Thoughts on Solar

Yesterday we wrote about our most recent foray into the California Solar Initiative (CSI) data and how that data revealed trends regarding the costs of solar in SCE’s service area during the first half of 2011. We continue today with a look into the equipment that was specified for these projects and explore who’s hot and who’s not.

CSI Data Generally and Equipment Specifically

As a reminder, our data set for this analysis consists of an extract from the CSI Working Data from 8-24-2011 that includes data for SCE installs where major status activity took place during the first half of 2011.  That data set consists of a total of 6,306 projects of which 698 are “delisted” (meaning the project’s rebate reservation has been cancelled for some reason), 3,131 are “installed” (completed or in some stage of rebate payment) and 2,477 are “pending” (in some stage of the process from initial rebate application filed but no rebate claim yet filed).  For today’s analysis, we will exclude the “delisted” projects from our data, leaving a total of 5,608 projects to analyze.

CSI tracks data about equipment used on projects in great detail.  In particular, for every project, CSI allows for up to seven different panel manufacturers and ten different inverter manufacturers!  So how many of our projects use multiple panels or inverters by different manufacturers?  We would expect not many, and the data supports that surmise.  Only 11 projects reflect two different solar panel manufacturers on the same project and in most of those cases the installer has substituted one solar panel for the one originally designated.  (Indeed, one project reflects four different panels being identified to CSI for the same project, finally settling on what appears to be two 180 Watt panels plus six 175 Watt panels feeding a single string inverter - curious design, that!)  Similarly for inverters, only 24 projects have two different inverter manufacturers specified and no project reflects more than two.  Given that, our analysis will only look at the first specified panel and inverter manufacturer.

Solar Panel Trends

So what is happening with solar panels?

Overall, there are 85 different panel manufacturers included in the data; however, most of them account for very few projects.  If we apply a reasonable filter to this data and only look at solar panels that appear in 50 or more projects, the number of represented manufacturers drops from 85 to 14, and the total number of represented projects falls from 5,608 to 5,079.  In other words, those fourteen manufacturers account for 90.6% of all of our projects, as demonstrated in this first graph. In fact, the distribution is even tighter with only five manufacturers exceeding 10% of the total: Suntech Power (18.7%), Sharp (14.8%), SunPower (14.3%), Kyocera (12.8%) and Yingli Green Energy (10.8%).

Solar Inverter Trends

There are twenty-three different inverter manufacturers represented in the CSI data, reflecting the greater complexity of inverters and the more rigorous path required to bring an inverter to market in the U.S.  Filtering for manufacturers represented by ten or more systems cuts the list from 23 down to just 13.

SMA America is the runaway winner in this competition.  Under their own label, they account for 35.4% of all of these projects.  Moreover, the majority, if not all, of the “SunPower” inverters are actually re-branded SMA inverters.  When the SunPower inverters are added in, SMA accounts for a whopping 48.2%.  That leaves only six other manufacturers to exceed even 1% of the total: Fronius USA (19.8%), Enphase Energy (15.2%), PV Powered (5.5%), Kaco New Energy (3.1%), Power-One (3%) and SatCon Technology (3%).

Two things of interest in those last numbers - the inroads of relative newcomer Enphase Energy (which was only founded in 2006), and the inclusion of SatCon, since alone among that list, it only sells central inverters for the commercial market (where it is dominant).

Popular Pairings

That is how the different manufacturers stack up head-to-head, but what about combinations?  Are there pairings of  panels and inverters that are most commonly preferred?  The data reveals five combinations that account for more than 5% of the total: Suntech panels with SMA inverters (13.5%); SunPower panels with “SunPower” (i.e., SMA) inverters (12.4%); Sharp panels with Enphase micro-inverters (10.3%); Yingli panels with Fronius inverters (8.2%); and Kyocera panels with Fronius inverters (8.2%).

Winners and Losers

While certain pairings are popular - are they cost-effective and how well do they perform together?  We decided to look at system combinations from an average $/Watt perspective and from an average CEC efficiency perspective to see what jumps out of the data.

