The article assists facility managers in deciding if they will receive a valuable ROI from installing solar systems. The included map helps managers determine their solar resource measured by kilowatt hours per square meter per day. That number can then be put into a formula to determine approximate energy cost savings. The article uses Giumarra Vineyards as a case study to show how the formula works. The article goes further to discuss photovoltaic technology, the solar panel market, mounting solutions, financing and tax incentives and energy analytics.

1. MAY-JUNE 201220
FEATURE
M
any cold storage
facility operators have
implemented building
envelope improvements
that deliver substantial energy
efficiencies. However, even the most
efficient facility still consumes a massive
amount of energy.
When does it make sense to reduce
your company’s vulnerability to rising
utility prices by generating power on-site?
This article provides an updated
look at the most common form of
distributed energy generation for
cold storage facilities: photovoltaic,
commonly referred to as solar or PV.
It presents objective guidelines for
quickly assessing your PV potential and
discusses new risks and rewards that
impact project returns.
Feasibility: What is Your
PV Potential?
Solar is economically viable only under
certain conditions. A certified and
competent contractor will provide
you with detailed engineering, solar
production and financial analyses, but
you can save time and money by doing
your own preliminary assessment of
sunlight, savings and space.
Sunlight
For PV, sunnier is better. Using this
map, (detail at www.nrel.gov/gis/solar.
html ) determine your solar resource
as measured by the kilowatt hours per
square meter per day. For example
Bakersfield receives 5.8 kWh/m2/day,
Seattle gets 3.4. Call this your “sunlight
score.”
Savings
With any distributed generation project,
the goal is to generate energy for less
than what the utility charges. You can
approximate the potential savings or
“avoided utility cost” of generating
energy yourself by taking a summer
energy bill and dividing the total dollar
amount by the total number of kilowatt-
hours consumed. The result will likely
be somewhere between $.07/kWh and
$.18/kWh – your “savings score.” If your
utility has a solar incentive, calculate its
$/kWh value over 20 years and add it to
this score.
For example a Seattle facility’s
monthly energy bill might be $8,000 over
115,000kWh, or $.07/kWh. But there’s
also a $.12/kWh solar incentive over 5
years; spreading this over 20 years we
get $.12 x 5/20 = $.03/kWh incentive.
Their savings score is .07+.03 = .10.
Space
Bigger projects are better at covering the
fixed costs of engineering, development
and financing. This is determined by the
size of the project, what we call a “space
score.” To find yours, award 1 point if you
have 50,000 square feet of unshaded,
solar-viable space, and an additional 1/10
point for each incremental 50,000 square
feet thereafter.
Now multiply your Savings Score
and Space Score together. If the total is
less than 0.50, put this article down and
get back to work – solar probably can’t
save you money. If your score is more
than 0.85, call your CFO… you have
outstanding PV potential! And if you are
in the middle, read on.
Comparing Cases
With great sunlight, expensive
energy and plenty of space, Giumarra
Vineyards in Bakersfield, Calif., scores
a trifecta at 1.1. A larger project in
Seattle benefits from a generous rebate
(paid at $.12/kWh for 5 of 20 years), but
cannot overcome lack of sunlight and
inexpensive energy… the project scores
.41 and won’t be compelling:
SolarEnergy
forCold
Storage
Is solar energy an option
for your company?
Check out this update
on the feasibility, risks,
and rewards.
By Tom Millhoff
Annual average solar
resource data are shown
for a tilt=latitude collector.
The data for Hawaii and the
48 contiguous states are a
10 km satellite modeled dataset
(SUNY/NREL, 2007) representing
data from 1998-2005.
The data for Alaska are a
40 km dataset produced by
the Climatological Solar
Radiation Model (NREL, 2003).
This map was produced by the National Renewable Energy Laboratory for the U.S. Department of Energy.Author: Billy Roberts - October 20, 2008
kWh/m2
/Day
<6.8
>
2.2
3.0
4.0
5.0
6.0

