46
10.20.2009 Webinar: PV Financial Analysis Matt Heling Program Manager Solar & Customer Generation Pacific Gas & Electric Co. Garen Grigoryan Business Analyst Solar & Customer Generation Pacific Gas & Electric Co.

Download It

Embed Size (px)

DESCRIPTION

 

Citation preview

  • 1. Webinar: PV Financial Analysis
    • Matt Heling
  • Program Manager
  • Solar & Customer Generation
  • Pacific Gas & Electric Co.

Garen Grigoryan Business Analyst Solar & Customer Generation Pacific Gas & Electric Co. 2. Webinar Goal

  • Review concepts and resources needed to understand and/or perform an analysis of PV system cost-effectiveness.

3. Agenda

    • PV system costs
    • PV systems benefits (financial)
    • Methods of financial analysis

4. Energy Efficiency 5. Energy Efficiency

    • Energy efficiency is typically the mostcost-effectiveway to reduce your energy bill
    • Energy efficiency alsoreduces the size of the solar systemyou need
      • Can save $1,000s of dollars on the cost of the system
    • Anenergy efficiency auditis required to be eligible for some customer-side incentive programs

6. Large Solar PG&E Home:PV System Cost and Payback Large Solar PG&E Home Total Upfront Savings: $8,889 11.9 Panel Reduction *($9/watt)-CSI Incentive -30% Federal Tax ~ 10 years ~ 22 years ~4 years ~ 15 years $ 26,009* $ 19, 047 $ 6,962 $ 34,898* Total Combined Cost Size and Cost of Solar After EE (3.6 kW) Cost of Implementing EE Size and Cost of Solar Before EE (6.1 kW) 7. Site Screening Criteria 8. Site Screening

  • What physical site characteristics makes a site a good candidate for PV?
          • Orientation S or SW is best
          • Solar window Access to mid-day sunlight
          • Roof tilt ~30 is ideal, but even flat is okay
          • Weather Typically good in CA

9. System Performance 10. PV System Performance

    • Rules of thumb:
    • Each 1 kW of PV system capacity typically*
      • Requires ~100 ft 2of roof space
      • Produces ~ 1,300 1,700 kWh/yr .
        • Depends on many factors, including:
          • Location
          • Shading
          • System orientation
          • etc.

* Values presented are approximations only and may vary depending on a variety of factors.

      • PV production calculatorscan estimate production for specific PV system types, locations, technologies, configurations, etc.

11. System Costs 12. Capital Investment

    • Modules (Panels)
    • Inverters
    • Balance of system cost

Typical installed costs are $8 to $10 per Watt 13. Operations and Maintenance Costs

    • Washing
      • Cost related to hiring a service to perform this maintenance twice a year
    • Inverter replacement
      • Typically every ten years
    • PMRS(Performance Monitoring and Reporting Service)
      • Additional monthly cost - offset by owners awareness of system performance

14. Incentives 15. Types of Incentives

    • CSI California Solar Initiative
    • NSHP New Solar Homes Partnership
    • MASH Multifamily Affordable Solar Homes
    • SASH Single Family Affordable Solar Homes
    • Local Incentives and Financing Opportunities
      • San Francisco
      • Berkeley (Berkeley First)
      • Sonoma (SCEIP)
    • Federal ITC / Depreciation

16. CSI California Solar Initiative

    • Applies to Retrofit Residential and Non-Residential, plus New Construction Non-Residential
    • Incentives designed to decline over time
      • Currently both Residential & Non-Residential are in step 6
    • Two types of Incentive Payments
      • EPBB (Expected Performance Based Buy-Down) one lump sum paid upfront
      • PBI (Performance Based Incentive) once a month payments made over 5 years

17. CSI Current Incentive Availability 18. NHSP New Solar Homes Partnership

    • Only For New Residential Home Construction
      • Builders
      • Developers
      • Custom home owners
    • Aims to install 400MW
    • Incentive budget is $400MM
    • One time, upfront, expected performance based incentive (EPBI)
    • PV system size 1kW AC or larger (>5kW requires justification)

