[Bldg-sim] PV cost benefits

[Christian Stalberg]

Costs

Solar photovoltaic or PV systems are quoted in terms of dollars per Watt.
The larger the system, the lower the cost per Watt- be sure your contractor
is quoting fully installed cost. These costs vary widely by installer, by
state and by technology implemented. Module costs for installers run
$4-5/Watt. Beware snake oil salesmen whose costs are too close to these.

 

Solar thermal is a many headed beast with multiple applications and even
more widely varying costs. That being said, because these systems are much
more efficient (60-80% verses 12-18% for PV) they have much better payback.

 

The best guide for the state credit is at
http://www.ncsc.ncsu.edu/information_resources/fact_sheets.cfm ("Guidelines
for NC Tax Credit"). Information for other states can be found at
www.dsireusa.org <http://www.dsireusa.org/> . The best guide for the federal
credit is at http://www.seia.org/taxmanualdownload.php. 

 

Benefits

There are two main drivers for payback on solar generation equipment. Green
power subsidies or the avoided cost/expense for electricity are never at the
forefront. The primary driver is finding the best way to leverage the
available tax benefits that determines how feasible a solar project is in
North Carolina.

 

If this value is fully captured, these are good, albeit conservative,
investments. Larger systems are "better" investments in terms of payback and
internal rate of return because of the lower cost per installed Watt of
production capacity- next to tax credits, system cost in terms of $s per
Watt installed is the biggest driver for good financials. 

 

The other types of subsidies- avoided costs and green power premiums- are
important to the long term cash flow for a project. You are purchasing
capital to create cash flow with a PV system, just like any other piece of
equipment. For estimates on potential output, which determines the value
that the installed equipment will create, consult PV Watts
<http://www.nrel.gov/rredc/pvwatts/> . Using North Carolina for example, 1kW
of installed capacity typically produces 1,100 kWh of electricity per year.
At $.17/kWh (avoided cost or qualified facility rate plus a small greenpower
premium), that 1kW will create $187 per year in revenue, minus metering
costs.

 

Another benefit of purchasing solar equipment over greening up power by
purchasing RECs is that the equipment has real, balance-sheet value- it is
an asset, verses an expense. While it is not as cost-effective to purchase
capacity verses someone else's production, once the system is purchased and
off the balance sheet, is 

 

The other values these investment have for your business is also comprised
of the future value of this type of progressive, carbon-conscious investment
as well as any marketing, branding or positioning value, which, while murky,
does have a dollar value attached to it at the end of the day. 

 

There will be a market in North Carolina for solar energy within the next
two years because of our new Renewables and Efficiency Portfolio Standard,
and  this will create subsidies that we believe will have to be more
generous than the NC GreenPower program to generate the supply to meet
demand. 

 

National carbon regulation, which would create additional value for this
investment, is very likely with any of the potential next US
administrations. Even with fairly conservative cash flow projections of this
values, PV systems in NC can feasible reach payback in 9-10 years.

 

Challenges

Other than the financial hurdles of leveraging tax credits and projecting
future value of renewable energy for accountants, there are also technical
issues, which are both regulatory and site related.

 

>From a regulatory standpoint, it is important to know rules for net metering
<http://en.wikipedia.org/wiki/Net_metering>  and interconnection
<http://en.wikipedia.org/wiki/Interconnection>  in your state. Some of these
are favorable, others are not, some states don't have them (and they vary
from utility to utility). These are too varied to address here- to check on
the rules in your state, consult the Green
<http://www.eere.energy.gov/greenpower/markets/netmetering.shtml>  Power
Network and forward questions to your local State
<http://www.eere.energy.gov/state_energy_program/seo_contacts.cfm>  Energy
Office.

 

Site related issues include:

  Roof shading- Is your roof shaded, either by rooftop mechanicals, false or
parapet roofs or trees and other buildings? These are all problems to
overcome.

  Membrane type- No one wants holes in their roof; the ideal commercial
situation is where a ballasted system, with no roof penetrations. If the
membrane isn't adhered it takes more weight to ballast the system 

  Roof layout- If you want PV or solar thermal, design your roof to be flat.

  Building Mechanicals- Many building mechanical systems can take solar
thermal input, including preheat or direct heat from a heat exchanger that
is running off thermal storage that is primarily for domestic hot water. If
this infrastructure is not built in- in terms of space and technology-
retrofits can be difficult. In addition, the design stage can be an
engineering nightmare and prohibitive for small installation firms in the
absence of approved project funding or a formal retainer/design contract.

++++++

Christian Stalberg, Energy Modeler

Southern Energy Management
(O) 919.836.0330
(C) 919.801.0734
101 Kitty Hawk Drive
Morrisville, NC 27560
www.southern-energy.com

P Please consider the environment before printing this email

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