at a set amount y / y, but typically not more than electricity rate increases

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  • Webinar: PV Financial Analysis
    • Matt Heling
    • Program Manager
    • Solar & Customer Generation
    • Pacific Gas & Electric Co.
    Garen Grigoryan Business Analyst Solar & Customer Generation Pacific Gas & Electric Co.
  • Webinar Goal
    • Review concepts and resources needed to understand and/or perform an analysis of PV system cost-effectiveness.
  • Agenda
      • PV system costs
      • PV systems benefits (financial)
      • Methods of financial analysis
  • Energy Efficiency
  • Energy Efficiency
      • Energy efficiency is typically the most cost-effective way to reduce your energy bill
      • Energy efficiency also reduces the size of the solar system you need
        • Can save $1,000’s of dollars on the cost of the system
      • An energy efficiency audit is required to be eligible for some customer-side incentive programs
  • Large Solar PG&E Home: PV System Cost and Payback Large Solar PG&E Home Total Upfront Savings: $8,889 11.9 Panel Reduction *($9/watt)-CSI Incentive -30% Federal Tax ~ 10 years ~ 22 years ~4 years ~ 15 years $ 26,009* $ 19, 047 $ 6,962 $ 34,898* Total Combined Cost Size and Cost of Solar After EE (3.6 kW) Cost of Implementing EE Size and Cost of Solar Before EE (6.1 kW)
  • Site Screening Criteria
  • Site Screening
    • What physical site characteristics makes a site a good candidate for PV?
            • Orientation – S or SW is best
            • Solar “window” – Access to mid-day sunlight
            • Roof tilt – ~30º is ideal, but even flat is okay
            • Weather – Typically good in CA
  • System Performance
  • PV System Performance
      • Rules of thumb:
      • Each 1 kW of PV system capacity typically*…
        • Requires ~100 ft 2 of roof space
        • Produces ~ 1,300 – 1,700 kWh/yr .
          • Depends on many factors, including:
            • Location
            • Shading
            • System orientation
            • etc.
    * Values presented are approximations only and may vary depending on a variety of factors.
        • PV production calculators can estimate production for specific PV system types, locations, technologies, configurations, etc.
  • System Costs
  • Capital Investment
      • Modules (Panels)
      • Inverters
      • Balance of system cost
    Typical installed costs are $8 to $10 per Watt
  • Operations and Maintenance Costs
      • Washing
        • Cost related to hiring a service to perform this maintenance twice a year
      • Inverter replacement
        • Typically every ten years
      • PMRS (Performance Monitoring and Reporting Service)
        • Additional monthly cost - offset by owner’s awareness of system performance
  • Incentives
  • Types of Incentives
      • CSI – California Solar Initiative
      • NSHP – New Solar Homes Partnership
      • MASH – Multifamily Affordable Solar Homes
      • SASH – Single Family Affordable Solar Homes
      • Local Incentives and Financing Opportunities
        • San Francisco
        • Berkeley (Berkeley First)
        • Sonoma (SCEIP)
      • Federal ITC / Depreciation
  • CSI – California Solar Initiative
      • Applies to Retrofit Residential and Non-Residential, plus New Construction Non-Residential
      • Incentives designed to decline over time
        • Currently both Residential & Non-Residential are in step 6
      • Two types of Incentive Payments
        • EPBB (Expected Performance Based Buy-Down) – one lump sum paid upfront
        • PBI (Performance Based Incentive) – once a month payments made over 5 years
  • CSI Current Incentive Availability
  • NHSP – New Solar Homes Partnership
      • Only For New Residential Home Construction
        • Builders
        • Developers
        • Custom home owners
      • Aims to install 400MW
      • Incentive budget is $400MM
      • One time, upfront, expected performance based incentive (EPBI)
      • PV system size 1kW AC or larger (>5kW requires justification)
  • MASH and SASH
      • Designed to encourage solar adoption for low income housing residents
      • MASH
        • Administered by PG&E
        • $108MM available for incentives
        • Track 1a: $3.30/Watt for systems that offset common load
        • Track 1b: $4.00/Watt for systems that offset tenant load
      • SASH
        • Administered by Grid Alternatives
        • $108MM available for incentives
        • Very low income customers may receive a 1kW fully subsidized (up to $10,000) system
  • City Government Incentive
      • San Francisco
        • 10 year program
        • In addition to other incentives
        • $1,000 to $3,500 for Residential
        • Up to $10,000 for Commercial
        • Low income residents may qualify for additional grants
  • Federal ITC
      • Solar Investment Tax Credit*
        • Went into effect January 1 st 2009
        • Available for next 8 years (through 2016)
        • 30% of net solar system cost
        • No monetary cap
        • Applies to residential & commercial
    *All tax related statement are designed to inform and not to be construed as tax advise. Please consult a tax attorney before making any purchasing decisions.
