Categories: "Utilities"

10/28/16

  12:14:00 pm, by Jim Jenal - Founder & CEO   , 1654 words  
Categories: All About Solar Power, PWP, SCE, Residential Solar, Ranting

Understanding Tiered vs TOU Rates

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.

PWP segmented usage

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:

PWP standard and TOU 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:

SCE Domestic Tiered rate

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:

SCE segmented usage data

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.

SCE rate comparison - Tiered vs TOU

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.

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07/23/14

  07:22:00 am, by Jim Jenal - Founder & CEO   , 340 words  
Categories: All About Solar Power, Utilities, Energy Efficiency, Ranting, Energy Storage

Teaching the Duck to Fly

There is a fair amount of talk lately (in nerd circles) about a graph being circulated by the utilities and the California Independent System Operator ( CALISO, the entity that manages the electric grid in the state).  Known as the “Duck graph,” it is being presented as a dire prediction of impending grid instability due to the increasing role of renewable energy sources. But where some see doom and gloom, others see opportunity.  Here’s our take. (H/T John Farrell at REWorld.)

Here’s the graph (credit, CALISO):

Duck graph - predicted energy demand in California

As recently as 2012, this wasn’t a duck at all as net load had two peaks, one in the morning and one late in the evening.

But look at the center of the graph: as more and more renewable sources come online, the demand during the middle of the day falls dramatically, so much so that the utilities are complaining that there will be a risk of “over generation” - producing more energy than is needed and cutting into the baseline production (from power plants like coal and nuclear that need to operate continuously to be efficient.)

Also predicted is a rather steep increase in evening demand between now and 2020.

The net result is a curve shaped much like a duck, apparently a fowl predictor of grid chaos.

Frankly, we look at that graph and see progress and opportunity.  Progress in that renewables, which not so long ago were sneered at as being a, “tiny amount of energy that will never amount to anything serious,” are now completely rewriting the load curve in the nation’s most populous state.  Talk about coming a long way, baby!

The opportunity, of course, is right there as well.  While adding large amounts of smart storage to the grid is an obvious fix for this “problem", as we noted just the other day (see Can Renewables Power the US?), we can handle this evolving energy future in a relatively simple manner—it just requires changing how we approach the problem.  Here’s the video:

We can, and will, teach this Duck to fly. 

05/23/13

  07:02:00 am, by Jim Jenal - Founder & CEO   , 1391 words  
Categories: Utilities, Commercial Solar

Comparing Solar Bids - Part 3: Utility Savings Analysis

In Part 1 of our series on Comparing Commercial Solar Bids we looked at how to distinguish bids based on the Solar Modules proposed.  Part 2 did the same for Solar Inverters.  Now our four-part series continues, looking at what to expect from a 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.  A proper Utility Savings Analysis must do three things: predict the amount of power the system will produce both peak and in terms of energy over time; assess the value of that production in Year 1; and apply appropriate factors to assess the change in value of that production over the lifetime of the system. Let’s break this down.

Power and Energy Production

The peak power and energy yield from the proposed system in Year 1 is a function of system and environmental factors.  The system factors include the modules and inverters chosen (including all of the variables discussed previously).

The environmental factors consist of the azimuth (orientation relative to true North), the pitch of the array and any shading factors that might be present.  If the overall array is comprised of sub-arrays with different environmental factors, then each sub-array must be assessed separately.

For a so-called “fixed-plate array” – that is a solar array that is at a set azimuth and pitch (which is typical for commercial installations) – the ideal azimuth in terms of annual energy yield is due South and the ideal pitch is the latitude of the site.  While deviations from these ideal values will result in reduced annual energy yield, in the real world such deviations, are common.  Indeed, in some settings a deviation might be desirable if, for example, summertime performance is to be maximized (perhaps to mesh with the payment profile of a feed-in tariff program), in which case a flatter array pointed more to the West might be selected.

Regardless of the azimuth and pitch, shading is to be avoided, especially if string or central inverters are used.  When a string of solar modules are wired together, shade falling on one module not only degrades the performance of that module, it will degrade the performance of the entire string.  This in turn will degrade the performance of the entire sub-array of which that string is a part.  (Microinverters overcome this problem because each module operates independently – a shaded module still sees its performance deteriorate, but  that deterioration has no effect on the adjacent, unshaded modules.)

