Thoughts on Solar

Solar leasing programs are very popular, driven, no doubt, by the allure of something for nothing.  After all, the lease programs insist that for nothing out-of-pocket you can start saving today - an appealing pitch that is only rebutted when the homeowner does some serious homework.  This is not a new topic for us, and our post pointing out the
Top 5 Reasons to Avoid a Solar Lease!, is one of our most popular posts ever.  But an encounter with a potential client this past week highlighted yet another peril in the form of the deceptive salesman. 

Don’t buy solar from this guy!

Just another rip-roaring, bulls-eye salesman…

A couple of days ago we got a call from a woman who had been referred to us by one of our clients. She had been thinking about going solar and had in fact signed a lease agreement with another company before she spoke with our client. “Whoa,” said the client, “you better think twice about a lease. You should really talk to the folks at Run on Sun before you go forward with anybody else."  The woman told us she had until Saturday to cancel her contract so could we please come and see her right away?  Given that she was a referral and time was tight, we scheduled her site evaluation for the next day.

What we found when we got there was a two-story, blue tile roof, littered with roof vents!  Once you allowed for clearances on all of those obstructions, as well as with the setbacks required by the local Fire officials, there was very little roof left for solar.  (We estimated maybe 3 kW max.)

But the contract that she had signed said that this other solar company was going to put 5.7 kW on her roof!  How on earth did that reach that conclusion?  The answer was simple: the sales guy came to her home with a stock contract that contained a provision buried within the fine print that allowed them to “revise” what would be installed once the “engineering review” of the home had been completed!

In other words, the guy trying (and succeeding) in getting her to sign on the dotted line had no idea whether his repeated assertions of “30% savings off your present bill” were accurate or not, and he plainly did not care.

This unfortunate woman, who lives in a nice home in a nice neighborhood, had been preyed upon by the solar industry’s equivalent of the flim-flam man, and make no mistake about it - these disreputable representatives are a pox upon the entire industry.

Oh, and as to that right to cancel the contract?  The lease agreement appeared to be speaking out of both sides of its mouth on this.  One provision cited the California statutory requirement of three business days to cancel, whereas a second provision promised six calendar days.  Yet the attached, Notice of Rescission, only referred to the three-day option, and it required that the document be delivered to an office in Texas to be effective!  Good luck with that.

Don’t be a victim!

No one should end up in this woman’s position.  Here are a few steps to protect yourself:

1. Always get references for any solar contractor you might consider.  If they cannot provide you with references, run, don’t walk, away.  Referrals from people you trust are even better.
2. If you are feeling pressured by the salesperson, show them the door.  Reputable solar contractors aren’t trying to push you into anything.  If the salesperson makes you uncomfortable - walk away.  (Trust your gut.)
3. Never, ever, sign a contract before the technical evaluation of your site has been done!  A sales guy with a projection of “your system” who has never seen your home is guessing, and quite possibly guessing badly, as was the case here.  Before you sign up for anything, be sure that you are dealing with a proposal based on the specifics of your home, not some generic sales brochure.

Caveat emptor, folks!

Today is our first of three posts looking at the state of solar in Southern California for the first half of 2013 as revealed by the data compiled for the California Solar Initiative (CSI).  This first post explains our methodology and highlights some interesting trends in the data.

Methodology

Let’s start with our methodology.  The CSI collects a significant amount of data as part of managing its rebate program and most, though not all, of that data is made available to the public.  For example, while CSI collects data from installers that identify four components of system cost - solar modules, inverters, permitting and everything else - the data that is made available rolls all of that up into just one number - Total Cost.  Nevertheless, the CSI data is the most comprehensive data set available and covers all projects being built in the service areas of California’s three investor-owned utilities: PG&E, SCE and SDG&E.