Here’s the first thing that struck us - picking a system with lower-tier panels does not guarantee a lower installation cost.  In fact, many of the bottom-tier panels (none of which made the cut in our discussion of panel manufacturers above) had install costs well above our overall average for the data set ($6.37/Watt).  For example, we found a handful of systems using solar panels from such luminaries as Apollo Solar Energy, SET-Solar, and REC ScanModule where the average installation cost was more than $10/Watt!

Who was on the very low end of the install cost curve?  Gloria Solar, Suniva, Kaneka, Silray and Solaria each had a handful of installations that were below $4.50/Watt.

More significantly, how did our most popular pairings perform?  Here’s the data:

What is up with the Sharp & Enphase combination?  While Enphase installations are known to cost a bit more than a comparable string inverter installation (confirmed by our own experience), they certainly don’t cost $5/Watt more!  Rather, it turns out that the overall average for all Sharp-based systems is $8.53/Watt (nearly $2.00/Watt above the average) with prices ranging from a low of $6.17/Watt (when paired with a Solectria inverter) to a breath-taking high of - are you sitting down? - $19.30/Watt when paired with a Sharp inverter.  So who installed that system, you ask?  You’ll learn all about it (or at least all that we can tease out of the data) later in this series.

Shifting our attention to efficiency, thin-film module maker First Solar gets the highest overall ranking, 91.7%, thanks to its extremely high STC to PTC ratio.  On the more embarrassing end of the scale, Sunlan solar brings up the rear, averaging only 80.7%.  From our list of the most popular solar panels, Sanyo (long a Run on Sun favorite) does the best, averaging 89.3% across a variety of inverter combinations.  The rest of the top five are: Canadian Solar (87.6%), SunPower (87.5%), Suntech (87.2%), and Schuco (87.0%).  The bottom-five of our best selling panels?  That dubious honor belongs to: Sharp (86.0%), BP Solar (85.8%), ET Solar Industry (85.6%), Trina Solar (85.5%), and REC Solar (85.1%).

As for our five most popular pairings, here is the data:

That is a pretty tight grouping, with a total range of just 2%.  To break out of that mold with a conventional panel/inverter pairing, the Sanyo & SMA combination is your best bet, weighing in at 89.5%.

Who Uses What?

Finally, we decided to see what equipment combinations are preferred by the biggest installers in the market.  The following table lists the top-five installers and reports the number of projects in the data, their most frequently chosen solar panel (and % of times used) and their most frequently chosen inverter (and % of times used).

Collectively, these 5 installation companies accounted for 42.8% of the projects in the CSI data.  Certainly companies this large must have some real clout when it comes to negotiating prices, thereby allowing them to pass along those savings to their many customers. 
Or do they?

Find out in our next installment!

The California Solar Initiative (CSI) is responsible for overseeing solar rebates for California’s three Investor Owned Utilities (IOUs): PG&E, SCE and SDG&E, and in that role the CSI program collects some very interesting data.  As we have in the past, we decided to dip into the data from the first half of this year to gain some insights into the State of Solar in California.  Over the next several days we will be reporting on what we have learned - and there are some very surprising things in here to be sure!

Overview & Methodology

A word first about how we processed the CSI data.  We downloaded the most recent active data set as of this writing (the August 24, 2011 data set to be precise) and parsed it into Excel.  Since we were only concerned about systems in our service area, we excerpted out just the data from SCE.  To narrow our focus more, we wanted to only look at applications that had significant status during the first half of this year.  The CSI data has a host of date fields - we took the latest of the fields ranging from First Reservation Date to First Completed Date as our Status Date and excerpted those that fell between 1/1/2011 and 6/30/2011 - a total of 6,306 data points.

That’s a fair amount of data but it necessarily omits any data at all from the municipal utilities such as Pasadena Water & Power (where we do much of our work) or LADWP.  Unfortunately, none of the munis make their program data generally available - which is particularly odd given that the local residents actually own those utilities (and thus, their data) - but that is a topic for another day.

Finally, for the purpose of these posts, all system sizes are reported in CSI Rating AC Watts (to account for differences in equipment choice and system design) as opposed to DC (or nameplate) Watts.