19. MASH and SASH

    • Designed to encourage solar adoption for low income housing residents
    • MASH
      • Administered by PG&E
      • $108MM available for incentives
      • Track 1a: $3.30/Watt for systems that offset common load
      • Track 1b: $4.00/Watt for systems that offset tenant load
    • SASH
      • Administered by Grid Alternatives
      • $108MM available for incentives
      • Very low income customers may receive a 1kW fully subsidized (up to $10,000) system

20. City Government Incentive

    • San Francisco
      • 10 year program
      • In addition to other incentives
      • $1,000 to $3,500 for Residential
      • Up to $10,000 for Commercial
      • Low income residents may qualify for additional grants

21. Federal ITC

    • Solar Investment Tax Credit*
      • Went into effect January 1 st2009
      • Available for next 8 years (through 2016)
      • 30% of net solar system cost
      • No monetary cap
      • Applies to residential & commercial

*All tax related statement are designed to inform and not to be construed as tax advise.Please consult a tax attorney before making any purchasing decisions. 22. Bonus Depreciation

    • Applies to commercial system owners Only
      • Benefits extended for systems installed in 2009
        • 50% of cost of capital investment
        • Up to $250,000 with phase-out threshold of $800,000
      • Benefits will continue for systems installed 2010 with reduced depreciation allowances
        • Allowed write-off up to $125,000 of capital expenditure
        • Subject to phase-out once capital expenditure exceeds $500,000

*All tax related statement are designed to inform and not to be construed as tax advise.Please consult a tax attorney before making any purchasing decisions. 23. Sample Costs

  • Example* for average SF household of four
  • - Monthly electrical bill $75 to $150
  • - Installing 3.0kW AC System

*These Incentive and ITC values are for demonstration purposes. Please consult a qualified tax attorney for applicability of various Incentives and grants. ~5000 kWh / year kWh Production$14,000 NET COST+$700 Tax on SF Rebate -$3,500 San Francisco Rebate -$7,200 Federal ITC -$3,000 CSI Incentive (est $1000/kW) $27,000 Cost of system 24. Electricity Costs and Net Energy Metering 25. Electric Rates

  • Two basic types of rate schedules:
  • *Both incorporate the concept oftiers :
    • The more electricity is consumed, the more it costs.
    • Example:
    • 0 - 100 kWh$0.10/kWh
      • 100 - 200 kWh $0.12/kWh
      • etc.
    • Tiers apply to both flat rates and TOU rates

$/kWh varies by time of day* Time-of-Use (TOU) Constant $/kWh* Flat Electricity cost structure Rate Schedule Type 26. Rate Tiers Impact of PV Output from PV systems tends to offset the most costly electricity first. 27. TOU and PV 28. Net Energy Metering (NEM)

  • NEMallows customers to receive credit for electricity produced in excess of what is consumed on-site.
    • Utility grid acts as battery
    • Credit is at the relevant retail rate
    • Annual true-up
      • AB 920: Credits for excess generation (kWh) (details TBD)
    • Can zero out energy portion of bill, but other (minor) service charges still apply
      • Typical customer sizes PV system to ~80% of annual energy (kWh) consumption

NEMis especially valuable for customers onTOUrates because PV system output tends to occur during the most expensive (peak) periods. 29. Financing Options 30. Purchasing Options

    • Cash / Financing
    • Power Purchase Agreement
    • Lease To Own

31. City and County Financing

    • Berkeley
      • Creative financing Berkeley First
    • Sonoma County
      • SCEIP Sonoma County Energy Independence Program
      • Financing is for existing buildings only
      • Repayments made through property tax bills over time

32. PPA Structure

    • Third Party owns system and is responsible for financing, designing, installing, monitoring and maintaining for the customer
    • No upfront fee required
    • Customer purchases electricity (kWh) the system generates at contracted rates
    • Customer may purchase system after contract expires
    • Contracts are typically 20 to 25 years
    • RECs (Renewable Energy Credits) are claimed by third party

33. Lease To Own

    • Third Party owns system and is responsible for financing, designing, installing, monitoring and maintaining for the customer
    • Customer typically pays a small upfront fee
    • Customer enters into a lease agreement
    • Significant reduction in electricity bill
    • Contracts are typically ~10 years
    • Leases may have annual built-in increases typically not exceeding increases of electricity rates

