SolarWorld to wins $4 million US grant for next-generation crystallization tech

SolarWorld will conduct crystallization project research at its Hillsboro, Oregon, site as well as at its R&D facility in Germany.
SolarWorld will conduct crystallization project research at its Hillsboro, Oregon, site as well as at its R&D facility in Germany.

The Department of Energy award is aimed at the development of crystallization technology for more efficient and affordable solar cells.

SolarWorld has received a $4 million cooperative award from the U.S. Department of Energy SunShot Initiative to intensify development of a silicon mono-crystallization technology.

The proprietary development has demonstrated promise to sharply reduce costs in the production of silicon mono-crystals while increasing the efficiency of photovoltaic cells, SolarWorld said.

Green Bonds Expected To Top $100 Billion In 2015

green-bondAnother strong quarter for issuances of green bonds has taken the year’s total up to $32 billion, more than double the total issued during 2013, and fuelling predictions that 2015 could see $100 billion worth of green bonds issued.

Data from the Climate Bond Initiative published Tuesday claimed $9.2 billion green bonds were issued in the third quarter.

“The league table shows that Crédit Agricole, BAML and SEB were the main drivers of the growth of the ‘labelled’ market in the last quarter that saw 28 green bonds issued,” said Climate Bonds Initiative CEO Sean Kidney. “We predict USD100 billion of issuance in 2015 and green bonds to go mainstream in 2016.”

Yield Cos, Crowdfunding Among 4 Megatrends Shaping Solar Financing

bright_ideasIn recent years, we’ve witnessed the rapid erosion of many traditional barriers to solar adoption. Almost daily, there are new, sunny reports and forecasts regarding solar’s plummeting costs. But as the industry makes huge strides in areas of R&D and soft costs, and as the price of panels falls off the charts, it’s the recent boom in innovative solar financing that many believe will deliver the solar market into its next chapter.

Following on this idea, energy value chain experts DNV GL have just released a position paper looking at new frontiers in solar finance. “Bright Ideas: Global Trends in Solar Finance” identifies and analyzes four “mega trends” in solar finance:

Third-party ownership and securitization constitutes the majority of residential solar financing right now, so it’s no surprise that the report focuses on SolarCity as its use case. The popularity of SolarCity’s power purchase agreements (PPAs), where homeowners lease their roof in exchange for electricity at a fixed cost, has allowed the market-leader to issue securities backed by this enormous (and growing) solar portfolio. SolarCity has more recently thrown its hat into both the crowdfunding and solar loan markets as well, but those recent announcements didn’t seem to make the Bright Ideas report by press time.

New Equity Offerings, Corporate Structures and Bonds leverage the predictable cash flows from solar assets, and have been a recurring phenomenon among solar firms in the past year. The relative cost and complexity of yield cos and similar vehicles has relegated them to utility-scale projects for now, but Bright Ideas suggests that could change soon. The report looks at the successful-to-a-fault Yield Co IPO of NRG and two others, as well as investment trusts and partnerships. The section wraps up with a deep-dive into German-born green bonds, the issuance of which could potentially cap $40 billion by the end of 2014.

New Routes to Market are certain to attract interest as long as feed-in tariffs (FITs) continue to subside and costs of electricity/diesel rise. Bright Ideas looks at some of the most innovative and successful electricity off-take structures, namely direct power sales (PPAs), derivatives-based off-take agreements (“synthetic PPAs”), and the relatively risky hedging of merchant generators (merchant power plants).

The Future of Solar Finance, the fourth and final bright idea, focuses on the up-and-coming model of crowdfunding in solar. Consistent with other reports, Bright Ideas portrays crowdfunding as the new kid on the block, noting its limited contribution of capital raised and a (perceived) lack of protection for investors. Interestingly, the report’s crowdfunding case study focuses not on a major, investor-ready platform like Mosaic, but on United Photovoltaics Group, a China-based company that makes use of the public zhongchou.com (akin to Kickstarter in China).

The solar market is enjoying — and will continue to enjoy — a huge boost in capital resulting from the innovative and successful investment vehicles that Bright Ideas highlights. But as financiers continue to tinker with proven models and concoct new recipes in search of higher yields, DNV GL’s report dutifully reminds us of the inherent risk of any investment.