For our analysis, we started with the CSI Working Data set from July 31, 2013.  (Here’s a link to the CSI Working Data download page and here’s a link to the data set (11 MB zip file) that we used for this analysis.)  This analysis just looks at data from the SCE service area and to limit our time period to just the first half of this year, we added a Status Date field to the data which is the latest of a series of milestone dates recorded in the data (from First Reservation Date to First Completed Date).  We then extracted our data for dates from 1/1/2013 to 6/30/2013.  After that it is a matter of pivot table magic!

One other note - there are multiple ways to identify the size of a project from the data: Nameplate Rating (i.e., DC Watts), CEC PTC Rating (which accounts for the PTC rating of the solar modules used times the efficiency of the inverters chosen) and CSI Rating (which applies the Design Factor to the CEC PTC Rating and which is the basis for rebate payments.  For the most part, unless otherwise noted, we will be using CEC PTC Rating for system size since that accounts for some measure of equipment quality but isn’t confounded by site complications such as shading or the use of tracking systems.  In particular, our $/W figures are computed this way.

Trends

Overall, our data set reflects 14,459 projects, up from 9,669 over the same period last year - an increase of 49.5%.

There are three program divisions in the data: Residential (projects under 10kW), Commercial (projects greater than or equal to 10 kW) and the Multifamily Affordable Solar Housing (MASH).  The overwhelming majority of these projects are in the Residential program: 14,028 (97% of the total) are Residential, followed by 387 (2.7%) Commercial and just 44 MASH projects.   However, MASH projects are generally associated with affordable housing developments and so they can be quite large overall.  In fact, the average MASH project is 158.7 kW, compared to just 5.6 kW for Residential and 216.3 kW for Commercial.  Altogether, Commercial projects account for 83.7 MW, followed by 78.8 MW in the Residential program with just 7.0 MW in the MASH program.

Compared to last year, which saw a decline in the amount of solar capacity in the data, capacity this year is up 59% over last year:

At the same time, the average system size continues to decline from 14.2 kW in 2012 to just 11.7 kW this year.  Likewise, rebates are falling (by 32%) but so are overall prices (15.2%), just not as fast.

Still, in raw dollars, the reduction in system price of $0.97/W from a year ago, nearly triples the decline in rebate rate.

We will have lots more to say about system costs in subsequent posts.

The pace of projects is accelerating, driven by dramatic growth in the Residential program (as always, click on the chart to see it full size):

(To make the Commercial and MASH projects visible we have put them on a second axis.) Residential projects have grown from less than 1,700 in January to nearly 3,800 in June!

MASH-Up

Since it is a relatively small slice of the pie we are going to generally ignore the MASH program but before we leave it aside, we thought we should at least take a peak at who are the players in this program.  Here’s what we found:

Four projects have no solar contractor associated with them in the data (curious).  The big winner, however, is Shorebreak Energy Developers - not a company on our radar, but obviously a major player with nearly 2 MW worth of projects in the program.  A few familiar names - HelioPower, SolarCity and even our friends down the road at PHAT Energy (well done, Philippe!).

Roughly half of these projects are third-party owned:  24 of the 44 for a total of 3.5 MW out of a total 6.98 MW.  The average cost per CEC PTC Watt is also almost identical, $5.52 for third-party owned versus $5.55 for sold systems.  Yet within that average was a very significant range from a high of $13.12 for the 141 kW project being built by Lite Solar, all the way down to $4.32 for the 601 kW project being built by SPG Solar.  Shorebreak, the leader in the amount being installed and total number of projects is also a leader on price, coming in at $4.90.

Making the Delist

One stat we continue to find intriguing is the number of delisted projects - projects that got entered into the data but then cancelled at some point.  Altogether, there are 471 projects delisted, or just 3.26% of the total, down from 4.2% last year.  Those delisted projects accounted for 16.8 MW of capacity or 9.9%, which is up significantly from last year.  In other words, fewer projects were delisted, but they accounted for a bigger piece of the potential installed capacity.  The majority of the delisted projects, 324 of them (68.8%) were third-party owned.