34. Renewable Energy Credits 35. Renewable Energy Credits (RECs)

    • RECs are associated with the green component of electricity from renewable sources
    • RECs are presently traded in voluntary markets
      • ~$0.010.05/kWh
    • Generally, for PV systems on the customer side of the meter, RECs are owned by system owner
      • For PPAs, the owning 3 rdparty retains RECs
    • May become more valuable in the future particularly if utilities are allowed to use RECs to meet Renewable Portfolio Standard (RPS) goals

Customer NSHP Customer MASH/SASH Customer CSI REC Owner PG&E Program 36. Methods of Financial Analysis 37. The Key Questions

    • How much does/will my PV system cost?
          • vs.
    • What is the value of the avoided electricity costs and other financial benefits?

38. Key Inputs and Variables

    • Capital (installed) costs
      • PV modules, inverter, installation, monitoring equipment, etc.
      • Inverter replacement
    • O&M costs
      • Panel-washing, monitoring service, etc.
    • PV system performance
      • Annual energy production
      • Performance degradation
      • System life
    • Value of electricity displaced
      • Projected electricity production
      • Electric rate type (TOU vs. not)
      • Projected future electricity rate increases
    • Incentives
      • May be received up-front or over time
    • Tax credits
      • ITC
      • Other local tax benefits
    • Financing method
      • Cash vs. loan vs. PPA vs.
    • Other assumptions/concepts
      • Discount rate (opportunity cost)
      • Compound interest

39. Methods of Analysis

    • Simple payback
      • Years until costs are recovered
    • Total life cycle payback
      • Considers benefits received after simple payback is attained
    • Cash flow model
      • Shows expenses and revenues each year
      • See Appendix for example/illustration
    • Internal rate of return
      • Average annual profit (loss) over life of system

40. Information Resources 41. Information Resources ITC forms www.irs.gov/formspubs/ IRS Federal ITC Details for applicable depreciationswww.dsireusa.org/solar/ DSIRE database Incentives SF City Rebates www.sfwater.org/solarincentive San FranciscoLocal Municipality Rebates www.berkeleyfirst.renewfund.com/ BerkeleyFirst www.sonomacountyenergy.org Sonoma County Energy Independence Program Guide to Federal Tax Incentives for Solar Energy www.seia.org/ Solar Energy Industries Assoc. SEIA For hiring HERS rater www.energy.ca.gov/HERS/index.html California State Government EE surveysFor Sonoma County specific financing options www.sonomacountyenergy.org/ Sonoma County SCEIP Details for applying for NSHP incentives www.pge.com/nshp/ PG&E website NSHP Free classes available on a multitude of solar and solar-related topics www.pge.com/solarclasses PG&E Classes PG&E Classes Managed by GRID Alternatives www.gridalternatives.org/sash SASH website SASH Managed by PG&E www.pge.com/lowincomesola MASH website MASH www.pge.com/gen PG&E NEM website NEM Displays current incentive rates www.csi-trigger.com Trigger Tracker Official CSI program rules www.gosolarcalifornia.ca.gov/documents/CSI_HANDBOOK.PDF CSI Handbook State-wide CSI resource www.gosolarcalifornia.org GoSolarCalifornia website PG&E CSI resource www.pge.com/csi PG&E CSI website CSI Notes Link Resource Program/Topics 42. Thank you!

  • Your thoughts?
    • Suggestions for future content?
    • Opinions on content and delivery?
    • Topics to emphasize or de-emphasize?
    • How can we provide a better service?

Feedback is welcomed! [email_address] 43. Appendix 44. Net Energy Metering (NEM) Sell Power to the Utility by Day Buy Power at Night and Winter Exchange at retail Annual billing cycle 45. NEM October May April SUMMER WINTER 250 500 750 kWh/mo Roll over Average monthly usage PV system production 46. Value of displaced electricity grows as assumed electricity cost increases outpace assumed performance degradation Inverter replacements (Simple) Payback at ~Year 15 Profit increase with time Note: This chart and the values shown are for illustrative purposes only. Capital costs (incentives + tax credit) Example Up-front, cash purchase of PV system