What’s crucial to keep in mind, says DNV, is that “investors’ returns are only as good as the solar assets that underpin them.” We don’t need to look back too far to remember what happens when the smartest guys the room become too “innovative” for the markets they serve.

SolarCity Giving Loans For Solar Ownership

solar-city-roofOutfitting your home with cheap solar power just got a lot easier.

Elon Musk-chaired Solar City, the biggest name in residential solar power, is now offering loans to allow their customers to own their solar panels for cheaper than their current lease offerings.

The loan option, called MyPower, ends up cheaper it is paid back by the customer paying for the energy produced by their equipment — and it’s a win-win because these payments end up cheaper than your traditional power bill. And after 30 years, the power is free.

Here’s how it works, according to SolarCity founder and CEO Lyndon Rive: customers take out a 30-year loan on a solar power system at 4.5% interest. SolarCity installs and maintains the system at no cost to the customer, and the customer pays for the power — and in the process, pays off the loan.

Typically loans available for homeowners to fit themselves with solar utilities are usually offered by third-party banks and municipalities in partnership with solar companies, and do not take into account how much power is being produced by the system. That means if the system underperforms, the customer loses money.

Instead, with SolarCity’s direct financing, “you only pay based on the production of the system,” which SolarCity will monitor and guarantee against drops in performance, Rive told Business Insider.

“We’re able to do this because we have a very good understanding of how well your system is going to perform,” Rive said.

Energy from the power company typically costs, on average, 13 cents per kilowatt-hour (with wide regional variation), ranging as low as 9 cents and as high as 20 cents. The price also increases by 4% to 6% every year. Under the MyPower program, customers will pay 16 cents for every kilowatt-hour they use in the first year, after which most people get a 30% federal tax credit that drives the cost down to 12 cents per kilowatt-hour. Year after year, the price will increase by 2.9% — less than the usual increase from the typical power company.

In the end this loan program ends up cheaper than their leasing agreement offer, the “Power Purchase Agreement,” in which customers pay 15 cents per kilowatt-hour, increasing at 2.9% per year. They are going to continue offering the leasing option for customers, though in most cases it will be more expensive to lease than to own. “The only reason you’d go with a lease is if you pay low or no federal taxes,” in which case the 2nd year 30% tax credit would not apply, he added.

And depending on where you live, it’s potentially much cheaper than traditional power-company power. According to the US Energy Information Administration, the typical US resident used 10,837 kilowatt-hours of power in 2012. For a household paying the average rate of 13 cents per kilowatt-hour, that power would cost about $1400. In the first year, that household would pay about $330 more for their power, but in the second year they would see a savings of about $100. But a household paying 20 cents per kilowatt-hour would see a more dramatic savings of about $430 in the first year, and $870 in the second year.

In addition to saving money, solar power substantially reduces pollution compared to fossil fuels, and allows households to move towards energy independence.

One possible disadvantage to the MyPower program is that solar power, like virtually all technology, is bound to improve dramatically over the next 30 years, both dropping in cost and increasing in efficiency. In fact, futurist Ray Kurzweil predicts that we will have unlimited, free solar energy in just 20 years. If that happens, SolarCity owners could find themselves paying for obsolete equipment.

However, as Jonathan Bass, SolarCity’s vice president of communications, wrote in an email: “The value of the solar system is the electricity it produces. Electricity is a commodity, and we expect it to become more valuable, not less, over the next 30 years as retail rates rise, so we don’t expect customers to want to incur the cost of installing a new system during the term.”

The MyPower program will help SolarCity expand their residential solar power products into new markets — and could dramatically decrease the cost of power for many people.

Vivint Solar CEO Greg Butterfield Glows Over Company’s Future

residential-installVivint Solar Holdings Inc (NYSE: VSLR) priced its 20.6 million-share IPO at the high end of a $14 to $16 range this past Tuesday. On Wednesday, it opened for trading at $17.01 and has since drifted steadily lower to $13.75, where it closed on Friday.

Chief Executive Officer Greg Butterfield isn’t concerned about the day-to-day minutiae of Wall Street trading, though.

In an interview with Benzinga, he acknowledged that IPOs are exciting but in reality are “just another financing event that lets [the company] execute [a] broader strategy and mission.”