149 different companies made their way onto the Delist - not surprising for very large players, but as before we decided to look at these companies as a share of their overall project total.  We limited to companies with at least 10 delisted projects and then rank ordered them by the percentage of their projects that are delisted. Here they are:

What is up with this?  PsomasFMG has 79% of its total projects delisted?  Turns out their 33 delisted projects account for nearly half the the total delisted projects by capacity.  Not surprisingly, these are all third-party owned Commercial projects ranging in size from 61 kW to just under 1 MW.

The other big winners, Electricare, Smart Energy, and Petersen-Dean had all of their delisted projects in the Residential program with sizes ranging from under 3 kW to just under 10 kW.  Interestingly, of the worst actors last year: Remodel USA, Herca Solar and A1 Solar Power, both A1 Solar (4 projects) and Remodel USA (1) still made the delist this go around, but with greatly improved numbers. (Herca Solar has 44 projects overall in the data, none delisted.)

While Commercial projects are necessarily more complex, making cancellations more likely, it is hard to understand a 15% delist rate for Residential projects. Caveat emptor.

Does Size Matter?

Finally, we turn to the question of size, and in particular how well does the size of a project drive down its cost?  For this analysis (and most of our analyses going forward) we are excluding delisted and wait list projects from our data.  Here’s our result for systems at or below 10 kW:

As in the past, we had to exclude a couple of outliers above $15/Watt: the farthest out there was Sun Pacific Solar Electric which charged $21/W for a 1.5 kW system and right behind was California Solar who installed a 7.9 kW project for over $16/W! We will have lots more to say about such Outliers next week.

Overall, the trend is clearly moving in the system buyer’s direction with the trend line reaching down to $5.40/W for systems sized at 10 kW, while a typical residential project of 5 kW comes in around $5.70/W.

Nevertheless, that is a very gradual slope indicating that prices are fairly consistent across system sizes in this program segment.

What about larger systems, do we see more of a downward trend there as system sizes increase?  Here’s the data:

Interestingly, for the smaller projects there is very tight clustering right around the $5.70 mark where the trend line begins.  However, as you move up in system size, the clustering breaks down and system costs vary far more widely than they do for smaller systems.  Still the trend has 1 MW projects coming in around $3.77/W, compared to nearly $5.20 last year.

Ok, that’s enough to get us started.  Monday we will report on Who’s Hot and Who’s Not, and Tuesday will be our favorite post: Outliers and Oddities.  Stay tuned!

In Part One of this three-part Case Study we learned how Westridge School chose Run on Sun as their solar contractor.  Part Two followed the actual Construction and Installation process from the client’s perspective.  Now we conclude with Part 3 - Advice to the Solar Reluctant.

Advice to the Solar Reluctant

A true and long-tenured operations man, Williams understands not every business has the same confidence in the value of large-scale solar installations and their ability to save real dollars. Sometimes, people on the ground are convinced of the legitimacy of solar but may run up against superiors still reluctant to make a long-term investment. To those people, Williams gives this advice:

“Don’t think short term, think big picture,” he says. “Look at the numbers in a way that you’re truly aware of the value of sustainable energy and how important it is.”

The facilities director advises others in his position to help decision-makers understand having a solar installation is a way to add value to a company and separate a business from competitors in a way that is meaningful to customers. People will likely support that company by continuing to give it business, especially if the cost savings can be passed on to them.

Addressing the upfront costs is one of the biggest challenges, Williams admits, but it’s large-scale projects that offer the best and fastest ROI. When talking to a supervisor, or whoever is responsible for making the decision to invest in a system, speak to the facts. Have your data prepared and on-hand, and be prepared to show concrete evidence that solar would be a worthwhile investment, he says.

Even after a business decides to go solar, there are several more opportunities to remind higher-ups that the decision was a wise one. After installation, data collected from monitoring the system can show the direct benefits to others in the company and create a culture of awareness about the overall benefits of moving toward sustainability. When Williams receives the PWP rebate, he plans to take the paperwork straight to the school’s asset management department.