What can we say about those 6,306 projects?  Collectively they account for 164.7 MW of new solar power at a total installed cost of just over $1 billion - with incentive amounts totaling $219 million - roughly 21% of the installed cost.  Unfortunately, not all of those are built - or even ever will be.  Fully 11% (698) of those projects have the status ‘Delisted’ - meaning that they have been cancelled for one reason or another.  Those delisted projects account for 37.8 MW of potential solar power that presumably will never see the sun.  (Do some installation companies have a significantly higher rate of “delisted” systems?  We will answer that question in a subsequent post - stay tuned!)

The remaining 5,608 are split between “Installed” and “Pending” with 55.8% (3,131) installed and 44.2% (2,477) pending.  Breaking that down a little more, the installed projects account for  33.8 MW worth $240.1 million with incentive amounts totaling $57.1 million.  In contrast, the pending projects account for almost three times as much capacity at 93 MW worth $575.8 million with incentive amounts totaling $120.6 million.  (That is, nearly three times the to-be-installed solar cpacity for roughly twice the rebate dollars.)  On average, installed projects cost $7.09/Watt whereas pending projects cost $6.19/Watt - a positive trend for consumers since it shows the cost of solar power systems declining over time.

Does Bigger = Lower Cost?

Finally, for today, let’s examine whether the data supports the notion of solar economy of scale - that is, as system size increases does the installed cost/Watt decline?  To get a handle on that, we took two different cuts through our data set - “small” installed or pending systems <10 kW, and “large” systems ranging between 10 kW and 1MW.

First, here’s the graph for the “small” systems (consisting of 4,992 installed or pending systems - click on the graph to view full size).  As the trend line makes clear, larger systems really do drive down costs - decreasing from over $10/Watt at the small end of the range to just above $6/Watt for systems around 10 kW.

Another interesting observation from this graph are the outliers - with some data points below $3.00/Watt (mostly from self-installed system) all the way up to nearly $18/Watt!!! (We will have way more to say about those data points - and who is responsible for them - later in this series.)

If we now look at larger systems - those between 10 kW and 1MW - our data set has 587 such systems and again, the trend line shows the decline in system costs as system size increases.  (Note, because there is such a huge range in system sizes on this graph, we plotted the system size on a log scale.)  Some of these outliers are also pretty curious - a 200 kW system coming in at over $14/Watt?

Of course, this data is showing what happens when an individual project gets larger and there the trend is clear.  One might well ask, does the same trend apply to larger installation companies?  In other words, as a company has more and more installs, does that economy of scale translate into lower costs for the end consumer?  That’s a very interesting question and the answer - coming in our next post - just might surprise, or maybe even disturb you.

If there are some other cuts of this data that you would like to see, just let us know in the comments.  Trust me, we are just getting started!

A recent article in USA Today/CNBC online asks the question, “Does the solar industry have a PR problem?"  Yes, concludes the article, and that bad press is well justified because “solar technology is not quite ready for prime time".  Well, if the USA Today article is any indication, the solar industry clearly does have a PR problem, but it is not because of any failure in existing technology.  The failure, rather, is in media reporting that allows interested parties to speak as experts who denigrate existing solutions, without ever bothering to disclose the expert’s inherent conflict of interest, or even to report on the facts as they pertain to actual solar clients.

There can be little doubt that those of us who believe in the benefits of solar power systems have done a poor job of informing the public about the value of solar today.  (This blog, and the writings of folks like Tor “SolarFred” Valenza notwithstanding, there is a great deal of work to be done on this front.)  So it is hard to argue with the general proposition that solar has a PR problem - as in not nearly enough PR to counter the spin coming from the naysayers and the apologists for the status quo.

But the article takes a different tack.  It quotes at length from someone named Jim Nelson, the CEO of solar start-up Solar3D, to explain why solar has earned its bad rap:

The problem, says Nelson, is that solar is generally still not price competitive with fossil fuels for energy generation, says Nelson [sic]. Paradoxically, government efforts to subsidize the purchase of solar panels actually slow down the adoption of innovation that should ultimately make renewable energy more affordable.

By encouraging consumers to buy immature and inferior solar technology right now, government subsidies risk locking people into solar systems that are inefficient, expensive, and may or may not ultimately pay off to the consumer. “They’re encouraging people to use things that don’t work,” he says.

At current kilowatt-per-hour rates, solar energy costs about 4 times more than power drawn from the grid, says Nelson.

