Tuesday, January 31, 2012

Hourly Utility Pricing Boosts Solar Payback

What if electricity cost more when the sun was shining? 

Many utilities are using new electronic "smart meters" to adjust the price of electricity as often as every hour, to reflect supply and demand.  And charging more when electricity is in short supply can be good news, increasing the value of solar by 33 percent or more.

Time-of-use (TOU) pricing is a different billing method for electricity, where the customer pays based on the time of day of using electricity rather than a flat rate per kilowatt-hour consumed.  The premise is that electricity is more expensive when in high demand (e.g. by air conditioners in the afternoon on hot, sunny days) and that pricing accordingly will help reduce demand. 

For example, customers in San Francisco on a TOU pricing plan pay more for electricity during peak hours (12 noon to 6 p.m.).  In the cold months (November through April), the peak rate is 11.1 cents per kilowatt-hour (kWh), compared to 8.3 cents during non-peak hours.  But in the warm months (May through October), electricity used from 12 noon to 6 p.m. costs 31 cents per kilowatt-hour (kWh), while off-peak electricity is 7.9 cents per kWh.

This pricing scheme can act as an incentive to go solar, because solar panels tend to operate at their highest capacity during summer months.  The following chart shows the solar radiation falling on San Francisco during the "winter" and "summer" seasons (as defined by the utility).  The average insolation during the summer is 6.42 kWh per sq. meter per day, compared to 4.46 in the non-peak season.
Solar panels also tend to have higher output during the peak hours of the day.  In fact, the California Public Utilities Commission found that solar tends to have a 60 percent capacity factor (produce 60 percent of its maximum) during peak electricity periods.  The following chart from SolarStik illustrates:
The Economics of Time-of-Use Pricing for Solar
So what will a time-of-use pricing plan mean for the economics of solar in San Francisco? It means solar customers save more money.
Just over a quarter of a solar panel's output comes at the summer peak period, when the value of electricity is over 30 cents per kWh.  A further 18 percent happens during the winter peak, when prices are a third higher (at 11 cents) than off-peak rates. 
But this is just the start.  These rates (and those in the chart) only reflect the rates that PG&E charges for using up to ~250 kilowatt-hours (kWh) per month (their "baseline" or Tier 1 rate).  But baseline rates only apply to the first 3,000 kWh consumed per year, one-third the U.S. average.  Very few customers use so little electricity.
Rather, most customers will consume electricity in Tier 2, which applies to consumption from 3,000 to 6,900 kWh per year, or even Tier 3, which applies to consumption up to 14,500 kWh.  And the electricity rates in these tiers are substantially higher.
For electricity used in Tier 1 (the baseline) during peak times, a customer pays 28 cents per kWh.  But once they've used up their baseline amount, each peak kWh will cost 29.6 cents in Tier 2.  If the customer hits Tier 3 rates in a summer month, their peak electricity will cost 44.6 cents per kWh!
A solar array provides two benefits under this scenario.  First, it produces electricity during peak periods, and second, it also reduces overall consumption.  Thus, the electricity offset by a rooftop solar array is the most expensive, and it also can push the customer into a lower usage tier, reducing the rate paid on grid electricity.
A few examples:
  1. A customer uses 3,000 kWh per year (the Baseline) and has a 2-kW solar array.  The solar array provides 97 percent of the annual household consumption, and the value of the electricity produced by the solar array (based on the cost of grid power at the time it produces) is 22 percent higher than under a flat rate plan.
  2. A customer uses 6,900 kWh per year (Baseline and Tier 2 power) and has a 2.5-kW solar array.  The solar array provides 53 percent of the annual household consumption (but nearly all of the Tier 2 electricity), and the value of the electricity produced by the solar array (based on the cost of grid power at the time it produces) is 36 percent higher than under a flat rate plan.
  3. A customer uses 10,000 kWh per year (Baseline, Tier 2 and Tier 3) – the U.S. average – and has a 2-kW solar array.  The solar array provides just 20% of the annual household consumption (but nearly all of the Tier 3 electricity), and the value of the electricity produced by the solar array (based on the cost of grid power at the time it produces) is 253 percent higher than under a flat rate plan.
The following chart illustrates the good matchup between solar and time-of-use rates (the rates shown are for summer weekdays).  The bars show the pricing by hour, as well as the higher prices in higher tiers of consumption (for Residential Schedule E-6).  The green line shows the percent of daily solar output that falls during a particular time-of-use pricing period.
Overall, solar power is a pretty good fit with time-of-use pricing, a policy that should be used in more locales to improve the economics for local solar power.