“Once you estimate the legitimacy of it, don’t let people forget about it. Remind them it’s still working,” he suggests.

‘Surgere Tentamus’

When Westridge School for Girls was first founded in 1913, women were not allowed to vote. Despite that fact, founder Mary Lowther Ranney, a well-known architect and teacher way ahead of her time, envisioned a place where young women could rise to new heights. Today, a full 100 years later, Westridge’s motto, “surgere tentamus,” Latin for “We strive to rise,” says a lot about the legacy of its founder.

The decision to make sustainable improvements to the campus stems from that vision, and in that way, Williams says, the new solar installation is the perfect bridge between the school’s rich founding principles and its desire to bring state-of-the-art green technology to the campus and the classroom.

He acknowledges how fortunate Westridge was to have students and parents who supported bringing solar to campus and were willing to give funds to the school for completion of the project. Now, when students lead group tours, they point to the south-facing roof of the Fran Norris Scoble Performing Arts Center and proudly let visitors know a fully-operational mini-power plant is running, unseen, above their heads.

Williams encourages others in positions like his to research the many potential benefits of solar. Seriously consider the different providers available, and choose the one who can give you the best value for your investment, because quality means more efficiency, more power and more savings.

In his case, he acknowledges his good own good fortune in finding support for solar. “There are a lot of smart people here,” he says. “When you speak intelligently to smart people, good decisions tend to be the result.”

The preceding is an excerpt from Jim Jenal’s upcoming book, Commercial Solar: Step-by-Step, due out this summer.

In Part One of this three-part Case Study we learned how Westridge School chose Run on Sun as their solar contractor.  Here in Part Two we focus on the actual process of the installation as seen from the client’s perspective.

Run on Sun Gets it Done

With the paperwork filed and the rebate secured, Run on Sun had a very tight window —  less than two weeks in April 2012 — in which to install and connect all 209 solar modules and get the monitoring software up and running. The goal was for the project to be completed and operational by the time Westridge students returned from Spring break, so time was of the essence.

For the rooftop display Run on Sun used a microinverter system supplied by Enphase Energy, which allows customers and solar installers to track the output of the modules, individually or collectively, from the convenience of their computers, iPads or smartphones. This software was a selling point for the school, because it would make the technology accessible to students and allow teachers to creatively incorporate aspects of the solar system’s performance into classroom instruction.

The modules were grouped into three sub-arrays that formed a larger circuit. Under each module, a microinverter was installed to convert DC energy gathered from the module into AC power, which could be combined and fed back into the school’s electrical service. The 1:1 ratio of microinverters to modules allows for a more detailed readout that lets users know the output of each module and gives an easy-to-read display should anything ever go amiss, from a connection issue to dirt on the module’s surface.

Throughout the installation Williams remained on hand to oversee the work, though there were no delays and no change orders requesting funds beyond what had been originally estimated. Within the assigned two-week period, Run on Sun had completed the project on time, and everything was in working order.

A Picture-Perfect Roof, Perfected

“I’ve worked with a lot of contractors, and I can honestly say, in this situation, this was one of the most seamless projects we’ve ever completed,” Williams recalls. “They were here early on the first day and, boom, they got it. It was done on schedule, at the price they said and signed off by the city. I wouldn’t hesitate to do a project like that again.”

A Truly Happy Anniversary

April 2013 marked the one-year anniversary of Westridge School’s solar installation, and Williams reports the system is running smoothly. The Enphase software makes it easy for officials, teachers and students to monitor the activity of all 209 modules, but Run on Sun also keeps a close eye on the operations and reaches out if and when an anomaly is detected. In the event that an outage or a decline in energy production should occur, the company promptly notifies the school.

For example, when one of the modules stopped reporting and apparently needed to be replaced, Run on Sun immediately contacted Williams to schedule a visit. The rest of the modules were still in full working order, and upon close inspection it was revealed that a connection had come loose. Still, to ensure maximum performance, the company replaced the microinverter at no cost to the school.