  • Bonus Depreciation
      • Applies to commercial system owners Only
        • Benefits extended for systems installed in 2009
          • 50% of cost of capital investment
          • Up to $250,000 with phase-out threshold of $800,000
        • Benefits will continue for systems installed 2010 with reduced depreciation allowances
          • Allowed write-off up to $125,000 of capital expenditure
          • Subject to phase-out once capital expenditure exceeds $500,000
    *All tax related statement are designed to inform and not to be construed as tax advise. Please consult a tax attorney before making any purchasing decisions.
  • Sample Costs
    • Example* for average SF household of four
    • - Monthly electrical bill $75 to $150
    • - Installing 3.0kW AC System
    *These Incentive and ITC values are for demonstration purposes. Please consult a qualified tax attorney for applicability of various Incentives and grants. ~5000 kWh / year kWh Production $14,000 NET COST +$700 Tax on SF Rebate -$3,500 San Francisco Rebate -$7,200 Federal ITC -$3,000 CSI Incentive (est $1000/kW) $27,000 Cost of system
  • Electricity Costs and Net Energy Metering
  • Electric Rates
    • Two basic types of rate schedules:
    • *Both incorporate the concept of tiers :
      • The more electricity is consumed, the more it costs.
      • Example:
      • 0 - 100 kWh $0.10/kWh
        • 100 - 200 kWh $0.12/kWh
        • etc.
      • Tiers apply to both “flat” rates and TOU rates
    $/kWh varies by time of day* Time-of-Use (TOU) Constant $/kWh* “ Flat” Electricity cost structure Rate Schedule Type
  • Rate Tiers – Impact of PV Output from PV systems tends to offset the most costly electricity first.
  • TOU and PV
  • Net Energy Metering (NEM)
    • NEM allows customers to receive credit for electricity produced in excess of what is consumed on-site.
      • Utility grid acts as “battery”
      • Credit is at the relevant retail rate
      • Annual true-up
        • AB 920: Credits for excess generation (kWh) (details TBD)
      • Can zero out energy portion of bill, but other (minor) service charges still apply
        • Typical customer sizes PV system to ~80% of annual energy (kWh) consumption
    NEM is especially valuable for customers on TOU rates because PV system output tends to occur during the most expensive (peak) periods.
  • Financing Options
  • Purchasing Options
      • Cash / Financing
      • Power Purchase Agreement
      • Lease To Own
  • City and County Financing
      • Berkeley
        • Creative financing – Berkeley First
      • Sonoma County
        • SCEIP – Sonoma County Energy Independence Program
        • Financing is for existing buildings only
        • Repayments made through property tax bills over time
  • PPA Structure
      • Third Party owns system and is responsible for financing, designing, installing, monitoring and maintaining for the customer
      • No upfront fee required
      • Customer purchases electricity (kWh) the system generates at contracted rates
      • Customer may purchase system after contract expires
      • Contracts are typically 20 to 25 years
      • RECs (Renewable Energy Credits) are claimed by third party
  • Lease To Own
      • Third Party owns system and is responsible for financing, designing, installing, monitoring and maintaining for the customer
      • Customer typically pays a small upfront fee
      • Customer enters into a lease agreement
      • Significant reduction in electricity bill
      • Contracts are typically ~10 years
      • Leases may have annual built-in increases – typically not exceeding increases of electricity rates
  • Renewable Energy Credits
  • Renewable Energy Credits (RECs)
      • RECs are associated with the “green” component of electricity from renewable sources
      • RECs are presently traded in voluntary markets
        • ~$0.01–0.05/kWh
      • Generally, for PV systems on the customer side of the meter, RECs are owned by system owner
        • For PPAs, the owning 3 rd party retains RECs
      • May become more valuable in the future – particularly if utilities are allowed to use RECs to meet Renewable Portfolio Standard (RPS) goals
    Customer NSHP Customer MASH/SASH Customer CSI REC Owner PG&E Program
  • Methods of Financial Analysis
  • The Key Questions
      • How much does/will my PV system cost?