The Mission

According to Butterfield, Vivint’s mission is to provide “lower-cost, environmentally conscious alternatives to traditional utility generated energy.” Its sales force, which focuses on face-to-face interaction with customers, is paid entirely on commission, and marketing efforts are centered on residential areas.

“Ours is a more customer-centric approach,” Butterfield said.

“We go door-to-door and canvas people who live in the neighborhoods. [The sales team] schedules meetings in the evenings so the whole family can be there.”

By using tablets with proprietary software, salespeople are able to walk consumers through the benefits and potential cost savings of going green. “We find it to be more personal, more customized,” he added.

A Win-Win

Given the upfront infrastructure cost associated with solar technology, Vivint’s strategy circumvents the need for customers to pay it. Vivint pays the upfront cost and in return secures what often amounts to a 20-year contract.

“We primarily use the power purchase agreement,” Butterfield explained.

“We work out all the funding and financing and actually own the systems put on the roof, and they agree to buy the electricity those panels create for the term of that contract. The benefit to them is they save 15 to 30 percent on their power bill and they get the ability to control their power rates going forward.

“We will have a small fixed escalator, where utility rates traditionally go up 6 percent annually in the states we’re at, 4 percent nationally,” he added. “They get the freedom to choose where they buy their power from and what kind of impact that power has on the environment.”

At the end of the contract, customers can choose to sign a new agreement. Vivint estimates a large number of current customers will re-sign because electricity isn’t like many other types of technology, where a premium is placed novelty.

“Electricity just isn’t that kind of value proposition,” Butterfield said. “The value proposition is: I save money, I’m being socially responsible, and when I turn the lights on, they come on.”

Risk

Vivint is able to provide these solar arrays for free partly because of its contractual arrangements, but also because of tax incentives. Should the government initiate any cuts, Vivint’s S-1 states its business could be materially affected. Butterfield, for one, acknowledged the hazard, but asserted there’s no near-term risk to the program.

“I think we’re [solar power] such a small piece of overall energy that’s generated in the nation, I don’t see any major regulatory changes that could impact the business,” he said.

“I look at public sentiment and they’re on the side of clean energy and saving money. We think there might be an interconnection fee that will be so small, the economics of it won’t be ruined.”

Passions

Butterfield also talked about his passions.

“I love using technology to provide a better service to a customer, or… to create a disruption and change the way things have been done in an old world model,” he said, before adding: “Or to… create a whole new industry that never even existed.”

The energy is evident.

“I want to make a difference and change the world. I’m really passionate about the cause… We’ve grown from 800 to over 2,500 employees. People are here because they want to be here, not because it’s just a job.

“It’s fun to go to work,” he stated.

‘I Will Be Here As Long As I Add Value’

Butterfield is no stranger to technology-related IPOs.

In 2002, he led his company at the time, Altiris, to a successful IPO after growing revenues from $3 million to $300 million. Initially priced at $10 per share, Symantec acquired the company in 2007 for $33 a share — a 230 percent gain for investors over that time.

On average, the CEO spends about a half-decade at every company, and technology reinvents itself every five to seven years, Butterfield explained.

“I’ve had this rule of seven,” he said. “After seven years, you’ve added all the value you can add in that seven years. You’ll probably do the organization a favor by bringing in a fresh perspective after that time. If you don’t, you run the risk of getting stale.”

Butterfield clarified he has no intentions of going anywhere while there is work to be done, though. “I will be here as long as I add value. I’m 55, but I’m pretty young. I mountain bike, skydive and jump from cliffs,” he said.

Advice

Butterfield, lastly, discussed advice. The best he has ever received, he said, was from the late Ray Noorda, the founder of Novell whom the Associated Press once deemed the “Father of Network Computing.”

Butterfield recalled the advice: “Take care of your employees, take care of your customers, take care of your partners, and Wall Street will take care of itself.”

Speaking broadly, he concluded: “We’ve gotten into a situation where everyone focuses on a quarterly number and what happens in 60 or 90 days, we fail to see what’s really important. Too many people lose that concept.”

Disclosure: At the time of this publication, the author holds no positions in any mentioned security.

