The Commercial Solar Opportunity

The Commercial Solar Opportunity

There are there are three market segment for solar in the U.S.: residential, utility and commercial. Based on some rough math, in 2018 we expect to install 5 to 7 million solar panels on homes in the U.S. In areas with high residential electric rates, paybacks are usually in the range of 4-8 years. But the utility solar segment is much larger: about 20 million solar panels will be installed by utilities in 2018. Utilities realize that it is cheaper to generate power with solar compared to coal or nuclear generation. Moreover, the combination of solar and batteries is projected to be even cheaper than natural gas in a few years. (more…)

Solar Incentives – Don’t Miss the 2017 Solar Tax Credit

Solar Incentives – Don’t Miss the 2017 Solar Tax Credit

We usually discuss the topic of filing for the 30% Solar Tax Credit in January or February. That’s when most people who just installed solar in the previous year are getting ready to file their taxes. But by 2018 it will be too late to qualify for the 2017 tax credit. So this year we decided to cover the topic in advance of year’s end to help people save on their 2017 tax bill. (more…)

San Jose Mercury News Op-Ed: More solar panels and battery storage at homes could prevent power failures

San Jose Mercury News Op-Ed: More solar panels and battery storage at homes could prevent power failures

At 1:30 on a Sunday afternoon in June, I experienced the second power outage at my Silicon Valley home this year. Then, last weekend a transformer explosion at a Los Angeles Department of Water and Power substation left 140,000 people in the San Fernando Valley without power. In both cases these power failures occurred during a 100+ degree heat wave.

According to PG&E, there was a “local transformer issue” in our neighborhood; the Los Angeles utility is still investigating the cause of their transformer failure.
Local transformers are those big can-shaped things at the top of utility poles. Most were installed before electric vehicles were commonplace and when temperatures were a few degrees cooler. So when people crank up their air conditioners and plug in their EVs, transformers can become overloaded and fail.

Power was out in my neighborhood for about 12 hours while PG&E deployed a crew to diagnose the problem and replace the transformer. But the blackout would not have happened if just one more home in the neighborhood had a solar or battery storage system.

The output from that incremental solar or storage system would have supplied the electricity needs of that home — and the excess solar or battery power would have flowed back to the local grid, reducing the load on that transformer and preventing its failure.

High temperatures and new electric vehicle demands are causing outages like this all over California. Solar power coupled with battery storage is the cleanest and most cost-effective solution to this problem, but only if these systems are deployed in the right place.

The challenge is to get the power from remote utility solar plants to the homes and businesses that need it. Unfortunately, the local power grid is the weakest link, and it is expensive to modernize neighborhood grids to meet today’s higher power demands and two-way energy flows.

There are two solutions to modernizing overloaded local grids. The “business as usual” solution is to pay the local utility for upgrades that include bigger transformers, wiring, control systems and battery storage. Unfortunately, ratepayers get stuck with higher electric bills for this.

A much better solution is to encourage homeowners and businesses to install their own solar and storage systems. These customer-owned “Behind the Meter” (BTM) energy systems do not require expensive transmission and distribution grid upgrades. Since investments in them are made by homeowners and businesses, utility ratepayers are not burdened with upgrade costs.

With over half a million solar-powered homes and businesses, California leads the country in both solar power generation and solar jobs. This was the result of public policies that encouraged solar installations. As a result, solar costs have come down so much over the past 15 years that incentives are no longer needed.

We have the same opportunity now with battery storage systems as California moves toward an electric grid powered 100 percent by renewables. Two policies will help us achieve this goal.

First, as other states have done, we should ensure that there are no arbitrary limits on a customer’s ability to install solar and battery storage. Second, we need to reduce the up-front costs of battery storage systems, which are relatively expensive at this early stage of the market.

