Thoughts on Solar

A client of ours noted that Pasadena Water and Power (PWP) offers, in addition to its regular, Residential tiered rate structure, the option to switch to a Time-of-Use rate structure, and he asked if he would derive additional savings from making that switch. Turns out that is not an easy question to answer, and there certainly isn’t a “one size fits all” result. We decided to take a closer look into these rates both for PWP and for the folks in Southern California Edison (SCE) territory.

SPOILER ALERT - The following is pretty much down in the weeds.  You have been warned!

Defining Tiered and Time-of-Use (TOU) Rates

Let’s start by defining our terms. Most residential electric customers, of both PWP and SCE, are on a tiered rate structure. That means that there are two or more cost steps - called tiers - for the energy that you use. Tiered rates assume that there is some minimally expensive charge for the first allocation of energy per billing cycle, and that as you use more energy your cost for energy increases. For example, SCE’s Domestic rate has three tiers and in the first tier the charge is 8.8¢/kWh, in the second tier the charge is 16¢/kWh, but the final tier is 22.4¢/kWh! (There  is also a non-tiered component that adds another 6.9¢/kWh to the customer’s bill.)

PWP, on the other hand, has a somewhat perverse tier structure in that the lowest tier is very cheap, 1.7¢/kWh, the second tier is significantly higher, 13.5¢/kWh, but the final tier actually goes down to just 9.9¢/kWh! Since the whole point of tiered rates is to provide an incentive for heavy users to reduce their usage, PWP is actually rewarding those who consume more than 25 kWh per day with lower rates! Very odd.

Time-of-use rates, on the other hand, are generally not tiered. Instead, the day is broken up into segments and the cost of energy varies depending on the segment in which it is consumed. PWP refers to these segments as “On-Peak” (from 3-8 p.m.) and “Off-Peak” (all other hours). But PWP’s TOU rate retains the tiered element as well, making it a truly odd hybrid rate structure.

SCE’s approach is more involved, dividing the day into three, more complicated segments: “On-Peak” (2-8 p.m. weekdays - holidays excluded), “Super Off-Peak” (10 p.m. to 8 a.m. everyday), and “Off-Peak” (all other hours).

For both PWP and SCE there is a seasonal overlay on these rates, with energy costs increasing in the summer months (defined as June 1 through September 30).

(It is important to note that both PWP’s and SCE’s TOU rates put the most expensive energy in the late afternoon to evening time period - pricing energy to offset against the “head of the duck.” Ultimately, these rates will create the energy storage market in California, but that is a post for another day.

Analyzing the Benefits of a Rate Switch - Pre-Solar

Assuming that one can create a spreadsheet to model these different rates (not a small task in and of itself!) there is one more hangup - data. Both PWP and SCE report total monthly usage to customers on their tiered rate plans - but in order to analyze your potential bill under a TOU rate, you must have hourly usage data for every day of the year! (Because there are 8,760 hours in a [non-leap] year, such a usage data collection is typically referred to as an 8760 file.)

The standard meters that PWP has installed simply do not record that data, so the average PWP customer has no way to know whether they would save money by making the switch.

On the other hand, most SCE customers do have access to that data and they can download it from SCE’s website.

After you create an account, login to it and go the “My Account” page. On the left-hand-side you will see some options - click on “My Green Button Data” (the too cute by half name for the interval data you are seeking), select the data range for the past twelve months, set the download format to “csv” and check the account from which to download. Then press the “download” button and cross your fingers - in our experience, the SCE website fails about as often as it actually produces the data that you are seeking!

Modeling PWP

Given that PWP doesn’t have data available, is there any way to estimate what the results might be? The answer is, sort of. We took an 8760 data set from an SCE customer and used that as our test data for both PWP and SCE. (The data file does not identify the customer.) Since the data file has an entry for every hour of every day, we can segment the usage against the On-Peak and Off-Peak hours, and using a pivot table - probably the most powerful took in Excel - we can summarize those values over the course of the year, as you see in Figure 1.