All of these factors, as well as the geographic location of the system site, are then provided as inputs into a PV system performance model – the best known being PVWatts, created by the National Renewable Energy Laboratory (NREL), and used as the underlying mechanism of many utility rebate calculators, such as the CSI rebate calculator.  The output from the calculator will provide a value for the peak output from the system (in AC Watts) and the energy yield profile over a year – either month-by-month, or even hour-by-hour.

Savings in Year 1

Knowing the production profile for the proposed system is just the first step in the Utility Savings Analysis.  The next crucial step is to calculate the savings from that production in Year 1 – the first year the system goes live.  To do this accurately requires a detailed analysis of the relevant utility rate structure and possibly detailed information about how the existing loads at the site behave.  A simple-minded analysis that assumes that all kWh’s of energy are worth the same fails to meet this standard and will not accurately predict the savings to be achieved.

Most commercial solar customers pay for both total energy usage and peak power demand.  To accurately determine savings requires a clear understanding of how the solar power system will affect both of those components.  Unfortunately, it is not uncommon that the data necessary for such an analysis will be incomplete or missing altogether.

Savings from usage reduction, by comparison, are easy to calculate – if you have past usage data (pretty much always available except for new buildings or new utility customers) and a properly designed rate structure model, it easy to apply the energy yield profile from the performance calculator to the rate structure and determine savings.  For customers on usage only rate structures, this provides a nearly perfect estimate of annual savings as of Year 1.

It is in trying to determine how the solar power system will alter demand charges where things get complicated.  To do this accurately – and honestly – requires hour-by-hour demand data so that the client and the solar contractor know when peak demands occur.  If the peak demand occurs at high Noon and is driven by HVAC loads, the solar system will directly reduce that peak – perhaps by the full value of the solar power system’s output.  Conversely, if the peak demand occurs at eight o’clock in the morning – say, when the first shift arrives – the solar power system will have next to zero effect on peak demand.

Unfortunately, unless the potential client has been on a time-of-use based rate structure, such data is almost certainly unavailable.

Under those circumstances client and contractor have only two choices: gather the data as part of the site evaluation process (by temporarily or permanently installing data logging equipment), or make a well-documented estimate (also known as a wag) of what the effect of the solar power system will be on peak demand.  The client should insist that all of its bids use the same estimate.

Fortunately, relatively inexpensive data logging equipment is now available and it should be used whenever available decision-making timing permits.  A contractor who refuses to provide such a service – for a fee, of course – should be scratched from the list of potential candidates.

Savings Over System Lifetime

So now you have an estimate of your utility savings in Year 1 – how can you determine what your savings will be over the lifetime of the system?  After all, that is the key question in determining your ultimate Return on Investment.

To answer that question requires figuring out two more puzzle pieces – one straight-forward and the other unavoidably controversial.  The straight-forward puzzle piece is how will the system’s performance will change over time.  This is straight-forward because we have reliable data for making that prediction.  Assuming reasonable maintenance for the system – cleaning the modules occasionally, replacing broken modules or repairing faulty inverters, etc. – the performance from one year to the next is really a function of the deterioration in the performance of the solar modules installed.  That rate will be documented in the performance warranty of the module, and hence it will be easily modeled.  (For modules that guarantee 80% of nameplate power after twenty-five years, that works out to a degradation factor of ~-0.9%/year.)

The controversial puzzle piece is in guesstimating what will happen with utility rates over the lifetime of the system.  Not only is this a difficult task at best, it has even lead to class-action litigation when solar leasing giant SunRun was sued for over-estimating (according to the Plaintiff) the magnitude of utility rate increases in the future.

Over the years solar companies have used annual rate increase factors ranging from 6.8% (almost certainly too high) to 3% (almost certainly too low, at least in California).  SunRun was sued for picking 6%, and yet in 2012 SCE secured a three-year, 17.2% average rate increase – which works out to 5.7%/year!

So what is the right number to use?  At Run on Sun we generally use 4.5% for municipal utilities and 5.7% for SCE.  But in our view, the rate selected is not as important as the need to clearly disclose the rate being used in the model.  If that is done, the client is free to do their own calculation with a different rate or to insist that all potential bidders use the same rate.  At the very least, such disclosure should render lawsuits such as the one facing SunRun moot.