To jump-start the battery storage market and improve local grid reliability, California has proposed SB-700, the Energy Storage Initiative. It mimics the California Solar Initiative in a way that supports home or business-owned energy storage systems with incentives that decrease as costs decline. With policies like this, electric customers throughout California will be the first to benefit from a modernized electric grid that is both lower cost and more reliable.

Originally published July 12, 2017. Barry Cinnamon is the CEO of Cinnamon Solar and previously founded Akeena/Westinghouse Solar. He wrote this for The Mercury News.

Commercial PACE Financing – With Brandon Deno

Commercial PACE Financing – With Brandon Deno

PACE financing, or Property Assessed Clean Energy, started out about 10 years ago as a financing mechanism for residential solar. Basically, the cost of the solar system is repaid over a 5 to 20-year timeframe as a part of the building’s property taxes. The benefits are that the property serves as security for the loan, there is almost no repayment risk (everyone must pay their property taxes), interest is deductible, customers are almost always cash flow positive in the first year, and the property can be transferred more simply than if there is a standard solar lease or PPA.

These advantages also apply to PACE loans for commercial solar installations – with two extra benefits. First, many commercial PACE loans are structured in such a way that the tax and depreciation credits are front weighted so that commercial property owners are very cash flow positive in the first few years. Second, many commercial leases are triple net — in other words the tenant pays for utilities, taxes and maintenance (in addition to utilities). If there is a commercial PACE solar loan on the property, the tenant gets the benefit of lower electricity costs and automatically pays for the slightly higher tax assessment from the solar PACE loan. Voilà – no cost to the building owner.

My guest on this week’s Energy Show is Brandon Deno, Vice President of Solar at Clean Fund. Clean Fund is the leading provider of PACE loans for commercial buildings. Please Listen Up to The Energy Show on Renewable Energy World as Brandon explains the ways in which solar developers and building owners can take advantage of PACE loans for their commercial properties.

How Many Solar Panels Do I Need?

It may seem counter-intuitive, but you can have too many solar panels on your roof. With conventional net metering, your utility will not reimburse you at the end of the year if you produce more power than you consume. For example, last year my electric bill was -$46.86. Our roof has a 6kw solar system on it, but because we installed a new thermostat, LEDs and new windows, we generated a net credit with our utility last year. So I’m replacing my LEDs with old-fashioned incandescent light bulbs so I can use more power and get closer to a zero bill this year. The number of panels you need is based on two factors: the available space on your roof and the size of your electric bill.

A good installer will not take advantage of you by installing modules where there is a lot of shade or a poor north-facing orientation on a steep roof. Along the same lines, your installer should analyze your current electric bill and recommend the number of solar panels that will get you close to a zero bill.

Once you know these two boundary conditions – the number of panels that fit on your roof and the number of panels that you need to zero out your bill – you can see what size system fits in with your budget and method of financing. At the same time your installer should step you through the options for different levels of solar panel efficiency, module electronics (optimizers or microinverters), and changes in your future use of electricity (such as an EV or energy conservation measures). For more about determining the optimum size of your solar power system, Listen Up to this week’s episode of The Energy Show on Renewable Energy World.

Getting your Solar Investment Tax Credit

It’s that time of the year…tax time, that is. Every year we get questions from customers about filling out their solar investment tax credit (ITC) form. Now, we are not tax experts (so check with your accountant), but the rules are pretty straightforward for the solar ITC.

Basically, every homeowner who installs a solar electric system or solar hot water system (not a pool heating system) gets a 30% tax credit on the total cost of their system. This tax credit only applies to the owner of the system, not if you have a solar lease or solar PPA. There is no need to file for the ITC if you have a lease or PPA since the corporate entity that owns your system has already collected the tax credit and depreciation benefits – reducing your monthly payments accordingly.

It only takes a few minutes to fill out the IRS “Residential Energy Credits” Form 5695. For documentation, all you need are copies of all the invoices that apply to the installation of your home solar system. For more about getting your 2016 solar investment tax credit, Listen Up to the Energy Show on Renewable Energy World.