Clean Energy Finance 101

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As innovative energy products and services come to market, so do new mechanisms to fund them. And existing funding options become more popular. This has resulted in a boom of finance jargon, especially regarding energy efficiency and renewable generation. Though many of the finance terms used in clean energy finance are similar to those used in traditional finance, it’s easy to get lost. We hope this glossary will help those in clean energy navigate the new and growing world of clean energy finance.

Asset Class: A grouping of similar types of investments that behave similarly in the marketplace and are subject to the same laws and regulations. Broad examples of asset classes include:

  1. Equities (also known as stocks) – assets that represent ownership of part of a company.
  2. Bonds – assets that guarantee a fixed payment stream.

Bonds are often further categorized based on structure or source of the payments. Examples of these subclasses include municipal, corporate and mortgage bonds.

Credit Enhancement:  A feature that increases the creditworthiness of an individual or corporate borrower. They are intended to reduce the risk that the investors will not be repaid. One simple type of credit enhancement is a loan loss reserve, which accepts the losses for a portion of the defaults in an asset pool. Other types of credit enhancements include payment mechanisms such as On-Bill Repayment and PACE (see explanations below).

Energy Services Agreement (ESA): In an ESA, energy efficiency is treated as a service rather than a product. In this type of agreement, a project developer evaluates a building and executes energy efficiency upgrades. The customer pays for this energy service over time at an agreed upon rate. One way to structure the contract is to have the customer pay per unit of energy saved, which means they only pay for the actual savings and do not bear the risk of an underperforming project.

Green Bank: Green banks are generally defined as public or quasi-public financial institutions that use public funds to attract private investment to clean energy projects. Green bank activities can include offering financing guarantees, creating new financial products, and helping alleviate market barriers and inefficiencies. Green banks in Connecticut, New York and Hawaii have hired staff with extensive experience in both the private and public sectors. Each of these banks has the authority and capability to work closely with private sector entities to design effective clean energy financing solutions.

Green Bonds: A type of bond that is issued to pay for climate/environmental projects. These are often issued by large institutions, such as World Bank, Bank of America, and Toyota, that invest in both environmental and non-environmental projects. However the proceeds from the green bonds are invested exclusively in green projects.

MACRS: The Modified Accelerated Cost Recovery System (MACRS) is the primary tax depreciation system used by the IRS. Depreciation is an income tax deduction that taxpayers can use to recover the cost of certain types of property over time.  MACRS specifies different cost recovery periods for different types of properties, usually based on the expected useful life of that property. However, MACRS allows for a relatively short five-year cost recovery period for solar photovoltaic assets despite the fact that solar systems often have a useful life of 25 years or more. This accelerated recovery period increases the attractiveness of solar investment.

On-Bill Finance (OBF): OBF allows utility customers to borrow money from their utility at little to no interest to pay for certain energy efficiency measures. The loan is repaid over time through the utility bill.

On-Bill Repayment (OBR): OBR is a program that helps utility customers secure private financing for energy efficiency and renewable generation by allowing them to repay the private financing institution through their utility bill. Placing the repayment on the utility bill provides lenders and other investors with greater assurance that they will be repaid, therefore enhancing the credit of participating customers. This results in a greater number of customers being eligible for financing as well as better overall financing terms for qualifying customers.

Open Source OBR: An OBR program that allows multiple lenders and other investors to compete for customers and allows a wide variety of financing products, such as loans, leases, Power Purchase Agreements and Energy Services Agreements, to be eligible through the program.

Property Assessed Clean Energy (PACE): PACE allows building/home owners to repay loans for energy efficiency and/or renewable generation through their property tax bill. Placing the loan repayment on the property tax bill reduces the risk of default because property taxes are almost always successfully collected. This reduced risk of default provides a credit enhancement for participating building/home owners, and therefore allows more building/home owners to get access to financing at attractive rates.

PACE 2.0: PACE 2.0 is a new version of PACE that is emerging in Connecticut, California and some other states. Like the original PACE, PACE 2.0 allows for clean energy investments to be repaid through the property tax bill. But PACE 2.0 goes a step further by allowing payments for solar leases and for solar power purchase agreements to also be repaid through the property tax bill.

Renewable Electricity Production Tax Credit (PTC): The Renewable Electricity Production Tax Credit (PTC) is a per-kilowatt-hour tax credit for electricity generated from qualified renewable resources including, but not limited to, wind, geothermal, and closed-loop biomass. It incentivizes renewable energy in a market dominated by fossil fuels. This tax credit is generally only available for the first ten years of production. The PTC is not typically used for solar generation.

