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.

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05/22/13

  07:02:00 am, by Jim Jenal - Founder & CEO   , 661 words  
Categories: Residential Solar, Ranting

SMA for the Save - Well Done!

We often claim that the solar industry is called to be better - more honest, more ethical, more community oriented - than the average business.  One way that can manifest itself is by going out of your way to help when there is nothing in it for you. Today we want to recognize SMA and their marvelous Melody Kenoyer for doing just that.

First some background.  Back in 2010 we were contacted by a lady we’ll call Sophia about a problem that she was having with her solar power system.  Sophia lives in a modest home in Glendale that was built for her by Habitat for Humanity.  The three townhomes in the project were each topped with a 1.6kW solar power system.  Unfortunately, the solar installer who had worked on the project had long since gone out of business and that left Sophia to go searching on the Web to find someone who might help.  She found Run on Sun.  As luck would have it, we were able to fix her system and get her back online without much difficulty.  Sophia was so grateful she sent us an amazing Christmas card that year.

Fast forward to last Friday when Sophia called again.  She had a different problem this time that couldn’t be resolved quite so easily.

Inverter displaying eeprom_d faultTurns out that her long-since out-of-warranty SMA 1800U inverter had stopped working and was displaying an EEPROM_d error message.  We had seen this problem before and we knew that while you could reset the error, there was no way to prevent the problem from happening again without installing an EEPROM upgrade - a task we had performed on another 1800U years earlier.  We reset the inverter and it came back online - Sophia was very relieved to have the unit working again, but concerned that the problem might return.  We promised to contact SMA and see what we could do.

When we called on Monday we reached Ms. Melody Kenoyer at the service support desk.  We explained about the problem and she pointed out that the 1800U was no longer being made and that as they were all outside of their warranty period - an understatement given that they had carried 5-year warranties and they were phased out long ago when the CSI program mandated 10-year warrantied products. Not surprisingly, SMA was no longer servicing them.  They did have an upgrade program for customers who wanted to upgrade to newer units - but that was not going to be a viable option for Sophia.

Ms. Kenoyer checked with her supervisor who confirmed that apart from assisting us in resetting the inverter, there was nothing more that they could do for us.  I told her that we had already done the reset and the system was back online - it was just that we were hoping to be able to give Sophia some greater piece of mind.  Ms. Kenoyer listened, and then promised that she would personally take this to her Manager to see if there wasn’t something else that they might do.  I thanked her for that and hung up, fully expecting that we had played this out as far as it could go.

But then, lo and behold, I received the following email from Ms. Kenoyer:

I spoke with my Manager about the pro bono job you are doing for the single Mom in the Habitat for Humanity home.   We do have some EEPROM chips for special circumstances and my Supervisor will send you some.

Well what do you know about that!

From utility attacks on the one hand to shady behavior by certain solar companies on the other, at times it is hard to cling to our view that solar is special.  But then along comes Ms. Kenoyer, and her Manager, and SMA to help convince us that our view is the right one after all - solar is special.

So a hearty “Thank You” to everyone involved in making this happen - don’t be surprised if Sophia sends you a Christmas card!

05/21/13

  08:36:00 am, by Jim Jenal - Founder & CEO   , 525 words  
Categories: All About Solar Power, Commercial Solar

Comparing Solar Bids - Part 2: Solar Inverters

In Part One of this series we looked at the factors that could go into comparing solar modules proposed in competing commercial solar bids.  Now our series continues with a look into solar inverters for commercial projects.


Solar power inverters for commercial installations range from large, central inverters to a collection of string inverters to microinverters (one inverter per solar module) 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.

Power-One Aurora 100kW central inverter

Power-One Aurora 100kW
Central Inverter

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 project - if the central inverter fails, your system will produce nothing until it can be repaired. Moreover, not every small commercial project has the space to accommodate the bulk of a central inverter.

In contrast, using a series of smaller string inverters may fit the available space, but at the risk of looking more cluttered, and interconnecting them for monitoring purposes may be more complicated and costly.