Figure 1 - Usage Profile for PWP

Summer months are highlighted in orange. For this specific energy usage profile, Off-Peak usage is more than twice that of the On-Peak usage (9,806 to 4,009 kWh respectively). So how does that work out when we apply the two different rate structures? The table in Figure 2 shows the details of the two rates:

Figure 2 - PWP Rates - Standard Residential and TOU

Under both rate plans, the distribution is tiered (with the perverse reverse incentive for usage above 750 kWh). Added to that is either the seasonally adjusted flat rate for energy, or the seasonally adjusted TOU energy charge.

Applying those rates to the Usage Profile in Figure 1 allows us to see what the energy and distribution components would be under both approaches. Given the hybrid nature of these rates, you might expect them to be similar and you would be correct. The distribution charge - which applies to both - comes to $1,180 for the year. The flat rate energy charge comes to $893, whereas the TOU charge is $985. Meaning that someone electing to use the TOU rate would have a yearly total of $2,165, whereas the flat rate user would have a total bill of $2,074, making the TOU rate - for this specific energy profile - 4% higher.

Beyond that, PWP has a number of other charges - such as a public benefit charge, an underground surtax, and a transmission charge - that are only tied to total usage, so the ultimate difference between these two rates is even smaller.

Modeling SCE

SCE rate structures are significantly more complicated that PWP’s. For example, the tier 1 (aka baseline) allocation varies by location. Since SCE covers such a huge and diverse area from cool coastal regions to absolute deserts, customers are allocated more energy per day in their baseline depending upon where they live. In the area around Pasadena that is covered by SCE, a typical daily baseline allowance would be 13.3 kWh in the summer and 10.8 kWh in the non-summer months. The baseline then is that number times the number of days in the billing cycle. Tier 2 applies to every kWh above baseline, but below 200% of baseline. Tier 3 applies to everything beyond that. As with PWP, the tiered rate only applies to “delivery” charges. The energy generation charges are the same all year. Here’s what that rate structure looks like:

Figure 3 - SCE’s Tiered Domestic Rate

The first thing that you notice when you look at this rate is how much higher it is than the rates from PWP, and the end calculation bears that out - the same usage that resulted in an annual bill of $2,074 in Pasadena becomes $3,227 once you cross the border into Altadena, South Pasadena, San Marino, or Sierra Madre - an increase of 56%! (There’s a reason why a growing percentage of our clients are coming from those surrounding, SCE-territory communities!)

So what would happen if this beleaguered client were to shift to a TOU rate? First, we need to re-parse the usage data according to SCE’s more complicated segmentation scheme, which gives us Figure 4:

Figure 4 - SCE’s Segmented Usage Data

Once again, the On-Peak usage is the smallest category of the three, amounting to just 23% of total usage, compared to 42% in Off-Peak, and 35% in Super Off-Peak.

Of course, SCE can’t do anything in a simple fashion, so they have not one but two basic approaches to their TOU rates, Option A and Option B.  Option A rates run from a low of 13¢/kWh (in summer Super Off-Peak), to 29¢/kWh (during summer Off-Peak) to an eye-popping 44¢/kWh (during summer On-Peak).  However, Option A includes a credit of 9.9¢/kWh on the first baseline worth of energy which reduces the monthly bill by roughly $30.

Option B deletes that baseline credit and replaces it with a “meter charge” (even though it is the same meter!) of 53.8¢/kWh/day, or roughly $17/month.  In return, the On-Peak charges are significantly reduced from 44¢/kWh to just 32¢/kWh.

So how does this shake out?  The results are quite surprising, as shown in Figure 5.

Figure 5 - SCE Rate Structure Comparison

The two left columns show the month-by-month calculations for both delivery (the tiered component) and generation (the flat component).  The two right columns show the month-by-month calculations for the two different TOU rates.