Secondary Market: The market(s) where securities and other assets can be purchased from somebody other than the initial issuer of the asset. For example, when a bank sells the mortgages that it originated as mortgage-backed securities, they are selling into a secondary market. Secondary markets are particularly important to clean energy finance because the payment obligations that are created through clean energy finance mechanisms like PACE and OBR (see definitions above) can be turned into an asset and sold on secondary markets. The ability to sell these assets on the secondary market is very attractive to investors and helps drive down the cost of capital for clean energy projects.

Securitization: The process of combining financial assets into a pool and then selling portions of that combined pool on the secondary market to institutional investors, such as pension funds. The resulting asset (i.e. mortgage-backed securities) generally requires a credit rating from a rating agency assessing the risk associated with it. By allowing the original investor in a project to sell the resulting asset on the secondary market, securitization increases initial lenders’ willingness to provide low-cost capital. This is particularly true if the resulting securities receive a high credit rating because the asset will be worth more on the secondary market.

Solar Investment Tax Credit (ITC): The Solar Investment Tax Credit (ITC) is a 30 percent tax credit for the cost of solar systems installed on residential and commercial properties.

Solar Lease: A contractual agreement under which an individual or business allows solar panels owned by a third party to be installed on their property, and leases those panels for a fixed period of time. Lease periods typically fall within 10 to 20 years. Third-party ownership structures, such as solar leases and Solar Power Purchase Agreements, allow investors to take full advantage of the tax benefits of solar (see Tax Equity Investment).

Solar Power Purchase Agreement (PPA): A contractual agreement under which an individual or business allows solar panels owned by a third party to be installed on their property, and agrees to purchase the power produced from the solar installation at an agreed upon rate over a fixed period of time. Third party ownership structures, such as Solar Leases and Power Purchase Agreements, allow investors and consumers to take full advantage of the tax benefits of solar (see Tax Equity Investment).

Tax Equity Investment (Third Party Ownership): Investment in solar development by a third party private investor who utilize federal tax benefits to offset taxes they would otherwise owe. In such an arrangement, a third party investor owns the solar panels and collects the tax benefits while leasing out the panels, or selling the power through a Solar Power Purchase Agreement. The two primary tax benefits for solar investment are the Solar Investment Tax Credit (ITC) and the MACRS. In practice, tax equity investments are generally attractive for profitable financial companies and for a few wealthy individuals with extensive real estate holdings.

Yield Co: A yield co is a publicly traded company that is created for the purpose of owning assets that produce cash flow. Some yield cos specifically focus on renewable energy assets. The income from these assets is then generally distributed to the shareholders as dividends. While yield cos are structured as a normal taxpaying corporations, yield cos that own renewable resources can use the tax benefits associated with clean energy investment to avoid paying taxes.

Original Article on

How Big Data is Driving U.S Solar

sunriseIn the tech world, big data means opportunity. For solar, it’s no different.

With solar securitization dominating the news, it’s hard to imagine that only a few years ago, the PV industry experienced a major upheaval on its way to maturity.

2010 began with a clash of the titans as big solar players like SunPower, First Solar, and SunEdison clung to survival, riding out market saturation, panel price drops and the resulting margin squeeze.

This survival-of-the-fittest bloodbath, while ugly, was the sign of healthy market maturation as PV struggled to break into the mainstream. After all, similar shakeouts have occurred in every emerging technology market from color televisions to automobiles to penicillin. With PV panel prices now projected to increase in 2014, we may be seeing the leveling of the market.

Solar YieldCos: Proven Concept or Hype?

commercial-solar-yieldco

There has been a lot of excitement around YieldCos and their ability to improve the financing prospects for solar.

Major solar companies like Canadian Solar, First Solar, JinkoSolar, SunEdison and SunPower all seem to be investigating the possibilities of launching their own YieldCos. These companies have good reason to be interested: YieldCos have the potential to create value by improving access to cheaper sources of capital and the potential to unlock the value of solar assets that are not being recognized by the market.