Another time Williams received a notification email from Run on Sun after the campus Internet connection had been temporarily cut during some service upgrades. And when the energy dipped from its norm of exceeding system predictions to 98 percent of anticipated, a call came in with a recommendation to check the array for accumulated dirt. After a brief spray with a hose, the system was back to producing at maximum capacity.

At the one-year mark, the school became eligible to receive its first annual rebate from Pasadena Water and Power. This is the first of five annual rebates it will receive, the dollar amounts directly correlated to the system’s actual production.

When a technician came from the city to assess the energy output of the system, the school was excited to learn the results. The city’s readings gave some very welcome news, indeed — the energy generated by the installation was above and beyond the original estimate provided to PWP, and it looked like the first rebate would be larger than anticipated.

“He said, ‘You’re over your estimate,’ and that’s all we could ask for,” says a thoroughly pleased Williams. “To date, everything that was promised to us was delivered — plus.”

In terms of the amount of energy generated, the rooftop system has continued to outpace expectations. The school expected to see a return on its investment in seven years, but it’s shaping up to come in as few as six. Because of the installation, Westridge is using 30 percent fewer kilowatt hours and is seeing its bills reduced by thousands of dollars each month, in addition to the rebate. The overall savings is far greater than the cost of running the air-conditioner in the gym, the initial impetus for bringing solar to campus. To Williams, making the decision to go solar was a “no-brainer.”

“The neat thing about this is it runs itself. If somebody walks onto campus, they don’t know we have a 52 kilowatt solar system on campus,” he adds. “They don’t see it. It doesn’t impact anything. All you do is save money.”

We will conclude this three-part Case Study with Part Three - Advice for the Solar Reluctant.

The preceding is an excerpt from Jim Jenal’s upcoming book, Commercial Solar: Step-by-Step, due out this summer.

Today we begin a three-part series offering a Case Study of the Westridge project, one year later.  Part One reviews the process that Westridge used to choose the solar contractor to build its solar project.  Part Two details the actual construction and the experience of the School in managing the project.  Part Three concludes with some advice to the Solar Reluctant on why solar really does make sense.

For the past 100 years, Pasadena’s Westridge School for Girls has prided itself on providing a top-notch education that grooms young women into the leaders of tomorrow.

As part of a legacy of bringing cutting-edge ideas and innovation to campus and making it all come alive in the classrooms, school officials have made it a goal to pursue and complete at least one project related to sustainability on campus each year.

In late 2011, looking forward to the next year, they decided to address a perennial request made by parents and students over the years: that an air-conditioning system be installed in the school gymnasium to keep crowds cool on hot days. While the school could likely raise funds from the parent community to purchase and install a system, the financial and environmental impact of running it and creating a new drain on the power supply were less than sustainable, says Brian Williams, Westridge’s Director of Facilities.

So, to offset the cost and energy consumption of the desired air-conditioning unit, officials decided to fundraise for another project at the same time, one that would mitigate the cost and consumption of the A/C.

They asked parents and students if they’d be willing to raise money to install a solar system on school grounds.

Big Plan on Campus

Solar energy was not exactly new to the school. In 2009, Westridge had installed a small system on its newly built LEED-Certified Platinum science and math building. There some of the panels were placed near the ground, where students could see them up close and interact with the technology.

For the new project, however, school officials were thinking much bigger. They wanted to maximize energy savings by installing a large-scale system that would provide a solid and swift return on their investment and take advantage of a local rebate being offered by Pasadena Water and Power (PWP) that was set to decrease drastically after the end of the year.

Ideally, the new installation would generate enough energy to cover the usage from the A/C in the gym and still supply additional power to other buildings on the campus, saving on the school’s overall monthly electric bill. At the outset, there were no specific parameters for the project, Williams said, just a location.

A Picture-Perfect Roof for Solar

“We found our biggest roof and said, ‘Fill it up,’ he says.