The bottom line is striking: under TOU-A there is a savings of 5% over the tiered rate, whereas the savings jump to 19% by going to TOU-B!  That is a savings of $600/year just by changing rate plans - a switch that any SCE customer can make.

MAJOR CAVEAT: YOUR MILEAGE WILL VARY!

The results displayed here are entirely dependent on your actual energy usage and no two usage profiles are alike.   It is possible, even likely, that some usage profiles will see an increase in bills under either TOU option.

The good news is, that for a nominal fee,  this is an analysis that we could do for any SCE residential customer - we would just need access to your usage data.

So that completes our pre-solar analysis. In our next post, we will look at how these results change when you add a solar power system into the mix.

In November of 2011, Run on Sun was hired by Westridge School for Girls to install a 54 kW solar system on the roof of the school’s Fran Norris Scoble Performing Arts Center (the “PAC” as it is known on campus), and that project was just recently completed.  This multi-part series will document the process by which we went from a signed contract to a signed-off solar power system.  Not surprisingly, there were a few twists and turns along the way that had to be resolved before we could deliver a successful project, and this series will showcase those developments in the following five parts:

The Rebate Application

The rebates being offered from Pasadena Water & Power (PWP) for this non-profit project were scheduled to step-down on December 1, 2011.  Indeed, this was a substantial rebate reduction - 26% - such that failure to secure the existing rebate rates would have amounted to a hit of tens of thousands of dollars for our client.  And PWP had made it very clear - unless applications were 100% complete and correct, they would be rejected and when resubmitted would be subject to the reduced rebate rates.  Clearly the pressure was on to get this right the first time!

The application package consisted of eight parts - most of which were straight-forward, but a couple required substantial work to guarantee that the application as submitted would be acceptable the first time.  Here are the parts that went into the rebate application: 1) Signed Rebate Application (PWP’s form, signed by client and Run on Sun under penalty of perjury!); 2) Single Line Diagram for the electrical components of the system (more on this below); 3) Site Plan; 4) CSI Report (as produced by the California Solar Initiative’s rebate calculator); 5) Shading Analysis (i.e., a Solar Pathfinder report to support the shading values used to create the CSI Report); 6) PWP’s Net Metering Agreement (executed by the client); PWP’s Net Metering Surplus Compensation form (for AB 920 compliance); and 8) Installation Contract between the client and Run on Sun.  Also, since this was a non-profit client, proof of non-profit status was also required.

Shading Analysis & CSI Report

PWP wisely requires the submission of a shading analysis in addition to the output from the CSI rebate calculator.  Since the amount of shading at the site directly impacts the performance of the system - and hence the CSI AC Watts of the system (or the predicted annual energy output in the case of a PBI rebate) - it really doesn’t make sense for a utility to simply trust that the installer is telling the truth about shading.

The output from the Solar Pathfinder proves that the shading numbers claimed are the shading values present at the site.

Site Plan

The site plan needed for the rebate application is a much simpler plan than what will ultimately be required for the permit, really only requiring an indication of where the various components of the system will be relative to the overall site.   However, our system occupies three different areas of the PAC: the roof where the array itself is located, a ground-level storage area where our step-up transformer will be, and the utility switchgear, located on the far north end of the building.  Thus our site plan included drawings for each location.

The array drawing showed the three sub-arrays and the clear space allocated for fire department access.  Each sub-array consisted of three branch circuits, each of which was “center-tapped” to reduce the voltage drop in the associated branch circuits.  Each branch circuit landed at a sub-array service panel which then fed a master “solar-only” sub-panel in the transformer area.

The transformer area drawing detailed the conduits coming down off the roof (one each from each sub-array sub-panel), the master sub-panel which feeds our step-up transformer (to change the 208 VAC three-phase power coming from the roof to 480 VAC three-phase supplied by the utility service) and then a safety disconnect switch located adjacent to the transformer.  From the safety switch a fourth conduit carries the required conductors back across the roof to our service switchgear area.