When compared directly to sponsor equity, the advantage of the YieldCo is that it may provide capital at a reduced cost. For example, the cost of capital for most financiers is in the 8 percent to 10 percent range. Take-out investors are generally interested in solar projects that model 8 percent to 10 percent returns over a twenty-year period.

Conergy Launches $100M Commercial Solar Fund

conergy-building

Germany’s Conergy, which like SunPower, both manufactures and installs soar arrays, today announced (Jan. 14) that it launched the Conergy Fund I program, a $100 million fund to support the development of large-scale projects in the U.S. The fund will finance solar projects between 500 kilowatts and 25 megawatts in size.

“The Fund is ideal for mid-to-large size organizations such as municipalities, school districts, utility companies, and investment-grade corporations because the savings achieved last for decades,” said Anthony Fotopoulos, CEO of Conergy Americas. The fund is designed to make it easier for companies to go solar by combining multiple aspects of the project financing process. Under the fund Conergy manages the financial analysis, credit rating, administration and finance, billing, and collection of power purchase agreements (PPAs) on behalf of the project.

“Not only are these entities reducing energy consumption, but the fixed energy prices secured through the PPAs are significantly lower than market prices for conventional grid power, providing additional savings to the end-user,” said Fotopoulos.

The company’s main investor in the fund is Kawa Capital Management, which purchased the company in August 2013. “The Conergy Fund I program is the first step in a long relationship with Kawa. We already have five projects in the United States utilizing The fund and expect to develop and acquire projects in other growth markets in 2014,” Fotopoulos said.

Through the fund, Conergy and its partners will provide such projects with development and engineering, procurement and construction (EPC) services to design the system. It also provides operations and maintenance management after the system is producing electricity.

The company created the fund to help increase access to solar financing for businesses. While residential solar has been growing as more solar installers offer financing options, the share of commercial buildings has been going down.  “Access to competitive financing that can monetize local and federal incentives is a key barrier to the widespread adoption of solar photovoltaics (PV) via PPAs—only about 40 percent of commercial buildings or power plants are able to secure this financing,” Conergy said. “The Fund bridges this gap by removing the funding barrier that has historically hampered organizations from installing photovoltaic systems on their facilities.”

The companies are likely to create more such funds in the future, according to Conergy. Conergy has been installing PV arrays around the world, particularly in markets where it has been able to design and build projects at parity with other energy sources. Last year for instance, it said it developed a 672 kilowatt grid-parity project at Western University of Health Sciences in Pomona, California.

Original Article on Solar Reviews

Solar in 2014: Buy or Lease?

envision-solar

As utilities are using more solar and wind–both free energy sources–to power grid than ever before we might think electricity rates could level off, if not actually go down. But this hasn’t been the case. Moderate to heavy consumers here in California saw their rates rise between 20 to 40%.

So if you haven’t gone solar yet, make it a 2014 resolution. And with today’s cheap panel pricing, installing solar could be less stressful than your other resolution… dropping weight!

How cheap are solar panels today? Well, in 1977 panel cost per watt was around $77; ten years ago, about $5; and today it’s around .74–yes, 74 cents a watt. The typical 24-watt panel in ’77 would have cost $1848. Today, the average wholesale price of a standard 250W module is about $185. Bearing this in mind, the cost for a typical 5kW (5000Wdc) solar installation in CA is as low as $18,750 or $3.75/watt turnkey. Rebates and tax credits will defray much of that cost, too.

So now the question is whether to purchase or go with a lease or power purchase agreement (PPA). If you can afford it or have access to a low-interest loan, then purchase.

The lease/PPA will commit you to a 15, 20 or 25-year lease. Down payments can be 0 or an amount he lessee can cough up to reduce the monthly payment. The monthly lease payment (unless prepaid) can be fixed or set with a 1-3% annual escalator. All incentives are taken by the lessor who owns the system. Lease/PPAs are also transferable.

Some like the idea that any maintenance or repairs are the duty of the lessor. But be careful here. The lessee (homeowner) in most cases are responsible to keep the panels clean for optimal production and damage other than panel or inverter failure, must be covered by homeowner’s insurance. Finally, at lease/PPA end of term, the homeowner has the choice to renew, purchase at market value or have the system removed at the lessor’s expense. Here’s the hitch to consider:  If you total the payments over the lease/PPA term, the amount can be more than the original purchase price AND the lessor will have taken the incentives.