This post originally appeared on Energy Self-Reliant States, a resource of the Institute for Local Self-Reliance's New Rules Project.

Tuesday, January 24, 2012

5 Steps to Solar-Powered Profits

Installing security contractors are well positioned to adopt solar photovoltaic (PV) panels into their portfolios and take advantage of increasing opportunities to utilize “green” power alternatives. These solutions are ideal for projects that require a power supply for off-grid, remotely-installed equipment.

By Joe Bono | December 21, 2011
More and more installing security contractors are seeing the light and expanding into solar power solutionsto service their customers. One example of this is the installation of solar photovoltaic (PV) panels to power security systems in remote locations that otherwise lack electricity and communications infrastructure. Solar is also used to provide power for portable and temporary security systems such as construction sites. And some security systems integrators and vendors are deploying "green" power alternatives by adding small solar chargers to wireless devices like detectors.
Solar solutions utilized today in the electronic security industry are proving to be a cost-effective means to solving difficult problems. But there is another important solar option integrators need to consider — one that results in business growth while offering consumer and business customers another service. That opportunity is the installation of solar power systems for homes and businesses, a market that's become as hot as the sun's rays. Read on to find out what simple steps you can take to implement solar power solutions within your portfolio of services.
Getting Started in Solar Power
The U.S. solar power market grew 67 percent in 2010, making it the fastest-growing energy sector, according to the Solar Energy Industries Association and GTM Research. Solar PV installation led the industry in demand, a market that doubled from 2009 with 16 states installing more than 10 megawatts of PV each. The top 10 states were California, New Jersey, Nevada, Arizona, Colorado, Pennsylvania, New Mexico, Florida, North Carolina and Texas.
Solar PV installation offers a great fit for security dealers and integrators with many of the same skill sets involved: electrical work, engineering experience, quality control, plus safety and project management.
With solar a hotspot in today's cool economy, installing security contractors interested in getting involved in the industry should consider five key steps before expanding into this marketplace. Let's take look at the particulars:
1. Learn the foundation — Solar PV is a 60-year-old technology. The panels are made up of tiny cells of treated silicon. Each panel collects solar radiation and converts it into an electrical current. These panels are then wired together in a series to create an array, and the electrical output from that array travels through wires and conduit to an inverter typically located near your breaker box. The inverter converts the electrical current or direct current (DC) into alternating current (AC).
The backbone of the solar industry is net metering. This means any power that isn't used from the system spins the meter backwards, giving you a credit from the utility company. As the industry has expanded, courses on the fundamentals of solar PV have become widespread. Understanding how solar PVs interact with the home or building shortens the learning curve and allows security integrators to build on their existing knowledge and skill set.
2. Assess where you need help — There is a benefit to being a contractor. You likely understand how to market your business and sell a service while maintaining fruitful relationships with vendors and customers. When it comes to solar PV installation, some installing security contractors will want to subcontract an electrician or hire one on full time under their new solar division. In many states and municipalities, an electrician is required to install the solar equipment into the building's electric utility system. The tools may also differ from the security industry.
Also consider adding someone with roofing experience to your installation staff. Because roofers understand roofing systems, they can safely tie solar panels and equipment into a roof with proper flashing so the structure and the solar equipment will last. Solar installation is very reliant on roofing and electrical, so it's important to research what you can take on and where you may need to contract out.
3. Research licensing requirements — Every state has different licensing laws and it's important to understand the requirements for solar PV in your area. The majority of states require an individual license per trade. Check with your state's department of labor to find out what licensing requirements are needed in your marketplace.
4. Get hands-on experience — Once you've obtained your license and gone through the supplementary training to become a solar installer, the challenge becomes gaining experience. As a security integrator you have the option to leverage your current residential and commercial customer base to sell solar PV. In addition to getting on bid lists, it's sometimes advantageous to contact more established installers and offer to subcontract on their projects while you gain experience.
Joining a solar franchise network is another option. Solar franchise networks can provide best practices and support you in booking jobs. A good solar franchise network will also give you access to greater purchasing power, which allows you to price yourself more competitively. Integrated sales and marketing training, and best practice sharing provided by solar franchise networks can also put you at a competitive advantage.
5. Work incentives into your price — It's important to understand tax incentives when determining how to quote a solar installation. Do your research. Incentives are issued at both state and federal levels. Some utility companies also offer rebates to customers that install solar.
It's also a good idea to research software tools that can help you stay apprised of the changing rebates and incentives. Taking rebates into consideration when pricing offers a value proposition to your customer and allows you to remain competitive in a growing market.
A Sun Belt of Opportunity
To sum it all up, solar electric power is a key technology that installing security contractors can adopt into their portfolios of services in a straightforward manner. For the appropriate application, solar PV installations can provide continuous, reliable and cost-effective power while helping overcome challenging project sites. With installing security technicians already having many of the skill sets necessary to install solar PV equipment, success in this market can be easily achieved with little organizational disruption.
Joe Bono is President and CEO of Solar Universe Network, a solar installation franchise and finance company based in South San Francisco. He can be contacted at (925) 455-4700.

