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Why Solyndra Just Doesn't Matter

Unless you have been hiding in a cave lately, you have undoubtedly encountered the media orgy over the collapse of solar panel manufacturer Solyndra. Yet amidst much media hype - most of it driven for political gain - the fact remains that as to the overall solar industry, Solyndra just doesn't matter.

Federal Subsidies for Solar

Much has been written about the so-called failure of federal solar subsidies in light of Solyndra's $535 million dollar loan guarantee debacle. Indeed, some would go so far as to demand that all solar subsidies should be abolished. To be sure, there are many reasonable voices explaining the error of such thinking, including at the NY Times, Time magazine, and the Washington Post, but the fact of the matter is that for most solar installations, loan guarantees play no role whatsoever.

Here is where federal money does assist solar power installations:

• The 30% Federal Investment Tax Credit - this program allows for residential and commercial clients alike to take a tax credit worth 30% of the system cost against their taxes. On a typical residential installation, that credit is worth anywhere from $4,000 to $12,000.
• The 30% Federal Grant for Commercial Projects - commercial clients can (through the end of this year) elect to receive a grant in lieu of the tax credit making the 30% available immediately without regard for the client's tax appetite.
• Accelerated Depreciation - the final benefit is the ability of commercial clients to depreciate the value of the equipment on an accelerated schedule (100% in Year 1 for projects installed this year and five year depreciation for all other projects).

Collectively, these federal tax subsidies save residential clients thousands of dollars, and as much as 50% of the total system cost for commercial clients. As a result, these subsidies play a part in every solar project installed in this country and they have gone a long way toward making solar more affordable, particularly during difficult economic times. The money is distributed to all who qualify for it without favorites - mostly - and in terms of actual dollars, it represents a tiny fraction of the $$$ lavished on other players in the energy marketplace.

Taking the Fifth

Against that backdrop of how most solar projects operate in this country, the top executives at Solyndra just pleaded the Fifth Amendment in refusing to answer questions posed by a decidedly hostile House committee. That is their right - enshrined in the Constitution, no less - and it does not mean that they are guilty of any wrongdoing. (Indeed, the lawyer in me notes that it would constitute malpractice to let your client testify before such a committee while multiple investigations are in the works.)

But the optics are awful.

Add this sad display on top of solar's pre-existing PR problems and it is clear that, once again, the solar industry is in for some harsh words and tough times.

What the Rest of Us are Doing

So what can the rest of us - who aren't taking the Fifth but are actively promoting solar for our clients because we know that it is a great deal for them - do about this? Plenty. Here are some suggestions:

• Solar companies must join their industry organization - the Solar Energy Industry Association (SEIA) and help it to help us all. For example, SEIA recently produced a series of video PSA's that help to introduce people to how solar is working across the United States, right now. If you haven't seen it, check out this PSA:



• We can push-back against the madness with letters to the Editor or posted rebuttals to the arguments made by the fossil fuel industry (SEIA has some great talking points to help). After all, not only is the future of solar at stake, but our children's future as well.
• We can encourage our clients - the folks who know best just what a great deal solar really is - to speak out and relate their experiences.

Solar is an exciting and dynamic industry and as such it has had and will continue to have winners and losers. But Solyndra aside, the future for solar is bright, and for those of us at Run on Sun, there's nowhere else we would rather be - join us!

Caltech's Solar Decathlon Entry

The Solar Decathlon is a tremendously cool event that allows collegiate teams from around the world to show just what innovative, energy-efficient design looks like - and boy can these kids think outside the box!

Here in Pasadena we admit to being a bit partial to our hometown heroes over at Caltech (as in, the California Institute of Technology, in case you didn't know). Teaming up with architecture students from SCI-Arc (as in the Southern California Institute of Architecture, in case you didn't know), the combined team's entry - called CHIP, for Compact, Hyper-Insulated Prototype - features insulation on the outside of the building and some other very clever design features, including - of course - solar panels.

