Cogenra’s Hybrid PV and Hot Water Plus Financing

Cogenra Solar is a solar cogeneration startup combining photovoltaic and heat generationto deliver electricity and hot water for commercial and industrialsites.  We profiled them here in September.

Hybrid PV and hot water is not entirely new — the real innovativepiece at the Khosla Ventures-funded Cogenra might be the introduction of the Heat and Power Purchase Agreement (HPPA).   Cogenra offersrenewable energy below utility rates while trimming natural gas andgrid-sourced electricity usage.  This is akin to what Solar City and SunRun offer in residential solar PV and a host of firms like Tioga Energy or Borrego Solar offer for commercial solar.

The firm just officially unveiled a solar cogeneration project at the Sonoma Wine Company in Graton, California. Former British Prime Minister Tony Blair andVinod Khosla of Khosla Ventures were on-hand as the winery flipped theswitch on the 272-kilowatt winery installation.

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Khosla’s PV/Hot Water Startup Cogenra Unstealths

Cogenra (formerly known as Skywatch Energy), a Khosla Ventures-funded solarstartup is slowly coming out of stealth — urged on by their recent winof a $1.5 million California Solar Initiative (CSI) RD&D grant.   RD&D, oddly, stands for Research, Development, Deployment and Demonstration. 

Here is some of the text of the Cogenra grant:

Cogenra Solar has developed, prototyped and validated the technical performance of an innovative concentrating photovoltaic/thermal co-generationtechnology and will conduct an 80-kW demonstration at the Sonoma Wine Company. For this project, the field performance of the system will be measuredand used to refine economic and financing models and optimization overmultiple tariff structures. This project will also look at modifying the co-generation system so that it can support tri-generation ofelectricity, heating and cooling, expanding the market to includecommercial sites that require cooling and lower amounts of hot water.Additionally, Cogenra Solar will modify the system to provide energystorage for use during peak demand and coordination with Pacific Gas and Electric on grid integration.

The startup has received $10.5 million from Khosla Ventures.

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A Look at Solar Hot Water in Tucson, Arizona

With an ideal climate and helpful incentives, Tucson, Arizona ispoised to become a hot spot for solar water heating. The city boastsnear constant sunshine and Tucson Electric Power provides generous incentives: a $750 up front rebate and performancebased incentive covering $0.25/kWh of avoided electricity use.

Solar water heaters rarely get the attention they deserve fromhomeowners and the solar community, even though they have lower pricetags, relatively short payback periods, and an immediate impact on homeenergy use. Installing a solar water heater in Arizona makes goodfinancial sense — and doing so in the Tucson is a particularly goodproposition. Let’s walk through how purchasing one would impact a family of four.

When a family decides to replace their water heating system, a solarwater heater — assuming a gross installed cost of $7,000 — looks priceycompared to an electric one ($600). However, with estimated power prices of $0.10 per kWh in Arizona, according to the U.S. Department of Energy, solar water heaters can be an attractive investment choice. Let’s seehow the high upfront cost and annual savings would look over theheater’s lifespan:

  • First, the additional cost of the solar hot water heating system isreduced to $6,250 when TEP’s up front incentive comes into play($7,000-$750=$6,250).
  • With an 80 gallon tank and a OG-300 rated system, our family would avoid using 2,700 kWh annually, saving them$270/year on their utility bill (2700 avoided * $0.10/kWh).
  • With TEP’s performance-based incentive (PBI) of $0.25/kWh avoided,our family will earn $675 in the first year (2,700 kWh avoided *$0.25/kWh avoided). The PBI would only apply in the first andsecond year of ownership, since TEP’s rebates per system are capped at$1750. (This works out to $750 for the upfront rebate, $675 for thefirst-year PBI, and $325 for the second-year PBI.)
  • The federal and state tax incentives available would also cut downthe capital costs significantly. The federal government provides a 30percent tax credit that would deduct $1,875 in tax costs, and the stateof Arizona’s tax credit (25 percent, capped at $1000) would lower costsby another $1000.
  • When all incentives are accounted for, the net cost of installing asolar hot water system instead of a conventional one comes to $3,375.
  • Assuming 5 percent annual inflation in electricity prices and TEP’s performance based incentive for solar hot water, the system would pay for itself in roughly seven years.
  • Over the 15 year average lifespan of a water heater, the family would save over $6,000 on their energy bills with and fetch a rate of return of 11.4 percent. Note that this 15-year useful life is a fairly conservative estimate. Your system may well beoperational for 20 or more years, in which case your return oninvestment would only get better.

Clearly, the numbers will vary for individual solar homes — shading,hot water demand, and the cost of the particular system you purchase all matter. However, the generous incentives provided by TEP, and manyother utilities for that matter, make solar hot water well worthinvestigating.

**Notes: For this exercise we assumed that the family would bereplacing an electric water heater and that they would be able to keeptheir current system as a backup. The expected annual kWh of avoided use for an 80 gallon OG-300 rated system came from an Arizona installer inthe GetSolar installer network. Depending on your situation, there maybe additional costs. All rebate information came from the DSIRE database and is also accessible through the solar cost section of our website.