The south-facing slope of the roof of the Fran Norris Scoble Performing Arts Center would be the perfect place to set up a large installation. With an area of approximately 4,000 square feet, it received direct sunlight throughout most of the day and was elevated enough to tidily keep the operation out of sight.

Doing their Bidding

Williams turned to three different solar companies, seeking estimates to help define the scope of the project and determine a total cost that would guide the school’s fundraising efforts.

The first two companies Williams considered were those the school had worked with on past projects. One was a large, international solar provider that had worked on the 2009 science building installation. The other had previously worked with Westridge on nearby residential properties.

Run on Sun, the third provider approached regarding the installation, was the only one the school had not personally worked with before. The Pasadena-based company had contacted school officials earlier that year and delivered a presentation on its installation process, qualifications and services provided. That presentation was fairly comprehensive, and made enough of an impact for Westridge to include Run on Sun in the bidding process.

“We didn’t have any actual experience with them, but they had very good references that we checked as we went through the bidding process,” Williams explains.

Finding the right contractor for the job was a thorough search that employed analysis and research. But beyond that, Williams, who’s worked in the facilities department for more than two decades, relied on his own gut instinct and experience to determine which company could  best get the project done in a short amount of time and leave no detail unchecked.

Since Westridge is a privately funded nonprofit, it is not under the same obligation as public entities to accept the lowest contractor bid. Cost, however, was still a primary consideration in selecting an installer.

“I have a fiduciary responsibility in my job to make sure the projects we do here are cost-effective and help maintain our campus in a positive way,” Williams says. “I can’t do anything that doesn’t make fiscal sense.”

The cost estimates provided by the three companies for an approximately 50 kW system were not that disparate from one another, coming in at about $4.25 per watt. One thing Westridge did have to be cautious about in its review of the estimates, however, was the possibility of a provider initially underbidding the project with the intention of requesting additional funds through change orders after a contract had been signed. The contractor who was truly right for the job would be one who provided an accurate estimate up front and diligently held true to that figure.

When considering the PWP rebate, Williams knew the school stood to save about half the total cost of the installation over the course of five years. Additionally, all three bidders told Westridge officials they could expect to see a full return on their investment in about seven years. Overall, the project made great financial sense.

Since the cost estimates that came in from the three bidders were relatively similar, Williams also analyzed each company’s references, experience and credentials. For example, he did consider installers certified by the North American Board of Certified Energy Practitioners (NABCEP) to have an advantage over uncertified companies. Another important factor was the presence of a licensed electrician on the staff. “It’s an electrical installation, and I wouldn’t let anybody who wasn’t a licensed electrician be on site,” he says. “I’m guessing the city wouldn’t allow it either.”

Throughout the selection process, Westridge officials knew they were working under a bit of a time crunch. If they missed the window to apply for the PWP rebate, the project would end up costing significantly more than the amount they had raised. Because of this, hiring an installer who could successfully submit all the paperwork before the fast-approaching deadline, and one they could trust to get the application process 100 percent right the first time, was of critical importance.

In this regard, Run on Sun was a standout, Williams says. They promised to take care of all the paperwork, filing within the deadline period and eliminating the extra bureaucratic steps the school would otherwise have had to take.

“They managed the whole process — I basically [just] had to sign the form,” he says.

The fact that Run on Sun had a strong working relationship with the city of Pasadena was another important consideration that worked in its favor, given Westridge’s own solid standing in the community. The attention to detail and professional accountability demonstrated by the company throughout the bidding process brought the local provider to the top of the list, making the ultimate decision to go with Run on Sun an easy one, Williams says.

“It was a combination of the cost, return on investment, their relationship with the city, the impression we had with the provider, how they presented the information and their references. We looked at all of it.”

Next up, Part Two - Run on Sun Gets it Done!

The preceding is an excerpt from Jim Jenal’s upcoming book, Commercial Solar: Step-by-Step, due out this summer.