However the rate is determined, and ultimately disclosed, the result should be a series of values for how much savings will be generated by the system for the next twenty-five years.  Now you are ready to receive your payoff analysis – that demonstrating your anticipated Return on Investment and LCOE, the topic of our final installment.


The preceding is an excerpt from Jim Jenal’s upcoming book, “Commercial Solar Step-by-Step,” due out in July.

04/10/13

  09:40:00 am, by Jim Jenal - Founder & CEO   , 908 words  
Categories: Solar News, SCE/CSI Rebates, SCE, NABCEP, Commercial Solar, Residential Solar, SDG&E

Picking a Commercial Solar Contractor: NICELY Does It!

Before you can ever get a bid for your commercial solar project, you have to contact a solar installation contractor to come out to your location and perform a site evaluation.  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 in the first place?  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.

If you remember that you need to find someone who will work NICELY with you, success is all but assured.  And no, we don’t mean nicely, we mean NICELY - as in:

N - NABCEP Certification
I - Incentive provider (CSI or local utility) connected
C - City building department experienced
E - Electrician on staff
L - Local or national?
Y - Years in business.

Focus on those attributes and you will have found a contractor who will inspire confidence and guarantee a successful project.  Let’s expand on why these particular attributes are so important.

NABCEP Certification

NABCEP CertifiedThe 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 demonstrates 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 (such as 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 have earned the designation, NABCEP Certified Solar PV Installer™ - and we know of no other solar power company in Southern California that can make that claim.

Incentive Provider - CSI or Local Utility

A second source of solar installers is the Incentive provider such as 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 must be on this list - but this is a double-check only - not an ideal starting point for your search.

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.

City Building Department

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.

Years in Business

The last of the NICELY elements is to look at the number of years the company has been in business.  Again, this is not a perfect indicator – some recent ventures really have their act together and some long-standing enterprises have long since ceased to really care about what they are doing – but at a minimum you want some assurance that the folks you are doing business with know how to run a business. Otherwise you run the risk of having a largely useless warranty and no one to call if things go wrong.

We would recommend a minimum of three-to-five years in the business of doing solar, with preferably a longer track record of running a business.  Expertise in areas beyond just installing solar is also useful such as engineering, management and law.


The preceding is an excerpt from Jim Jenal’s upcoming book, “Commercial Solar Step-by-Step,” due out in July.

08/24/12

  01:36:00 pm, by Jim Jenal - Founder & CEO   , 1151 words  
Categories: All About Solar Power, Solar Economics, SCE/CSI Rebates, SCE, 2012

State of SoCal Solar 2012 - Part 1: Overview

UPDATE - Read Part 2 of our series here: Who’s Hot and Who’s Not?


One year ago we wrote a three-part series analyzing six months worth of CSI data that turned out to be our most read blog posts ever. So back by popular demand, here is our analysis of the first half of 2012 CSI data in the SCE service area.

Methodology

First a brief review of our methodology.  We started by downloading the Working CSI data set dated August 22, 2012.  (Here’s a link to the CSI Working Data download page, and here’s a link to the data set (8MB zip file) that we used for our analysis.)  As we did a year ago, we limited our analysis to just the data from the SCE service area.  To limit our time period to the first half of 2012 (equivalent of what we did last year), we took the latest of a series of milestone dates in the CSI data (from First Reservation Date to First Completed Date) and used that as our Status Date and limited that date to values from 1/1/2012 to 6/30/2012.  Collectively, that accounted for 9,669 projects, an increase of 53% over the same period last year!

So that we can compare apples to apples, our analysis uses CSI AC Watts as the measure of system size (except where noted) instead of the more commonly reported DC or Nameplate Watts.  Why did we do that?  Well, not all 5kW Nameplate Watts systems are the same.  Some systems use less efficient inverters whereas others have panels that have very poor temperature performance (as indicated by their PTC rating), and some sites are poorly oriented or have substantial shading.  CSI AC Watts values take all of those factors into consideration - thereby giving a truer measure of the system’s actual performance.