Check out this video "walkthrough":

The Decathlon started September 23 and ran through October 2 on the National Mall in Washington, D.C. We can only hope that the folks who work in Washington and have a hand in setting national energy policy will take the time to become educated about the possibilities created by innovative thinking regarding our long-term energy needs.

The results are now in and our hometown team finished sixth overall, and ended up tied for the lead in two categories: Energy Balance and Hot Water efficiency.

Congratulations to all who participated in this competition - you make us proud!

Early Trends from LADWP's SIP Restart

"Data, data, data, I cannot make bricks without clay."

Alone among the municipal utilities, and in a most welcome new development, LADWP has started to publish data from its Solar Incentive Program (SIP) which was restarted on September 1. Although this analysis is clearly preliminary given that there are only three weeks of data available in the 9/21/2011 working dataset, nevertheless some interesting trends are already evident and one clear necessity arises - LADWP needs cost caps even more than does CSI.

Background

In restarting the SIP, LADWP allocated $40 million in new funds, evenly divided between the Residential and non-Residential (Commercial, Governmental, Non-Profit) segments of the market. Although the program is technically a Step-driven program with MW allocations for each step, in reality, it is a budget-limited system - when the annual budget for a given segment is met, the program in that segment will shut down.

As part of their new and improved program, DWP has also started to publish datasets that are similar to, but different from the data gathered and released by the California Solar Initiative (CSI). For example, the CSI data reports on the specific products used on the project whereas the DWP data only identifies the manufacturer. Hopefully future releases of the data will correct this limitation. In addition, neither data set allows analysts to distinguish between costs associated with the actual installation versus lease-based financing costs which apparently a handful of companies - most notably SolarCity - include in their reported costs.

For the purpose of this story we analyzed DWP's most recently released dataset, dated 9/21/2011. That dataset includes data from both the so-called "legacy" program and the newly revised program. As we were only interested in the most recent trends - that is, based on what has happened since the program restarted on September 1 - we excluded all legacy data from our analysis. Also, while system costs are often reported in dollars per DC or Nameplate Watts, we don't believe that provides much insight into the quality of the systems being installed. For that reason, our system costs are based on dollars per CSI AC Watts.

Outlier - A.S.E.S. Electrical Group, Inc.
(aka American Solar Energy Solutions)

As was the case with our analysis of the CSI data, it is informative to go hunting for outliers in this early data. This is especially important since these applications are still being reviewed and DWP staff is in a position to push back against any of these applications that appear to grossly exceed expectations.

We filtered the data to only include residential projects from the new program. We additionally excluded any company that did not have 20 or more kilowatts of project applications pending. Finally, to try and isolate sold systems only (as opposed to leased) we required the system owner to also be residential. As filtered, our remaining data accounts for 133 of the 239 total residential projects in the dataset. Here's what we found:

Now what is going on here? A.S.E.S. Electrical Group, Inc., is installing three systems for a total of 35.9 kW at a total cost of $597,500 or $16.66/Watt! (This makes our lead outlier in the CSI data - Galkos Construction, Inc. - look like a real slacker.) From the data, A.S.E.S. (not to be confused with - or was that the intent? - the American Solar Energy Society which is commonly known by the acronym ASES) appears to be planning to use Schuco panels. Although the data does not reveal the precise model Schuco panel they are proposing, a quick search online for Schuco panel pricing suggests that Schuco panels can be purchased for somewhere in the range of $2.00 to $2.28/Nameplate Watt, retail. If we apply the nameplate to CSI derating factor that appears in the data for the A.S.E.S. projects, that works out to a retail price average of $2.61/CSI AC Watt. Where is the remaining $14/W going? And why would any residential customer choose to have an installation performed at a cost nearly twice the local average?

We hope staff at DWP will take notice of these results and give some serious thought to imposing cost caps to protect their customers.

You can read our complete report - including our analysis of the residential and non-residential program segments - at our blog: Early Trends from LADWP's SIP Restart.