Thoughts on Solar

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!