Purchasing will require up-front payment but with the low cost for installing and solar incentives this choice makes good financial sense. (See https://www.dsireusa.org/ for incentives in your state. the federal solar tax credit is 30% of cost after any rebate and can be taken in whole or anytime before the end of 2016). Payback (when savings equal net cost) can be as little as 3.5 years here in CA–an ROI of 12-18%. How many other investments will give that sort of return today? And if you sell, people in CA are statistically more apt to buy a house with solar (or solar ready) than those without.

Furthermore, most states require a 5 to 10-year system-wide limited warranty from the installer. Better yet, manufacturer’s warranties on solar panels and inverters are the best anywhere. Virtually all panels have a 25-year production warranty (at 80%) and 5-10 year warranty on materials and workmanship (quality). Standard string inverters have a 10-year limited warranty and some micro-inverter makers are giving as much as a 25-year warranty. Systems will last 30 years or more; annual degradation of panels is below 1%!

So with payback in 3-5 years, that’s 25-plus years of free power from the sun. Buy, if you can, and you’ll never look back.

Original Article on Solar Advice For Free

Why Doesn’t Florida Have Solar PPAs?

Despite an abundance of year-round sunshine, Florida lags behind many states in solar PV installations and those supportive policiesthat could help boost adoption.

The “Sunshine State” currently offers no tax credit programs or solar rebates, and its property tax exemption is fairly limited.  In stark contrast to many states, Florida doesn’t even have a Renewables Portfolio Standard (RPS) mandating that utilities incorporate solar energy into its power portfolio.

One can, perhaps, forgive Florida for its relative inaction.  Rebates and incentives can be costly affairs since they typically rely directly or indirectly on tax dollars.  But there exist a range of financial vehicles that operate almost exclusively outside the public sphere.  Power purchase agreements (PPAs), for example, are private arrangements between independent power producers and property owners who host solar installations on their sites.  The former pays for the set-up and maintenance while the latter pays only for the electricity consumed.

Such arrangements provide both parties with exactly what they want.  Property owners receive competitively priced electricity without worrying about set-up costs or maintenance.  By contrast, PV system owners receive regular electricity checks from site owners in addition to many of the renewable energy credits and tax breaks that come with solar power generation.  The relationship is analogous to leasing a car in which someone else owns and maintains the vehicle, and you only pay for the miles that you actually drive.

So why hasn’t this model taken root in sunny Florida?

For starters, Florida’s relative lack of supportive solar policies removes one of the key incentives behind the PPA – namely the ability to claim renewable energy credits as a power producer.  This alone makes PPAs a much harder sell for both parties.  Either system owners must extend their payback periods or property owners must pay more for the electricity they consume.

But the problem runs even deeper.  Because power generation has traditionally been the sole purview of utility companies, it was relatively easy to regulate.  Now that distributed power generation has become more mainstream, many states debate whether or not individual solar PV installations should have to play by the same rules.

Several states have already voted against placing the same regulatory requirements on PPAs that exist for utility companies.  A handful of states have decided to let the question remain ambiguous or unanswered altogether.  But for reasons that are still unclear, Florida has actually erected legal roadblocks that explicitly prevent solar PPAs on a massive scale.

Perhaps state officials fear that taxing independent power production won’t bring in as much money.  One could also argue that utility companies are incentivized to maintain monopolistic control rather than seek alternative energy partnerships given the relative lack of statewide Renewables Portfolio Standards.

The reasons are still blurred, but this much is certain – by not embracing PPAs, Florida is missing out on a huge opportunity to leverage its natural resources to spur economic development and protect itself from increasingly volatile energy prices.

Original Article on Cleanenergyauthority.com

Sunray Solar Offering PPAs in Jersey

Folks in New Jersey just got a bigger opportunity to go solar with no upfront costs thanks to a new partnership between Sunray Solar and Clean Power Finance. Under the new agreement Clean Power Finance will provide the backing for Sunray Financial Services, which will offer homeowners power-purchase agreements (PPAs).

Sunray’s energy supply contract lowers homeowners’ electric bills from day one. And with New Jersey’s energy prices on the rise it will help homeowners save even more, the company said.