            • vs.
      • What is the value of the avoided electricity costs and other financial benefits?
  • Key Inputs and Variables
      • Capital (installed) costs
        • PV modules, inverter, installation, monitoring equipment, etc.
        • Inverter replacement
      • O&M costs
        • Panel-washing, monitoring service, etc.
      • PV system performance
        • Annual energy production
        • Performance degradation
        • System life
      • Value of electricity displaced
        • Projected electricity production
        • Electric rate type (TOU vs. not)
        • Projected future electricity rate increases
      • Incentives
        • May be received up-front or over time
      • Tax credits
        • ITC
        • Other local tax benefits
      • Financing method
        • Cash vs. loan vs. PPA vs. …
      • Other assumptions/concepts
        • Discount rate (opportunity cost)
        • Compound interest
  • Methods of Analysis
      • Simple payback
        • Years until costs are recovered
      • Total life cycle payback
        • Considers benefits received after simple payback is attained
      • Cash flow model
        • Shows expenses and revenues each year
        • See Appendix for example/illustration
      • Internal rate of return
        • Average annual profit (loss) over life of system
  • Information Resources
  • Information Resources ITC forms www.irs.gov/formspubs/ IRS Federal ITC Details for applicable depreciations www.dsireusa.org/solar/ DSIRE database Incentives SF City Rebates www.sfwater.org/solarincentive San Francisco Local Municipality Rebates www.berkeleyfirst.renewfund.com/ BerkeleyFirst www.sonomacountyenergy.org Sonoma County Energy Independence Program Guide to Federal Tax Incentives for Solar Energy www.seia.org/ Solar Energy Industries Assoc. SEIA For hiring HERS rater www.energy.ca.gov/HERS/index.html California State Government EE surveys For Sonoma County specific financing options www.sonomacountyenergy.org/ Sonoma County SCEIP Details for applying for NSHP incentives www.pge.com/nshp/ PG&E website NSHP Free classes available on a multitude of solar and solar-related topics www.pge.com/solarclasses PG&E Classes PG&E Classes Managed by GRID Alternatives www.gridalternatives.org/sash SASH website SASH Managed by PG&E www.pge.com/lowincomesola MASH website MASH www.pge.com/gen PG&E NEM website NEM Displays current incentive rates www.csi-trigger.com Trigger Tracker Official CSI program rules www.gosolarcalifornia.ca.gov/documents/CSI_HANDBOOK.PDF CSI Handbook State-wide CSI resource www.gosolarcalifornia.org GoSolarCalifornia website PG&E CSI resource www.pge.com/csi PG&E CSI website CSI Notes Link Resource Program/Topics
  • Thank you!
    • Your thoughts?
      • Suggestions for future content?
      • Opinions on content and delivery?
      • Topics to emphasize or de-emphasize?
      • How can we provide a better service?
    Feedback is welcomed! [email_address]
  • Appendix
  • Net Energy Metering (NEM) Sell Power to the Utility by Day Buy Power at Night and Winter Exchange at retail Annual billing cycle
  • NEM October May April “ SUMMER” “ WINTER” 250 500 750 kWh/mo Roll over Average monthly usage PV system production
  • Value of displaced electricity grows as assumed electricity cost increases outpace assumed performance degradation Inverter replacements (Simple) Payback at ~Year 15 Profit increase with time Note: This chart and the values shown are for illustrative purposes only. Capital costs – (incentives + tax credit) Example Up-front, cash purchase of PV system