String inverters for a commercial project

Eight SMA 7000 String Inverters at commercial site

However, by distributing the inverter function over a number of devices, you have also distributed your risk - if one inverter fails, the others are unaffected and you will continue to produce the majority of your available 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.

Enphase microinverters being installed at Westridge

Enphase Microinverters being installed at Westridge
(Click for video)

Microinverters have been making inroads into the small commercial market because of better warranties (as long as twenty-five years compared to ten for string or central inverters), higher energy yields (due to shade tolerance, the ability to make use of multiple sub-array alignments, and no problems with module mis-match), and system monitoring down to the module level. On the other hand, because AC wiring runs occur at a lower voltage than do DC string runs, the conductors from a microinverter system will be carrying higher currents for the same amount of power (since power is the product of voltage times current) which means larger conductors will be needed to avoid efficiency losses in the system.

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.

In our next installment we will shift from looking at equipment and consider how that equipment will save you money when we tackle the question of assessing your Utility Savings Analysis.


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

05/20/13

  08:32:00 am, by Jim Jenal - Founder & CEO   , 982 words  
Categories: All About Solar Power, Commercial Solar

Comparing Solar Bids - Part 1: Solar Modules

We wrote recently about how you could go about identifying well-qualified solar contractors for your commercial project, but this week we are bringing you a four-part series on how to interpret the bids that you get from those contractors.  After all, getting multiple bids is essential, but understanding those bids so that you can make a true, apples-to-apples comparison can be daunting.  But don’t forget, you are in charge here and you should demand that your potential solar contractors take the time to answer your questions – all of them – so that you can make an informed decision.

One good way to start 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 too are 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.

Our series this week will look at four key areas about the bid process that you need to understand to properly compare your bids: the solar modules proposed, the inverter(s) proposed, your potential utility savings, and determining ROI & LCOE.

Solar Modules

All solar modules 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 Module” will differ from another. Here are the key considerations:

LG 300 Watt solar module

  1. Efficiency - The efficiency of a solar module tells you how much nameplate power per square foot the module will deliver.  As a general proposition, at solar noon (when the sun is at its highest point in the sky) the energy available from the sun is roughly 1,000 Watts/meter2 – which means that a solar module that was 100% efficient would produce 1,000 Watts for every square meter of surface.  Sadly, there are no such solar modules available – commercially affordable units (i.e., assuming your aren’t NASA) typically have module efficiencies that range from 11% to 20%.
    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 - Solar modules are exposed to the full heat of the sun and as a result, they get very hot - and if mounted close to a roof, they get hotter still. Perversely, all solar modules lose efficiency as they heat up - some more so than others.  One way to assess temperature performance is to look at the ratio between the STC and PTC ratings of the modules under consideration. The STC rating of a module - also known as its nameplate rating - it the manufacturers assessment of the module’s performance at so-called Standard Test Conditions.  The PTC rating, on the other hand is based on more “real world” conditions and is generally accepted as a better predictor of how the module is likely to perform on your roof.  (Which is why rebate estimates are based on PTC ratings.)  PTC ratings are always lower than STC ratings for the same module - the closer the ratio of PTC/STC is to 100%, the better the module will perform at temperature.  Those ratios for commonly available solar modules can run from a low of 85% to as high as 96% and the CSI website documents the PTC values for every solar module approved for use in California. But again, better temperature performance comes with a price.

  3. Manufacturing tolerance – Since solar modules are manufactured products, there are variances from one module to the next.  Manufacturing tolerance refers to how closely the actual power initially produced by the module corresponds to its nameplate rating. Lower quality modules typically exhibit wide tolerances of as much as ±10%. That means that a nominally 200 watt module might actually be producing as much as 220 watts - or as little 180 watts.  Such wide ranges of performance negatively affect overall system performance since central inverters cannot accommodate such wide swings in module performance. (Microinverters can help here since such module mis-match is no eliminated as an issue.)  Higher quality modules have much narrower tolerances and the best modules will have positive-only tolerances. For example, NeoN modules from LG Electronics feature 0 to +3% tolerances - which means you are guaranteed of getting the performance you paid for and excellent overall system performance.

