1

Tempe Community Christian Church (CCC) • Church is a non-profit—can’t use tax incentives

• SunWest (third party) --Places solar plant on Church property--Sells all of production to Church at lower than APS rate

• Net Metered—Excess solar production goes through Church meter to grid

• Church takes and gives power to grid as needed

• At end of year, --Net grid power used by Church—Church Pays APS --Net grid power to APS—APS Pays Church

Tempe CCC Solar SystemNet Metering

2

Solar System

Sun

SunWestMeter

APSMeter

ChuchPanel

Church ElectricPower Loads

Grid

Timeline

3

• SunWest promises 25% decrease in electrical costs for the church

• SunWest prepares contract and church board agrees

• Trimble has not seen contract and puts together his best guess of the situation—Best case, CCC uses all of electricity generated and will have NPV savings of $32K over 20 years.

• Trimble reviews contract and realizes that demand charge has not been considered. Church is paying SunWest 75% of 21.2 cents/kWh instead of the assumed APS rate of 12 cents/kWh

Timeline

4

• SunWest determined rate by taking total APS Bill/total kWh used

• Trimble issues analysis stating that church will loose about $5.3k the first year. This is based on analyzing the APS bill structure and realizing about 45% of bill is based on demand charges. Solar will not reduce peak demand.

• Church loses over $6k the first year

• Trimble gathers data from APS and confirms that peak occurs in the evening when solar is not available.

• Church is attempting to recover losses and re-negotiate contract

5

Equations for CCC Savings Spreadsheet• IOC Yearly Solar Production, kWhe• Production Degradation, %/Yr• SunWest Rate, % of APS Sell Rate• APS Sell Rate, $/kWhe• APS Buy Rate, $/kWhe• APS Rate Escalator, %/Yr• CCC Usage, % of IOC Solar Production

• Production Degradation Factor = (1 + degradation per year) * number of years

• Yearly Solar Production = IOC Yearly Solar Production * Prod Degradation Factor

• Total CCC Usage = % of IOC Yearly Solar Production * IOC Yearly Solar Production

• Energy Purchased from APS = Total CCC Usage – Yearly Solar Production

• Energy Sold to APS = Yearly Solar Production – Total CCC Usage

• APS Rates Escalation Factor = (1 + APS Rate Escalation) * number of years

Given:

Initial Analysis of Church Savings

6

7

Equations for CCC Savings Spreadsheet• Money Paid to SunWest = % of APS Sell Rate * APS Sell Rate * Yearly Solar Prod

• Money Paid to APS = APS Sell Rate * Energy Purchased from APS

• Money Received from APS = APS Buy Rate * Energy Sold to APS

• Total Cost of Energy = Money Paid to SunWest+ Money Paid to APS

-Money Received from APS

• Avoided Cost from APS = APS Sell Rate * Rate Escal Factor * Total CCC Usage

• Yearly Savings = Avoided Cost of Electricity from APS – Total Cost of Electricity

• Cumulative Savings = Prior Years Savings + This Year’s Savings

• Present Value of Yearly Savings = Yearly Savings / ((1.04) Number of Years)

8

Equations for CCC Savings Spreadsheet

• Cumulative Present Value Savings = PV of Prior Years Savings + PV of This Year’s Savings

• Savings Net Present Value = Cumulative Present Value Savings in Year 20

9

IOC Yearly Solar Production, kWhe 64057Production Degredation, %/Yr 0.5SunWest Rate, % of APS Rate 75APS Bill Rate, $/kWhe 0.12APS Buy-Back Rate, $/kWhe 0.06APS Rates Escalation Rate, % 3CCC Usage, % of Initial Solar Production 100

Year 1 2 3 4 5 20Solar Production Degredation Factor 1 0.995 0.990025 0.985075 0.98015 0.909156Yearly Solar Production 64057 63736.72 63418.03 63100.94 62785.44 58237.82Total CCC Usage, kWhe 64057 64057 64057 64057 64057 64057Energy Purchased from APS 0 320.285 638.9686 956.0587 1271.563 5819.177Energy Sold to APS 0 0 0 0 0 0APS Rates Escalation Factor 1 1.03 1.0609 1.092727 1.125509 1.753506Money Paid to SunWest 5765.13 5908.393 6055.217 6205.689 6359.901 9190.834Money Paid to APS 0 39.58723 81.34581 125.3653 171.7387 1224.476Money Received from APS 0 0 0 0 0 0Total Cost of Electricity 5765.13 5947.981 6136.563 6331.055 6531.639 10415.31Avoided Cost of Electricity from APS 7686.84 7917.445 8154.969 8399.618 8651.606 13478.92Yearly Savings 1921.71 1969.464 2018.406 2068.563 2119.967 3063.611Cumulative Savings 1921.71 3891.174 5909.58 7978.143 10098.11 49015.37Present Value at 4% Discount Rate 1847.7981 1820.881 1794.355 1768.216 1742.458 1398.192Cumulative Present Value Savings 1847.7981 3668.679 5463.034 7231.25 8973.709 32262.23Net Present Value of Total Savings 32262.228

CCC SavingsSpreadsheet

10

CCC Savings vs. Usage

• Savings Decrease as Usage Decreases Below 100%• Usage Must be Greater than 80% of IOC Solar Output