Cost and Performance: A Look at Solar Hot Water in Tucson, Arizona

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How Big a Roof is Needed for Solar PV, Hot Water or Both?

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How do you allocate roof space for both a solar PV system and a solar hot water system? True solar enthusiasts occasionally runinto this type of dilemma. It’s most common to see one or the other on an individual roof, but the space requirements for thesecomplementary technologies add another dimension to choosing between photovoltaics (PV) and solar hot water, or going with both.

For PV systems — the sort that generate electricity — a generic ruleof thumb is that you need 100 square feet (visualize 10 feet by 10feet) for each kilowatt (kW) of solar PV panels you install. This meansthat to install a 5-kW system — which is roughly the current nationalaverage — you’d need approximately 500 feet of usable roof space.

When it comes to installing a solar hot water system, the spacerequirements vary more by region. Location matters for hot water systems more because outdoor temperatures determine how much the water must beheated.

Roof Space Needed for Solar Hot Water

These size estimates are for a family of four, assuming that eachperson requires 20 gallons of hot water per day. The hot water system is designed to meet 100 percent of summer hot water demand and 40 percentof winter demand. Meeting these specific levels of seasonal demands will avoid wasting energy and incurring excess cost. For more information on this sizing process, refer to this explanation provided by the USDA.

For both solar PV and solar hot water systems, south facing roofswill allow the system to be most efficient, and shading from nearbytrees can prove problematic even for those buildings with an ideal rooforientation.

It is certainly possible for an average home to have ample roof space for both systems. Assume a 2,400 square-foot home (40 ft x 60 ft) with a roof pitch of 30 degrees. The half of the roof that faces south wouldhave dimensions of approximately 23 ft x 60 ft, giving you about 1,380square feet on which to install solar PV and/or a hot water system.

The fight for roof space definitely arises for some buildings nonetheless. Deciding how toallocate that precious south-facing roof area comes down to how much hot water you use and how much you’re willing to spend. Like so many issues related to solar installation, solar roof space is site specific.

How Big a Roof is Needed for Solar PV, Hot Water or Both?

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Is A Solar Hot Water System A Good Fit for You?

So you’re interested in solar hot water? We’re happy to hear it.Solar water heating is an effective way to lower your utility bill. And, compared to solar electric — or photovoltaic (PV) — systems, solarwater heaters are typically less expensive. (For more info on thedifferences between these technologies, see our post Solar Hot Water vs. Solar PV.)

If you’re trying to determine whether your property is a good candidate for a solar hot water system, consider the following.

All else equal, consumers who use a lot of hot water — and thereforespend a good chunk of their electricity or gas bill on water heating —stand to gain the most by installing a solar hot water system. If people are taking hot showers, washing clothes, or using a high volume ofheated water for any other purpose, solar hot water is a great option.Top candidates include:

  • Hotels
  • Swimming pools
  • Laundromats
  • Communal living areas, like military camps and bases
  • Correctional facilities
  • Any residential building– single family or larger

Since commercial candidates are likely to have the largest hot waterdemands, they stand to benefit most quickly. A huge percentage of alaundromat’s operating costs probably come from hot water, so meeting aportion of that demand via the sun’s thermal energy can providesubstantial savings. Homeowners can benefit significantly, too, and inmany states – like Hawaii, Arizona, and California — can take advantageof solar incentives to help them install solar hot water systems. (Moreon these programs to come.)

So, as review: if you’re spending a lot of money heating water — orexpect your hot water demand to increase in the future — you may want to consider a solar water heater. If your hot water demand is modest andyour electricity bill is high, however — say, because you’re paying ahigh per-kilowatt-hour rate for your power — a solar PV system may be abetter bet. Ultimately, if you’re trying to decide which solar energytechnology is right for you, don’t be shy about asking questions!

Finally, it’s worth noting that there’s nothing to say you can’t install solar PV and solar hot water…

Are You a Good Candidate for Solar Hot Water?

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China’s Solar Hot Water Example

Look who’s investing in solar hot water technology. While the rest of us are worrying that solar thermal lacks the trendy appeal of othersolar tech and wondering when people will realize how much sense itmakes, China is quietly stepping up and installing more solar hot watercapacity than anyone in the world.

Solar Hot Water Operating Worldwide

In this graph from Solar Heating & Cooling Worldwide, the 2010Edition, you can see that China has installed over 24,000 MW of solarthermal, more than any other individual country in the world. Granted,on a per capita basis, its investment might not seem so radical compared to others. But the Chinese preference for evacuated tube collectorsreveals much more about their clean energy investment priorities.

Evacuated tube solar collectors are known for their greaterefficiency and suitability for colder climates. In a nutshell, thetechnology permits the maximum amount of sunlight to be captured because the tubes’ curved shapes make the collector perpendicular to the sun at all times of day. Unfortunately the added complexity this brings makesevacuated tube collectors more expensive than their flat platecounterparts.