Wow.  Lots of troublesome statements in that blockquote.  Let’s break this down and see what’s what.

First off - what do people actually pay for electricity from their utility versus from a solar power system?  In Run on Sun’s southern California service area, the actual loaded cost of electricity ranges from $0.15 to $0.29/kWh.  For a commercial solar client, the cost per kWh - after allowing for rebates, tax incentives and O&M costs - is around $0.11/kWh.  These are the real world costs and benefits for clients adding solar right now.  For a 50 kW commercial installation, that translates into payback occurring between years 4 and 5 with an internal rate of return over the 25 year lifetime of the system of 17% or more.  Moreover, every year the client’s savings will grow as the cost of electricity from the utility continues to rise while the cost for electricity from their solar power system remains constant.

Second - solar today is far from something that doesn’t work.  To the contrary, solar power systems work day in and day out with minimal maintenance beyond occasionally directing a hose at the panels to clean them off.  True, inverters will likely need to be replaced about halfway into the 25 year lifetime of the system (although newer designs like the Enphase M215 micro-inverter are now pushing inverter lifetime far beyond older products) but that cost is part of the O&M cost considered above.  While solar panels will degrade over time, modern panels are warrantied to produce 80% of their rated power after 25 years and even older designs are still operating just fine after 40 years.  What other major asset can a business owner purchase that will pay for itself within five years, require minimal maintenance over its entire lifetime, and still be working well after 25 years?  Oh, and save the business owner many times over the initial investment during those 25 years?

Too bad more things “don’t work” as well as a solar power system.

Finally, what is Mr. Nelson’s perspective on all of this?  The article describes his company as a “solar manufacturer” but manufacturers typically have products for sale.  Touring the Solar3D website reveals lots of PR, but no products.  Rather, Mr. Nelson’s company, “Solar3D, Inc. is developing a breakthrough 3-dimensional solar cell technology to maximize the conversion of sunlight into electricity."  The key phrase being, “is developing".

Now we are all for more efficient solar technologies being developed into real-world products that we can put on roofs. We sincerely wish Mr. Nelson well in his efforts to bring ever better products to market.  But it is just silly to tell the solar-buying public that present technology is “immature” and “doesn’t work” when Gigawatts of installed solar power systems prove just the opposite.  And it is sloppy journalism to quote him without revealing his true position in the industry.

The April 28, 2011 edition of the Pasadena Weekly has a very nice article by Sara Cardine titled, The City of the Future, which includes an interview with Run on Sun Founder & CEO, Jim Jenal.

Part of its month-long series of articles on going Green, Cardine’s piece looks specifically at how Pasadena has taken long strides toward turning itself into a truly Green City.  Starting with its adoption of a “Green Action Plan” in 2006 - the same year that Run on Sun was founded - Pasadena is working hard to turn its good intentions into practical actions.  For example, Pasadena has made major reductions in its own energy usage and is pushing to do much more.

From the article:

Since the Green Action Plan was established, the city has seen improvements on multiple levels, said Ursula Schmidt, the city’s sustainability affairs manager. In addition to increased water and energy conservation, renewable energy use and recycling, the city is also making headway in its green building program and in an effort to establish an alternative-fuel fleet.

Last year alone, Pasadena trimmed its peak power demand by 4.45 megawatts and saved enough energy to power 3,640 homes for one year. Officials now hope to see a citywide reduction in greenhouse gas emissions of 25 percent by 2030, along with an increase in the citywide use of green energy sources beyond recently adopted statewide standards. Last month, state lawmakers passed SBX1 2, a law requiring that 33 percent of the state’s energy come from renewable sources by 2020. Pasadena is already pushing itself past that benchmark; last year the City Council adopted a comprehensive integrated resources plan that set a goal of 40 percent renewable energy use by 2020, according to Gurcharan Bawa, PWP assistant general manager.

Encouraging commercial and residential customers to Go Solar is a big part of the strategy to meet those goals.  Caltech, one of the largest energy users in the City, has installed over 1.3 megawatts of solar power on its campus with more planned.  Yet some customers have been reluctant to follow Caltech’s lead.  To get the installer’s view, Cardine interviewed Jim Jenal and quoted him as he described the process of working with an installer to get a proposal and ultimately, an installed system.