The service panel area drawing showed the placement of our lockable PV AC Disconnect, the associated performance meter, and our circuit breaker for the system located in the existing service switchgear.

Single Line Diagram

Our most significant deliverable in the rebate application packet was the single line diagram (SLD) for the electrical circuits.   Since this diagram shows how all of the electrical components of the power generating system interconnect - including the tie into the utility’s grid - we knew that this would be the most closely scrutinized piece of the submission.  To be sure, PWP has a generic SLD that installers can use (in fact, we helped develop it!) but that drawing does not cover the use of Enphase Micro-inverters which we were featuring on this job, nor does it allow for a step-up transformer.

Fortunately, we had developed a very flexible SLD format from prior jobs that we could readily adapt for this project.  However, before we submitted it to PWP, we forwarded it to the application engineers at Enphase Energy to make sure that they were comfortable with what we had designed.  Enphase was more than accomodating - given our tight time frame they bumped us to the front of their engineering review queue and came back promplty with the good news - the design was good as we had drawn it and no revisions were needed.  Of course, that was no guarantee that the utility would agree, but it is always nice to have a P.E. on your side!

Included in the SLD preparation was a complete set of voltage drop calculations.  This was complicated by the fact that we had 9 different branch circuits, three different sub-panels and two different operating voltages!  Good design calls for limiting total voltage drop to less than 3%.  To keep our worst case scenario within that limitation (covering the branch circuit farthest from the main “solar-only” sub-panel) we ended up with 4 different gauge sizes of conductors at different legs of the run: #12 in the branch circuit cables (supplied by Enphase), #8 from branch circuit jbox to sub-array sub-panel, #2 from sub-panel to main “solar-only” sub-panel, #3/0 from that sub-panel to the transformer and then #2 from the transformer back to the service equipment area.  (One change that occurred during the install process increased the length of some of these runs - and that necessitated some wire size changes to insure that we stayed comfortably below our 3% limit.  Those will be discussed in future episodes.)

One Big Present

All of those documents, plus pages and pages of cut sheets describing all of the key products being used, were then submitted to PWP - one day before the deadline!  With no margin for error, our submission had to be perfect.  Thankfully, it was - PWP gave us their official blessing to proceed three weeks later, just three days before Christmas.  One big present, indeed.

Our first hurdle successfully surmounted, it was time to prepare for the most nerve wracking part of the process - pulling the permits!  That’s the subject of our next installment - stay tuned!

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!

While many companies sit on the sidelines with accumulated capital, we have argued before that spending some of that capital on a commercial solar power system makes great economic sense.  But for some companies (and their facility managers and accountants and Board Members, and so on), commercial solar is still a mysterious concept, filled with confusing jargon and competing claims.  Can a commercial solar power system really be as economically beneficial as the proponents (like this blog) claim?

Rather than answer that question directly (well, ok, the answer is YES but please read on), we thought it would be useful to actually layout the case for commercial solar power in some detail.  Although no blog post (or series of blog posts) can take the place of a face-to-face conversation that takes into consideration all of the relevant  elements of a specific company’s situation, there are enough common elements that can and should be explained to demystify the overall process.  That is the task of this series - to teach you, the business/building owner everything you need to know in preparation for installing a commercial solar power system on your building.

First things first - before you ever even call a solar power company - and we will explain how to find the good ones in Part 3 - you need to start with something more mundane: your electric bill.  When was the last time that you really looked at your electric bill?  For many business or building owners the answer is never.  Oh sure, you certainly know how much you are paying - but do you know why you are paying so much?  What horrors are hiding in your bills?

The Shocking Facts Hiding in Your Electric Bill

The Basics - Usage & Demand

There is probably a very good reason why neither you, nor anyone else at your company has ever looked closely at your electric bill - it is terribly confusing.  Let’s start with some basics.  Almost every commercial user pays for at least two major components on their electric bill: usage and demand.