  4. Manufacturer warranties and reliability - Pretty much all solar modules comes with a 5-year warranty on workmanship and a 25-year warranty on performance, the latter of which purports to tell you how the module will perform over time.  While it is termed a warranty, in reality it is more of an aspirational document since, as a practical matter, there is no way to make a claim against the “warranty".  Most performance warranties assert that the module will produce 80% of the nameplate rating after 25 years - which works out to a degradation in module performance of roughly 0.9%/year.  
    Of course, the value of any warranty is entirely dependent on the reliability of the manufacturer.  Lots of cheap solar modules 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 2013 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 modules coming from the most reputable manufacturers.

That’s it for understanding solar modules - next up: the ins and outs of solar inverters.


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

05/17/13

  08:31:00 am, by Jim Jenal - Founder & CEO   , 488 words  
Categories: Solar News, LADWP Rebates, LADWP, Commercial Solar, Feed-in Tariff, Residential Solar, Non-profit solar

Tapping LA's Solar Potential

Drive the freeways, ride the train from San Diego to Union Station, or fly into LAX and you cannot miss the obvious - Los Angeles has tremendous, untapped potential for solar growth.  Now a new report from Michelle Kinman at the Environment California Research & Policy Center, seeks to layout the case for Solar in the Southland: The Benefits of Achieving 20 Percent Local Solar Power in Los Angeles by 2020.  Here’s our take.

Potential as Far as the Eye can See

It is beyond dispute that there is a huge gap between the amount of solar that could be supported in the Southland versus the amount that is actually, presently installed. As Ms.Kinman’s report makes clear, even in the City of Los Angeles alone, that gap is enormous, as illustrated by this graph:

LA's untapped solar potential is hugeCiting a study by UCLA’s Luskin Center for Innovation, Kinman reports that the rooftops just in LA alone could support some 5,500 MW of solar power - of which a paltry 68 MW is installed today.  That is a lot of potential. But Kinman’s report doesn’t focus on adding all of that - rather she has documented dramatic benefits that would follow from just reaching the goal of 1,200 MW by 2020.

In addition to supporting some 32,000 job-years of employment (thank you!), Kinman shows that installing that much solar would also have these benefits:

  • Reduce local air pollution and cut down on greenhouse gas emissions
    • This would be the pollution-reducing equivalent of taking 230,000 cars off the roads
    • 730,000 pounds of smog-forming pollutants would be eliminated
    • 1.1 million pounds of greenhouse gases would be eliminated
  • Reduce the demand for water - already in tight supply in LA - by displacing the need for energy from local gas-fired power plants, LA would save 435 million gallons of water per year.

Kinman insists that this is an achievable goal, but one that would take “clear, strong and consistent direction and support” from the Mayor and the City Council to LADWP.  Some specific policy prescriptions include:

  • Maintaining and expanding the existing Feed-inTariff program from the 150MW (targeted for 2016) to 600 MW by 2020
  • Expand net-metering and rebates under the residential Solar Incentive Program to reach 280 MW of capacity
  • Create specific policies to assist non-profits in adding solar since they cannot take advantage of tax benefits

Who Pays?

If we have one criticism of the report it is that it fails to identify funding sources - other than anticipated savings - to spur this growth.  For example, providing additional incentives for residential solar or expanding the FiT will come with a price tag.  Who is going to put up that money?  At a time when solar is under attack from investor-owned utilities for unduly shifting costs onto non-solar customers, the report misses an opportunity by failing to outline a mechanism to pay for its important goals.

Still, the report provides valuable documentation of the as yet unrealized benefits of tapping into LA’s solar potential; and in that it makes an important contribution to the ongoing policy debate.

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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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