2. MAY-JUNE 2012 21
• Bakersfield: Sunlight (5.9) x Savings
($.19) x Space (1) = 1.1
• Seattle: Sunlight (3.4) x Savings
($.07 cost + $.12 rebate x 5/20yrs)
x Space (1.2) = .41
Of course, incentives, policies,
energy pricing and weather vary
dramatically across regions. If your math
suggests solar may be economical,
or if you are aware of other special
circumstances that may affect your
score, we recommend you engage a
firm with solar contracting, engineering
and financing experience to assist you
with a more detailed feasibility analysis.
What’s New: Risks and
Rewards
We can best appreciate what’s new
in solar by understanding what remains
unchanged.
PV Technology:
Thanks to massive investment in
global production capacity, flat-
panel polycrystalline photovoltaic
technology has won the price-
performance war, trumping sexier but
costlier technologies like Solyndra.
This is a mature (some PV panels
have been operating for more than
40 years) and stable technology, with
modest productivity gains over the
last few years.
Price Flattening
Overproduction has forced panel
prices down dramatically. Retail
commercial system costs have
plummeted from about $8/watt in 2005
to less than $4/watt today. Surviving
panel manufacturers are reacting
to the resulting margin erosion by
constraining output. As supply aligns
with demand, we anticipate instances of
PV component price increases into the
future.
The marketplace agrees there
is no good rationale to wait for new
innovation and panel price declines:
Solar attracted more than half of all
clean energy investments in the G-20
countries last year, and the vast majority
of commercial projects used flat panel
PV technology. So, what’s new?
Mounting Solutions
Independent refrigerated warehouse
operators seeking to preserve roof
integrity are attracted to a new class
of inexpensive, light weight, non-
penetrating solar roof mount racking.
Agricultural producers with on-site
cold storage energy loads have more
acreage and thus often opt for ground-
mounted single-axis tracking solutions,
which follow the sun’s rays and thus
generate 20 to 25 percent more energy
per panel. Facilities with large staffs and
parking lots are increasingly opting for
shade structures, which provide both
functional shade and power.
Financing and Tax Incentives
The optimal financing vehicle will again
depend on your requirements and local
conditions. In some municipalities,
Property Assessed Clean Energy (PACE)
financing is or will soon be available;
PACE allows a tax district to issue a
bond which finances up-front costs of
solar and energy retrofits. The bond
is repaid by annual assessments on
that property’s tax bill, thus deferring
your firm’s capital costs. Because the
loan is attached to the property (not a
company), credit qualification is easier.
Solar projects completed by
December 2013 are eligible for
a 30 percent tax credit through
2016. In 2012, the 50 percent bonus
depreciation for qualifying solar
projects sunsets. Both of which can
be carried backward or forward. For
those cold storage operators who
lack the tax appetite to monetize
these tax incentives – or who seek to
preserve their capital budgets - there
is a wide and growing range of third-
party financiers and financing vehicles
attracted by PV’s stable, predictable
returns.
Under a Power Purchase
Agreement (PPA), a third party can
bear the cost of designing, developing,
financing, building, owning and
operating a solar facility on your
property, and your firm buys the energy
at a predetermined price from that
system owner. This approach works
well for credit-worthy firms seeking
predictably priced energy and no
operational responsibility.
HelioPower’s 500kW tracker-mounted solution
powers Giumarra Vineyards cold storage.

3. MAY-JUNE 201222
Financing costs are often lower
under a “True Lease,” whereby
the lessor claims the tax benefits
of ownership and is permitted to
depreciate the asset over its lifetime and
claim tax credits. The lessee can deduct
the lease payments as a capital expense
from ordinary income taxes. Unlike a
PPA, the lease payments are required
regardless of system performance, but
performance risk is easily mitigated
by engaging a contracting firm that
provides operations and maintenance
services. Cold storage operators who
cater to storage of agricultural products
will find particularly attractive subsidized
True Lease rates.
The key conclusion is that financial
engineering is just as important as
physical engineering for solar. If you are
considering a financed solution, choose
a solar contractor with a dedicated
financing division.
Energy Analytics
Sophisticated energy developers
are creating value for their clients by
wrapping solar projects in broader
energy analytic engagements.
Because of their mission-critical and
predictable energy load profiles,
cold storage facilities are well suited
to such approaches. For example,
where time-of-use (TOU) electricity
pricing is available, it is possible to
combine solar with tariff-switching
strategies and “arbitrage” utility
pricing by overproducing electricity
to generate bill credits at peak retail
rates. These credits are then used to
buy inexpensive off-peak energy, thus
using the utility grid as a free battery
with a built-in pricing advantage to the
solar facility owner. Demand response
and emerging peak event pricing
programs present similar opportunities
for savings.
Green Is Good
Of course there are also sustainability
benefits to PV project deployment.
California solar owners will soon have
the potential to generate “cap &
trade” offsets, and solar will mitigate
risk in geographies that face current
or future emissions regulations and
fines. Renewable Energy Certificates
(RECs) have substantial current or future
market value in some states, and firms
with strong sustainability missions will
find obvious marketing advantages.
Green is good, but in the end I
recommend you let economics guide
your solar decision.
Tom Millhoff (TMillhoff@HelioPower.
com or +1 775 830 0448) is the Vice
President of Business Development
for HelioPower, Inc. an integrated
energy solutions firm.
Additional Resources
• The Open PV Project at http://openpv.nrel.
gov/ provides real-time status of the solar
photovoltaic market in the United States.
• The National Renewable Energy
Laboratory (http://www.nrel.gov/ is a
federal laboratory dedicated to the
research, development, commercialization
and deployment of renewable energy and
energy efficiency technologies.