Please check out the article online or pick up a print copy (which features a wonderful picture of Jim with that famous Solar Kid) and let us know what you think.

As Cardine concluded:

“This isn’t rocket science — it’s truly something normal, everyday people can understand and feel comfortable with,” Jenal said.
It just begins with a little knowledge and the commitment to make a difference.

We couldn’t agree more!

Editor’s Note: This is the third in our three-part series on what you need to know about Commercial Solar Power.  Check out the first two parts here:

• Part 1: Understanding Your Bill
• Part 2:  Understanding Rebates and Tax Incentives

Along the path to installing a commercial solar power system, a business or building owner must first understand the hidden details in their current electric bill and the solar power rebates and tax incentives that are available to them - as we previously discussed in the first two installments of this three-part series.  The next step is to actually contact a number of solar power installation companies and assess their bids, choosing the one that will be the best match for you.  That process - finding the right installer by understanding the bids provided to you is the subject of this post.

Finding an Installer

Before you can ever get a bid, you have to contact a solar installation contractor to come out to your site and give you a proposal.  Actually, you should contact at least three contractors so that you have a set of bids to compare (more on that process below) - but how do you find them?  Well, you could choose based on who has the most ads on TV or the Internet, or you could rely on Cousin Billy’s recommendation - but somehow that just doesn’t seem sufficiently, scientific for a project like this.  There has to be a better way - and there is.  Here are our thoughts on how to identify properly qualified contractors for your job.

NABCEP Certification

The North American Board of Certified Energy Practitioners - NABCEP for short - provides the most rigorous certification process of solar installation professionals in the industry.  Not to be confused with their entry level Letter that merely proves that the person has taken an introductory course in solar,  the NABCEP Certified Solar PV Installer™ credential is the Gold Standard for installers and consumers alike.  Earning NABCEP Certification requires the successful candidate to have an educational background in electrical engineering or related technical areas (including an IBEW union apprenticeship program), at least two solar installations as the lead installer, and the successful passing of a 4-hour written examination on all aspects of solar power system design and installation.

As NABCEP notes:

When you hire a contractor with NABCEP Certified Installers leading the crew, you can be confident that you are getting the job done by solar professionals who have the “know-how” that you need. They are part of a select group of people who have distinguished themselves by being awarded NABCEP Certified Installer credentials.

NABCEP’s website offers a database of all Certified Solar PV Installers - just enter your zip code to find the installers located near you.  It is with great pride that we point out that at Run on Sun, all three of our owners are NABCEP Certified Solar PV Installers™ - and we know of no other solar power company in Southern California that can make that claim.  (Try it - click on the link above and enter our zip code: 91105.  There you will find the entries for Brad Banta, Velvet Dallesandro and yours truly!)

CSI - Go Solar California

A second source of solar installers is the California Solar Initiatives’ Go Solar California website.  Every installer who has done a solar power installation for a CSI utility (i.e., SCE, PG&E or SDG&E) will be included on this list.  Unfortunately, there are no other criteria associated with getting listed - and there is limited verification done to guarantee that the listed installer is reliable.  If your job is in California, your contractor should also be on this list - but this is a double-check only - not a starting point for your search.

Your Utility and/or Building Department

Another source for information about solar installers is your local utility’s point person for solar rebates.  This person deals with installers on a daily basis, and while s/he won’t give you a specific recommendation, they may be able to warn you off of an installer whom they have learned is less than reliable.

Similarly, the folks in your local building department deal with installers regularly as part of the permitting/inspection process.  Once again, they won’t be in a position to provide referrals, but they may be able to give you a warning if there are red flags associated with a contractor that you are considering.

Local or National?

Solar installation companies come in all sizes - from national organizations that have crews installing systems all across the country, to local operations that only work in a limited geographic region.  To be sure, there are pluses and minuses on both ends — maybe lower prices for the national chain due to economy of scale in their purchasing versus greater attention to detail from a local company that lives or dies based on how well it satisfies its local customer base.  And, of course, money spent on a local company tends to stay in the local economy - another consideration in tough economic times.