The partnership allows Sunray to expand on its existing solar financing and maintenance options for homeowners. And by tapping into Clean Power Finance’s resources, the company can do more PPAs. “It’s a non-exclusive arrangement,” said Sunray CEO Troy Lambe. “[They’ll take] as much I want to feed them based on the results,” he said.

The companies are already signing deals under the new partnership. “We’re up and running. We already have a built pipeline of projects,” Lambe said.

“Given the dynamics in the New Jersey market and what’s happened since last summer. It’s [i.e., PPAs] become the modus operandi,” Lambe said. Last summer the New Jersey solar renewable energy credit (SREC) market dropped because of oversupply, creating the need for more dynamic financing options. “Only institutional money can handle the way the returns flow now.”

Lambe is happy with the way things are working now because the end-user, the customer gets the benefit of the incentives. “This is the way it should have always been,” he said.

Sunray isn’t the only company in New Jersey offering third-party ownership. Other companies like SunRun and Sungevity are also in the state with similar options. Still, Lambe said it’s an apples to oranges comparison. Sunray offers homeowners a simple, two-page explanation of what the company offers, a fixed price for power of the duration of the 20-year contract and a guarantee for how much the system will produce.

At this point Sunray’s partnership with Clean Power Finance is limited to New Jersey. But Lambe said it plans to offer PPAs through the agreement in other states. First New York and then likely into Massachusetts, he said.

Original Article on Cleanenergyauthority.com

Time for Utilities to Buy Electricity Under PPAs

Powerpurchase agreements – aka “PPAs” – are an established tool for spreading the cost of energy over 20 years or longer as a means of ensuring arevenue stream for renewable energy project developers, stabilizing andpredicting energy costs and displacing dirty coal with cleaner sourcesof electricity. The time has come in just about every state that doesnot already have them to require regulated utilities to buy power fromwind, solar and other renewable sources.

One real-time test case is playing out in Maryland. There, newlyre-elected Democratic Gov. Martin O’Malley is set to introducelegislation before the state’s General Assembly to requireinvestor-owned electricity utilities — Baltimore Gas & Electric,PEPCO and Allegheny Power — to purchase power under long-term PPAs.

For utilities accustomed to sourcing their power on the “spot” orvery short-term markets, such a proposal will likely be met with disdain if not outright opposition. O’Malley has set ambitious state goals forrenewable energy, energy efficiency, greenhouse gas emission reductionsand the green jobs that come with them. Whether he succeeds in thiscontest of wills depends on how serious he is in achieving them.Maryland is an important barometer for other states to watch.

Massachusetts and Delaware already are blazing this trail in partbecause of influential organizations and lawmakers pushing for cleanerenergy. Collectively, Maryland’s lawmakers are more moderate. But thisdebate will likely hinge on how credible proponents are in connectingcleaner energy with good-paying construction and full-time jobs.

One new alliance making the case has joined steelworkers with the   Chesapeake Climate Action Network and Environment Maryland. Together they marched on the MarylandStatehouse Jan. 13 (photo) and connected the ‘dots’ with their bluet-shirts: “Real Jobs. Clean Power.”

The draft of a bill shared with TheEnergyFix to be offered by a teamof lawmakers would require the investor-owned utilities and possibly the Southern Maryland Electric Cooperative (SMECO) to issue a request forproposals by October 2011 and negotiate a long-term power purchaseagreement for power to being flowing by 2013.

Whether O’Malley’s approach is similar remains to be seen. But forthe Governor and lawmakers to already be on the same page in principlebodes well for a bill’s chances. If a bill along these lines becomeslaw, the next hurdle for PPAs in Maryland will be what price perkilowatt hour (kwh) the Maryland Public Service Commission will deemacceptable.

The nation’s first offshore wind project, a 24-square-mile tract inNantucket Sound off Cape Cod, Massachusetts, received its final permitJan. 7. According to a report in The New York Times, state regulators reached agreement with the on behalf of the “CapeWind” project owner for utility company National Grid to buy the powerbeginning at 18.7 cents per kilowatt hour.

Will Maryland regulators be willing to digest a similar price? The chess game is about to begun.

Image: Steelworkers and other wind energy supporters in the Maryland Statehouse. The bluet-shirts read: “Real Jobs. Clean Power.” Credit: Chesapeake ClimateAction Network

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