Usage is the more familiar component as it is the basis for your residential electric bill.  It is based on the total amount of energy that you used over the course of the billing cycle (usually one month for commercial customers).  Usage is measured in total kilowatt hours (kWh). Usage charges are based on some specific cost per kWh which is defined in the rate schedule that applies to your utility account (more on rate schedules in a minute).

Demand is a bit more complicated - it is usually defined as the greatest amount of power that the utility has to provide to you over a measured period of time during the billing cycle.  For SCE customers, demand is the peak power required during any 15 minute period over the month.  That means that if your building has multiple HVAC units and they all come online during the same 15-minute window, your demand will spike much higher than it would if those units came on in a staggered fashion (since the power demand of an HVAC unit is highest when the compressors are running as they will be when the unit is first started.)  Demand charges are billed per kilowatt (kW) of power.

Rate Schedules

Every utility has a variety of rate schedules that might apply to a commercial building and you could pay vastly different amounts - that is to say you could save a lot of money - by switching to the most economical rate schedule for which you qualify.

SCE’s GS-2 Rate Schedule Model (click for larger)

Case in point - SCE has two rate structures that commonly apply to small to medium size commercial buildings: GS-1 and GS-2.  (For those ready to get into the details, here is a link to the GS-1 rate schedule and here is a link to the GS-2 rate schedule.)  The beauty of the GS-1 rate schedule is that it has no demand component.  But here’s the catch - your peak demand must not exceed 20 kW in any three of the past twelve months.

We had one potential customer who was paying under GS-2.  When we analyzed their bills - the first step in preparing a proposal for installing a commercial solar power system - it was apparent to us that based on their bills, they were entitled to actually be billed under GS-1.  When we met with their facilities manager to discuss our proposal, we pointed out that they could have saved over $2,000 the past year if they had been on the right rate schedule and we encouraged them to contact SCE about getting switched to GS-1.  (No, SCE had not suggested that to them.)  Strangely, none of the other solar companies that they had talked to had explained that to them, yet once they called SCE, they were switched over immediately.  (Oh, and they hired us to handle their commercial solar installation!)

Here’s another example.  PWP generally has low rates, but their mid-level commercial rate schedule (M-1)  has one of the most significant “gotchas” we have seen anywhere - and we are yet to speak to a single customer who was aware of this before we pointed it out.  The M-1 rate structure includes a demand component (labeled “distribution"), but unlike SCE’s demand component described above, PWP charges you for the peak demand in any 15-minute window for the past 12 months! That means that if on one unlucky day, everything in your building comes online all at once during the same 15 minutes, not only will you pay for that peak demand that month, you will pay for that peak demand for every month for the next year (unless a higher demand comes along to take its place)!  For one of our customers, they had a peak demand one month that spiked at 82 kW, yet their average for the next 12 months was only 36 kW.  Under the M-1 rate schedule, they paid $5,300 more than they would have if they only paid for their monthly peak demand.

Models Matter

At Run on Sun we have devoted a lot of time to mastering the intricacies of the various rate schedules used by the utilities in our service area.  We have turned that understanding into a series of rate schedule models that allow us to accurately model your prior utilities bills and then make accurate predictions regarding your potential savings from a host of measures - changing rate schedules, reducing your usage or peak demand, or installing a solar power system. Some companies simply assign a fixed amount of savings per kWh that their proposed solar power system will produce and call that your potential savings.  Such an approach ignores the complexities of how your electric bill is actually calculated and can mask other steps that you could take to save money.

We firmly believe that energy efficiency is way more cost effective than energy generation and we will share with you our ideas and observations on how you can save money long before you throw the switch of (or even sign the contract for) your commercial solar power system.  So before you pick up the phone, pick up your electric bills and check out what is hiding there - it is the first step in getting the greatest value from your commercial solar power system.

Up Next: Part 2 of Our Series - Understanding Solar Rebates and Tax Incentives as they apply to a Commercial Solar Power System.