Archive for September 11, 2012

How the Investor Uses Other Peoples Money to Finance Community Solar

Community Solar ConceptThe next push in solar installations is the concept of community solar. This is a way that persons can participate in solar who do not want solar on their roof, or those who cannot afford to put solar on their roof, or live in apartment housing. In California Senate Bill 843 which would have created the opportunity for community solar was defeated. This bill would have made it possible for utility customers within the territories of PG&E, Southern California Edison, and San Diego Gas & Electric to purchase shares of power from these community-based facilities with medium-scale renewable energy systems (up to 20 MW).

Customers would sign contracts with the facility and pay a monthly fee for their share of electricity sent into the grid. These community energy facilities then report the customer’s percentage of the facility’s power to the respective utility. This amount of solar electricity would then be credited towards the the customer’s utility bill. This is how virtual net-metering would function with these community-based renewable energy facilities.

The renewable energy facilities’ economies of scale would have given way to a cheaper cost per kWh than standard residential systems- a savings that would keep the cost of electricity down for Californians who wish to utilize renewable energy through virtual net metering.

These small to mid-sized solar power plants could have been built at existing establishments such as schools or churches, reducing the need for large-scale solar power plants in the desert, which often pose environmental concern.

These community-based renewable energy facilities also would have created an estimated 12,000 jobs without spending any state funds.

This financial model does not require any up-front money from the developer. The concept is that a lot of electricity customers, like a community development, want solar but do not have the money to build a solar system themselves.
A solar company comes to the development and signs up 1,000 households who are willing to invest $10 per month towards a solar field for five years. Where the solar field is located could be on the community development property or anywhere empty land is available and not too expensive.
So, now you have a guaranteed an investment of $10,000 per month for five years which is a total investment of $120,000 per year, or $600,000 over five years.
Take the money to the bank and get a secured loan for 5% and borrow the $600,000 for the five years.
The cost of installing solar on the ground will be $3.00 per watt.
So for $600,000 you can build a solar system that will produce 200,000 watts.
On the average year, the solar system will produce 250,000 kilowatt hours.
The income from sales of the electric power produced includes two factors, the solar renewable energy credit which is worth $0.32 per kilowatt hour and the price of electricity of $0.11 per kilowatthour or a total of $0.43 per kilowatt-hour in New Jersey.
Your system is producing 250,000 kilowatt-hours times the income of $0.43 per kilowatt-hour, or $107,500 per year.
The loan will cost you $600,000 times 0.05 or $30,000 per year. Taxes amount to $4,500 leaving the net income at $73,000 per year.
You split the profit with the investors so you get an income of $26,000 per year and the remaining $27,000 is then split amongst the investors who will be getting $26 per year income.
That is a return on investment of 20%. At the end of the five years, you will have an additional income of $30,000 per year.

So with no money from you, you will have an income of $56,000 per year after five years from this one project. Not bad. Meanwhile the investors are still getting 20% per year on their investment. Of course, the rate of return depends on the sale of the generated electricity and if the price of solar produced energy is less than 43 cents per kilowatt-hour, then the rate of return will be lower. This does not include the tax benefits which will affect the bottom line increasing the rate of return.

That is how the system works. Now this is a simplified example but not too far off from reality.

The U.S. solar energy market achieved its second-best quarter in history

Today, the U.S. solar industry employs more than 100,000 Americans at 5,600, mostly small businesses, across all 50 states. Utility solar installations hit 477 MW in the second quarter, with eight states posting utility installations of 10 MW or greater: California, Arizona, Nevada, Texas, Illinois, North Carolina, New Mexico and New Jersey. In total, the U.S. now has 5,700 MW of installed solar capacity, enough to power more than 940,000 households. According to U.S. Solar Market Insight GTM Research forecasts a total of 3,200 MW, or 3.2 GW, of PV will be installed in the U.S. in 2012, up 71 percent over 2011. “We’re starting to see innovative PV business models take a substantial hold in the U.S. residential market,” said Shayle Kann, Vice President of Research at GTM Research. “The success of third-party residential solar providers has attracted more than $600 million in new investments in recent months. This influx of cash into the residential space signifies the growing acceptance of solar leases and power purchase agreements as a secure investment for project investors. We expect that third-party installations will claim even more market share in the coming quarters.” U.S. Solar Market Insight: 2nd Quarter 2012 provides insight into the state of PV component manufacturing in the U.S. Global oversupply continues to be the chief challenge to U.S. PV suppliers, as wafer, cell, and module production in the U.S. fell 33, 25 and 28 percent respectively in Q2 2012 as a result.
Read the full article here.