Overview

Apart from the dramatic jump in the number of projects over the same period last year, how does the overall data for the first half of 2012 compare to that data from last year?  Here’s what we found:

2011 vs 2012 CSI systems

Even though the number of projects increased dramatically from the same time period last year, the potential installed capacity of the projects declined significantly.  This may well reflect the expiration of the federal 1603 Treasury Grant program as it became harder to finance new commercial projects after the first of the year.  Here’s how the averages changed from 2011 to 2012:

Average system data, 2011 vs 2012

The average system size in the 2012 data dropped 46% from the same period in 2011.  Likewise, rebate expenditures per Watt fell from $1.33 to $0.94, or 29%.  At the same time, the system cost per Watt also declined, but far less dramatically, from $6.37 to $6.13/Watt.  We will have more to say about system costs later.

Altogether, the data reflects a total of 519 different solar contractors, of which 213 (41%) were responsible for only one project.

Delisted by Design?

One intriguing item we noted last year was the significant number of projects - a full 11% - that were categorized as “delisted” meaning that they had been cancelled for one reason or another.  How did that number fare in our new data?  It dropped significantly down to just 4.2% of all projects, 6.3% of the potential installed capacity.

Of course, projects can be cancelled for a host of reasons.  Nevertheless, we decided to see if there were any companies that jumped out as having an unusually high rate of delisted projects.  We listed all of the companies that had any projects flagged as delisted (a total of  113 different companies) and compared that to their total number of projects.  We extracted those companies that had ten or more delisted projects and rank ordered them by the percentage of all projects that were delisted.

Here’s what we found:

project delisting by company

Holy smokes, what is going on here?  Either Remodel USA, Herca Solar and A1 Solar Power are really unlucky, or something about how they create projects would seem to be problematic.  We will have more to say on this point in a subsequent post in this series.

Oh and a note to Do-It-Yourself’ers - you have a one in twelve chance of not completing your solar project.  Maybe solar really is something better left to the pros!

Is Bigger Still Better? (Or at least Cheaper?)

We closed Part 1 last year by looking at how the size of a system drives down the cost, and we wondered if the same would hold true this year?  To find out, we excluded delisted projects from our data and divided the remaining projects based on system size with one category being systems below 10kW and the other being between 10kW and 1MW.  (Strangely, we had to exclude some real outliers from our “small” system category - can you believe it, we found systems priced at over $30/Watt?  Again, much more to say about that in a subsequent post.)

Here’s our results for the small system category:

system cost vs system size, 2012 data, systems <10kwOur trend is still downward as system size gets larger, but the slope is not nearly as steep as it was in our corresponding graph last year.  Costs start at $8.59/Watt for the smallest systems and decline to an average of $6.41/Watt for systems just under 10kW.  That’s a rate of decline of $0.24/Watt per kilowatt of system size increase, in constrast to a rate of decline of $0.34 last year. Certainly as component costs decrease, their related economies of scale would likely flatten out and that is what this data appears to be showing.

Finally, then, let’s turn to the “big” systems - those between 10kW and 1MW - how did our system costs do in that group?

system cost vs system size, 2012 data, systems >=10kw

Again, another outlier as our highest system cost here is higher than it was a year ago - $16.50 vs $15.50/Watt.  Overall, we continue to see the downward trend as system size increases, but again, not as pronounced as it was a year ago.  This year, we see the average cost of a 100 kW system coming in just below $6/Watt whereas a year ago the 100 kW benchmark was closer to $6.80/Watt.  So our trend line is lower, but flatter than a year ago.

Moreover, we see far few systems in the 500kW and up category compared to last year.  Specifically, this year we have only 24 projects that crossed that threshold (10.98 MW total capacity), compared to 32 last year (21.6 MW).  Bottom line - projects have gotten smaller and really large projects have dropped off substantially.  Without the pull of those larger systems, it is not surprising that we are not seeing the same downward pressure on costs for larger systems.

Preview of Coming Attractions…

That’s enough to get us started.  Yet to come: whose equipment is hot and whose is not?  Any significant new kids on the block (be they installers or products)?  And who are our outliers this year?  (Hint - you’ve already seen some of those names!)  So stay tuned as we name names and follow the data wherever it may lead!

And of course, if you have thoughts on cuts of the data that you would like to see, please let us know in the comments.

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Jim Jenal is the Founder & CEO of Run on Sun, Pasadena's premier installer and integrator of top-of-the-line solar power installations.
Run on Sun also offers solar consulting services, working with consumers, utilities, and municipalities to help them make solar power affordable and reliable.

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