What to Expect During the Site Evaluation

Congratulations - you have identified three companies to bid on your commercial solar project - what should you expect from the process?  Here are three necessary steps that an installer must do to provide you with a proper proposal.  If any of these steps are missing, be very skeptical of their resulting bid.

1. They will review a year’s worth of your electrical bills - Every proposal begins with an assessment of your needs and that is determined by reviewing your electrical bills.  While some utilities allow you to download your usage and costs from their websites, that is rarely as detailed as the full bill itself.  You will recall from Part 1 of this series - there really can be some nasty surprises hiding in your electric bills.  So plan on having copies ready - or better yet, scan them, have them in a PDF file, and be prepared to email them to your installer when you first contact them.


2. They will go on your roof - Nothing takes the place of actually walking your roof, taking proper measurements, and identifying any shading issues that you might have.  While many commercial roofs appear to be “unshaded", a solar professional knows that appearances can be deceiving and will not rely on a client’s claims but will instead do a proper shading analysis.  (If you have any questions about this, demand that the installer provide you with the output from their shading analysis - if they didn’t perform a shading analysis, that is another red flag.)  Remember - your utility requires a shading analysis as part of the rebate process so if your potential installer didn’t do one, how can they know what your rebate will be?


3. They will check out your electrical system - One of the major variables in commercial solar is the nature of the interconnection between your solar power system and your existing electrical infrastructure.  While in a residential setting this is usually nothing more than adding a circuit breaker to your existing service panel, in a commercial setting this may involve transformers, 3-phase systems and/or line-side taps - all of which increase the cost of the installed system.  A professional installer will review the interconnection issues when they visit your site and adjust their bid accordingly.

Comparing Apples to Apples

You did it!  You found three installers with great credentials who came out to your site and each one did a careful evaluation.  Now you are holding in your hand a thick stack of paper from the three installers and they don’t look anything at all alike!  How to make sense of all of this?

One good way is to have the installer come in and present their proposal to you (and any other decision makers on your team).  A professional installer should be happy to spend some quality time with you and your team to explain the proposal that was given to you - but keep in mind that they are very busy people.  Do your homework first - compile your questions and those of your team (if they will not be participating in the meeting) so that your time together can be as productive as possible.  As part of that due diligence, here are some things to look for as you compare these bids.

Solar Panels

All solar panels are not alike and although they may seem like a commodity to you, there are a number of ways in which one “200 Watt Solar Panel” will differ from another.  Here are the key considerations:

1. Efficiency - The efficiency of a solar panel tells you how much nameplate power per square foot the panel will deliver.  This is a very important attribute if your available space for solar is limited.  However, efficiency is expensive - if you have lots of roof space for solar, the value of this factor drops dramatically.


2. Temperature performance - Somewhat perversely, all solar panels degrade in their performance as they get hotter.  Some panels do much better in the heat than others.  (Sanyo panels have the best temperature performance of any panel that we have seen.)  You will find this on the solar panel data sheet as Power Coefficient/°C.  You would like this number to be zero.  It won’t be, but the smaller the magnitude of this negative number, the better.  But again, better temperature performance comes with a price.


3. Manufacturer reliability - Pretty much all solar panels comes with a 5-year warranty on workmanship and 25 years on performance, but the value of that warranty is entirely dependent on the reliability of the manufacturer.  Lots of cheap solar panels are now on the market from start-up operations in Asia.  If you have a problem five years from now and you want a warranty replacement, how likely is it that the manufacturer will still be in business?  A 25-year warranty issued in 2011 is of no value at all in five years if the company disappears in 2015.  Ask your potential installer about the history of the company that is standing behind that warranty and then do your own homework on this vital reliability factor.  Be prepared to pay more for solar panels coming from the most reputable manufacturers.

Inverters

Commercial inverters range from large, central inverters to a collection of string inverters to even micro-inverters (one inverter per solar panel) in some settings.  You should check for: a) the efficiency of the inverter (should be in the 95-97% range with the higher the number the better); b) whether monitoring is built into the inverter or must be added; c) the warranty period applicable to the inverter; and d) the manufacturer’s reliability.  Inverter recalls in the solar industry are rare, but they have been known to happen.