Vivint Bets Its Solar Offering Will Shine

<p>Vivint Solar, launched in 2011, offers leased solar power systems to residential customers in New Jersey and other states.</p>Vivint, a national provider of residential security, energy management and automation solutions, thought so much about the potential for solar power to significantly impact its bottom line that it created an entirely new business during 2011.
The Provo, Utah-based company, formerly APX Alarm, ramped up Vivint Solar in October after it received $75 million in financing from U.S. Bancorp in support of its plan to offer solar installations for homes in New Jersey, Utah, Hawaii and New York.
Namely marketed through door-to-door sales, the company installs, monitors and maintains residential solar panels with no upfront costs. Customers agree to a 20-year contract during which they purchase the power generated by the solar panels for a lower rate than utilities charge.
"We approach homeowners who never thought they could get solar and improve their carbon footprint and feel proud about the generation of the power they use," says Vivint Solar COO Brendon Merkley. "They may not be super familiar with the product, but that is the beauty of the consultative sale. We can present it to them as something that maybe they have not formerly considered but is now obtainable and available to them."
The solar panels, which are installed on rooftops by Vivint Solar technicians, are designed to generate about 80 percent of a residence's overall electricity use. The company first marketed its solar platform in New Jersey during the summer and so far has completed about 200 installations. The company's initial tax-equity fund will finance about 2,400 installations.
"For the time being we are focused mostly on New Jersey, but we are eager to expand to other states that the fund allows," Merkley says. "This isn't a product offering we can offer universally nationwide. It is a lot more dependent on local economics."
Vivint began adding home automation and energy management solutions to its portfolio in 2010, allowing customers to monitor and adjust their homes' thermostats, lighting and small appliances remotely. Vivint has signed up about 77,000 customers for its home energy management platform. And while solar complements Vivint's core competencies in providing home services, Merkely says, there currently is no integration between the home automation platform and Vivint Solar's offering.
"In the future it will be more of a holistic sale that could include complementary products such as an energy management platform integrated with the solar installation," he says. "That is a product we have not yet developed but we are keen to do so and think it will be very powerful. We wanted to first assure ourselves that the business could stand on its own as a product offering and so we have marketed it almost exclusively independent of home automation."
Merkley says the company has "toyed around" with a couple of use cases that integrate the security panel with the firm's other platforms.
"The panel is this beautiful real estate in the home that functions as an in-home display for energy management. It is a perfect opportunity to display the solar power production on that alarm control panel," he says. "Additionally you can go beyond an information presentation analytics into to more energy automation and efficiencies where you might choose which appliances to run according to different times of the day where the solar array may be producing power opposed to when it's not."
— Rodney Bosch

Friday, January 13, 2012

USVI Going Solar