TVA, Help the Homeowner Afford Solar for their Homes

Homeowners deserve a higher feed-in tariff. Homeowners do not have the tax benefits of business owners, then restore the 12 cent feed-in tariff for home systems 10 kilowatts or less.
I was personally disappointed by the change in the TVA solar feed-in tariff changes recently announced. More so that TVA did not make a provision for the homeowner who wants a solar system on their roof with a size less than 10 kilowatts.
I do not understand the reluctance of TVA to follow the examples of other large utilities that have made solar more accessible to the average homeowner. My recommendation is to create a class of solar limited to 10 kilowatts or less and process the request on a fast-track basis.
We want to preserve the accountability and excellence in the installations to prevent damage to the home or problems for the utility, but having a qualified installer perform or supervise the installation would alleviate potential difficulties.
Have a one page request that would be travel the same route as the other, higher power applications but process these small installations faster. Local permitting should be less expensive and take less time to approve.

Most importantly, since homeowners do not have the tax benefits of business owners, then restore the 12 cent feed-in tariff for this class of application.

What do you think?

Send us your thoughts.

Falling prices for PV technology

By Paula Mints, Navigant Consulting
September 6, 2012

Average Prices to the first point of sale and for Inventory

Falling prices for PV technology – new average price for inventory, $0.65/Wp, off brand b- and c-grade modules, falling margins, failing PV companies, fraud, poorly installed systems and even counterfeit module product that carries a name brand and is really an off brand – good grief, what’s an industry to do?
As manufacturer failures pile up like a massive traffic accident it should be impossible to deny that prices are too low, yet, sadly, many continue to claim that the low prices are progress. In the U.S. the decision to apply tariffs (retroactively) to PV technology from China has divided the industry. The common goal of deploying solar has been largely put aside in favor of industry infighting. Rhetorical question … can a small, emerging industry afford to expend its energy in this manner? Meanwhile, acceptance of lower quality products at low prices has become commonplace and this will likely cost us dearly.

read the original article here

Do-It-Yourself Solar Installation Workshop Sign Up Today: Limited Seating

Do-It-Yourself Workshop. Ours will be comfortably indoors

The Tennessee Solar Energy Association (TSEA) in collaboration with the Tennessee Renewable Energy and Economic Development Council(TREEDC) are holding a workshop for those interested in installing solar for their homes, businesses and farms. The workshop will be held at the U.T. Conference Center in downtown Knoxville. The date for the workshop is the evening of October 18th beginning at 6 pm and ending at 9:30. Free parking at the Locust Street garage across the street from the U.T. Conference Center. Details are available here and sign up is found under the Events heading. Sign up now as the size of the workshop will be limited to forty persons. Sign up now to secure a seat at this educational workshop where experts will give you all the information needed by parties that are interested in solar for their home or business and are looking to reduce the cost by doing some or all of the work themselves. You will receive a manual containing articles on each aspect of solar purchasing of equipment and how the equipment is assembled to produce electricity from sunlight. The manual will contain examples of home solar projects as published in Home Power magazine who has given us permission to make copies of the most relevant material for you. After all, there is one source of power you can rely on and that is the sun. It has been doing its job some millions of years so reliability is a non-issue.

You will pay for the workshop using PayPal or your credit card. The cost for the dinner buffet, the manual and the instruction is $30 for everyone except for TSEA and TREEDC members who will have a $5 discount. The cost is kept as low as possible so sign up today and get a confirmation by email.