There are trade-offs associated with the different approaches - a central inverter consolidates your equipment in one place and makes for a clean, cost-effective and efficient system, often with sophisticated monitoring capabilities built-in.  Yet a central inverter represents a single point of failure for your entire system - if the central inverter fails, your system will produce nothing until it can be repaired.  In contrast, using a series of smaller string inverters may look more cluttered, and interconnecting them for monitoring purposes may be more complicated and costly.  However, by distributing the inverter function over a number of devices, you have diversified your risk - if one inverter fails, the others are unaffected and you will continue to produce some energy while the faulty device is repaired or replaced.  Most commonly, small commercial systems - those below 50 kW - may well benefit from using multiple, smaller inverters.  As system sizes increase, however, the cost-savings and ease of installation of the central inverter probably makes it the preferred approach.

Inverter configuration is ultimately a design choice and your installer should be able to explain to you why they have made the choice that they are recommending.

Warranties

We already touched on the value of warranties from equipment manufacturers, but what about the warranty from your installer?  In California, an installer is required to offer a 10-year warranty on their workmanship.  However, a company that has only been in the solar business for a couple of years (or less!) cannot offer proper assurances that they will be there to back-up that warranty.  Here’s one hint - if your potential solar installer was in the business before the recession hit, they are probably in this for the long haul (and they have demonstrated enough business savvy to survive the worst economic climate in more than fifty years - not a bad credential).

Rebate Calculations

Your installer should have done a calculation based on your utility’s rebate structure to estimate what your rebate will be.  These estimates should be comparable from one bid to another but if they are not, demand that your potential installers provide you with the output from the rebate calculator that they used to produce the estimate.  If they refuse, or if the rebate calculation shown doesn’t square with the rest of their bid, you can scratch them off your list of potential candidates.

Are You Comfortable?

You cannot be completely comfortable making such an important decision until you have had all of your questions answered.  Your potential installer should be happy to spend whatever time you reasonably need to be assured that you have all of the information in hand.  (But please remember, these are very busy folks so use their time wisely.)

The following are the analyses that you should insist on receiving, and having explained to you before you make your decision:

Utility Savings Analysis

You want to know what your savings will be from your new solar power system and this analysis should answer that question.  Specifically, it should consist of an estimate of the solar energy (in kWh) per month that the system will produce (usually tied to the output of the utility’s rebate calculator or some comparable method) and the value of that energy based on the utility’s rate schedule applicable to your site.  A simple-minded analysis that assumes that all kWh’s of energy are worth the same fails to meet this standard, as we explained back in Part 1.

Return on Investment
Internal Rate of Return

Given the energy saving starting in Year 1, the cost of the system, any O&M costs, the anticipated rebate from the utility, and the tax benefits anticipated for the system, your installer should map out for you the cash flows associated with your system.  That analysis should indicate when the system will break even and what the internal rate of return over the lifetime of the project will be.  There are several variables in this analysis - the amount of annual energy cost increases from the utility, the degradation of the system’s output over time, and the marginal tax rate (federal and state) for the system owner, to name a few.  A competent analysis will identify the assumptions used in each of these areas.

Cost per kWh

While it is common in the solar industry to express the cost of the system in dollars/Watt, that is a misleading statistic at best since it masks variables affecting real world performance.  A far better metric - and one that your installer should be able to provide you - is the cost per kWh for the energy that will be produced by the system over its anticipated lifetime (again, usually assumed to be 25 years).  The calculation is actually quite simple - determine the total out-of-pocket costs for the system owner over the system’s lifetime (including purchase price less rebate and tax credits/grant, plus all O&M costs) and divide it by the total amount of energy to be produced (allowing for the system’s performance degradation over time).

We prefer this number because it reflects the real world performance and it allows for direct comparisons against the client’s previous costs for energy.  Indeed, we typically find costs per kWh in the 10-11¢ range compared to utility costs of 15-19¢ starting in Year 1.  But because the energy cost for the solar power system is fixed over its entire lifetime versus the cost of energy from the utility which is constantly rising, the graphical comparison is quite compelling.

Just Do It!

Now it is up to you - you have all the information you could possibly want from one or more highly qualified solar installers.  Now is the time to pull the trigger and Go Solar Now!  There will never be a better time and every day that you wait is costing you money.  Give us a call and we will get you started!