The United States has over 20,000 MW of solar hot water systems inoperation, but the majority of ours are unglazed flat plate solarcollectors, which we use to heat swimming pools. Solar pool heating isrelatively common because of the short payback period involved. Despitethe benefits of using the sun’s energy for swimming pools, however, ourlack of investment in other solar hot water systems, whether flat plateor evacuated tubes, means a much larger portion of our basic waterdemand could be met with solar energy.

The Chinese are setting a good example here by accepting the high upfront costs necessary to spread the most efficient solar hot watertechnology available. Let’s hope the US — not to mention the rest of the world — can follow suit.

China’s Solar Hot Water Example

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Hawaii’s Solar Hot Water Miracle

When it comes to solar hot water, these are The Little Islands ThatCould. Hawaii’s strong investment in solar water heating technology hasgiven their state the enviable designation of Solar Hot Water Leaderwithin the United States. It’s also made these water heating systems aneven more attractive investment. Check out the size of Hawaii’s marketcompared to other key states:

Solar Hot Water Installations by State

Consider the fact that Hawaii’s population is a mere 2.5 percent ofCalifornia’s, and you can see why the 48th state deserves notice.

Hawaii supports solar hot water with a mix of policies:

  • An upfront solar hot water rebate of $750 for residential systems ($125/deferred kilowatt-hour for commercial systems)
  • A state tax credit of 35 percent
  • The broader 30 percent federal tax credit
  • A requirement that all new single-family homes come with solar hot water system installed

Let’s look at what this means for a typical residential customer. Say the initial system cost is $7000 (a conservative estimate — Hawaii Energy Efficiency Program estimates the average initial cost is $6,620). After the upfront rebate of $750, your contractor bill would be $6,250. With the 30 percentfederal tax credit, your expenditures would total $4,375. Finally,after the state tax credit of 35 percent, your ultimate costs wouldcome to a mere $2,500. Of course, this is assuming that you have theappetite for these tax credits — check with a tax expert to see if thisis the case.

According to some of our partner installers in Hawaii, this incentive system would set the solar hot water “break even” point at two years!

As noted above, for a tiny island state with a population just over 1 million, their contribution to, and example for, the solar hot watermarket is truly commendable. Many of these efforts stem from Hawaii’slack of traditional energy resources and the corresponding need toimport oil and gas. Their Renewable Energy Policy begins by explaining:

The objectives in the area of Alternate and RenewableEnergy are to promote commercialization of Hawaii’s sustainable energyresources and technologies to reduce the state’s high dependence onimported oil, increase local economic development, and reduce thepotential negative economic impacts of oil price fluctuations.

So there you have it. Strong motivation to implement renewables lead to strong strategy.

If you were thinking of moving to Hawaii and the weather alone didn’t lure you across the Pacific, their energy policy should definitelyconvince you!

Image: Source: Solar Energy Industries Association

Hawaii’s Solar Hot Water Miracle

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Solar Hot Water vs. Solar PV

So you want to get solar but haven’t heard much about solar hotwater? If you’re a little confused on how this technology compares tophotovoltaic (PV) systems, you’re not the only one.  Here are a fewpoints to note:

  • Solar water heaters, which make heat, cost significantly less thanPV systems, which make electricity
  • They offset a specific, smaller portion of your electricity bill,namely what you spend on heating water
  • Federal, state, and utility level incentives will lower the costs of both solar hot water systems and PV systems
  • The primary uses of energy within your building are the mostimportant factors in deciding whether a solar water heater would be aneffective investment.

Solar hot water systems are significantly more affordable than PVsystems. Residential solar hot water systems usually cost $6,000-$8,000after incentives, while PV systems could cost three to four times asmuch.

Solar hot water systems are designed to supplement conventional water heaters (powered by natural gas or by electricity), so they offset only the portion of your bill that comes from hot water demand. Since PVsystems generate electricity, they can cover many other types of energydemands.

Solar Hot Water

From an efficiency perspective, solar hot water technology is notable because it bypasses this step of electricity generation. Most of thetime, accomplishing an end-use goal (like heating water) requiresobtaining an energy resource (like oil, natural gas, or sunlight),converting it to an energy currency (like electricity) and finally using that currency to accomplish the end use goal. Solar water heaters avoid the middle “energy currency” step: they use the sun’s thermal energy to heat water directly.

As noted above, with the goal of minimizing overall energy use, thechoice between solar PV and solar hot water depends on building energyuse. All else equal, buildings that use a larger percentage of theirelectricity on hot water are better off with solar hot water systems.Facilities where this is particularly true include gyms, prisons, andsome agricultural facilities. Buildings with low hot water demand, likeoffices, are much better served by PV.

Everyone’s situation is a little different when it comes to choosingthe most effective home energy investments, but solar hot water is agreat option that’s often overlooked.

Related, see this post from last year: Active Solar Water Heating vs. Passive Solar Water Heating.

Solar Hot Water vs. Solar PV

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