CCC NPV Savings vs. Usage

-30000

-20000

-10000

0

10000

20000

30000

40000

0 20 40 60 80 100 120 140

CCC Annual Usage as Percent of Initial Solar Production

NP

V S

avin

gs

Ove

r 20

Yea

rs

at 4

% D

isco

un

t R

ate

11

CCC Case: Third Party Spreadsheet• Can take advantage of tax subsidies• Easier access to low-cost financing• Often production based incentive is used by utility to make solar financially attractive • Third party owns the equipment and sells power to the user• Third party takes the risk of supplying a reliable flow of energy

12

Example: Church Third Party FinancingGiven:

35.1 0.09140,400 3

64057 0.51000 0.095

5 2010000 30

8 01000 0

0.079 35IRR Discount Rate, fraction

7. Inverter Life, yrs8. Rebate, $/kWe

5. Annual Maintenance Inflation, %/yr6. Inverter Replacement Price, $

3. First year annual output, kWhe4. Annual Maintenance, $

1. System Name Plate Rating, kWe2. System Price, $

Given:35.1 0.09

140,400 364057 0.51000 0.095

5 2010000 30

8 01000 00.079 3517. Federal Tax Rate, %

15. State Investment Tax Credit, %16. State Investment Tax Credit Cap, $

13. PBI duration, yrs14. Federal Investment Tax Credit, %

11. System Output Degredation, %/yr12. PBI, $/kWhe

9. Electric Rate, $/kWh10. Electric Rate Inflation, %/yr

13

Example: Church Third Party FinancingYear 0 1 2 3 4 5 6System Cost,$ -140,400System ITC Basis, $ 140400Fed Tax Credit, $ 42120 0 0 0 0 0Annual Maintenance, $ -1000 -1050 -1103 -1158 -1216 -1276Inverter Replacement, $ 0 0 0 0 0 0Output Degredation Factor 1.000 0.995 0.990 0.985 0.980 0.975Annual Output, kWhe 64057 63737 63418 63101 62785 62472PBI , $ 6085 6055 6025 5995 5965 5935Electric Rate Inflation Factor 1.000 1.030 1.061 1.093 1.126 1.159Church Electric Rate, $/kWh 0.090 0.093 0.095 0.098 0.101 0.104Revenue from Church, $ 5,765 5,908 6,055 6,206 6,360 6,518NET TOTAL REVENUE, $s 10,851 10,913 10,977 11,043 11,109 11,176AFTER-TAX PROFIT 7,053 7,094 7,135 7,178 7,221 7,265Fed Dep Basis (-1/2 fed credit) $119,340.00MACRS 5yr Fed Dep Factor 0.2 0.32 0.192 0.1152 0.1152 0.0576Federal Depreciation 23,868 38,189 22,913 13,748 13,748 6,874DEP AVOIDED TAX BENEFIT 8,354 13,366 8,020 4,812 4,812 2,406Net Cash Flow, $ -140,400 57527 20460 15155 11990 12033 9671Discount Factor 1.00 1.08 1.16 1.26 1.36 1.46 1.58Present Value, $ -140400 53315 17573 12064 8845 8227 6128

14

Example: Church Third Party FinancingYear 0 1 2 20System Cost,$ -140,400System ITC Basis, $ 140400Fed Tax Credit, $ 42120 0 0Annual Maintenance, $ -1000 -1050 -2527Inverter Replacement, $ 0 0 0Output Degredation Factor 1.000 0.995 0.909Annual Output, kWhe 64057 63737 58238PBI , $ 6085 6055 5533Electric Rate Inflation Factor 1.000 1.030 1.754Church Electric Rate, $/kWh 0.090 0.093 0.158Revenue from Church, $ 5,765 5,908 9,191NET TOTAL REVENUE, $s 10,851 10,913 12,196AFTER-TAX PROFIT 7,053 7,094 7,928Fed Dep Basis (-1/2 fed credit) $119,340.00MACRS 5yr Fed Dep Factor 0.2 0.32Federal Depreciation 23,868 38,189DEP AVOIDED TAX BENEFIT 8,354 13,366Net Cash Flow, $ -140,400 57527 20460 7928Discount Factor 1.00 1.08 1.16 4.58Present Value, $ -140400 53315 17573 1733NPV -1.475127885

Analysis of APS Billing Rates

15

See MS Word document provided to church

17

Summary Table: CCC Peak Demand Analysis

Start End

APS kWe Delivered to CCC

Solar kWe Delivered to CCC

Total CCC Demand, kWe

% Due to Solar

Date of Peak Demand

Time of Peak Demand

Day of Week for Peak Demand

7-Jan 5-Feb 38 1.02 39.02 16% 16-Jan 7:00pm Wed5-Feb 6-Mar 36 0.72 36.72 2% 20-Feb 6:45pm Tues6-Mar 4-Apr 32 0.06 32.06 0% 9-Mar 6:30pm Sat4-Apr 6-May 31 0.32 31.32 1% 1-May 6:15pm Wed

6-May 5-Jun 34 1.54 35.54 4% 1-Jun 7:00pm Sat5-Jun 5-Jul 56 6.26 62.26 10% 29-Jun 6:00pm Sat