Sunday, December 29, 2013

Solar 2014: Buy, Lease or PPA? Buy

As utilities are using more solar and wind--both free energy sources--to power the 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 electricity 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. With today's cheap panel pricing, installing solar could be less stressful than your other resolution... dropping weight! 

So how cheap is cheap?

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, buy it.

The lease/PPA will commit you to a 15, 20 or 25-year lease. Down payments can be 0 or an amount the lessee (homeowner) 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 (you) in most cases is responsible for keeping panels clean for optimal production and damage other than panel and inverter problems or poor wiring, 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 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 in 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 when selling, people in CA are 20% more likely to buy a house with solar (or solar-ready) than those without.

What's more is 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. 

(If you live in the San Diego area and are interested in solar power for your home or business, contact me at Reply in 72 hours or less.)                            



Thursday, December 12, 2013

American Indians Making $$ on Solar in West

Airborne coal ash pollutes the air at Moapa Indian village.
The Energy Policy Act of 1992 opened development of renewable energy projects on American Indian reservations. Since then wind and solar projects have provided power to pump water and electrify homes of Native Americans both on and off the grid. While not perfect, solar provides jobs and lease revenue for tribes as it cleans up their air.

The 2010 Census lists 334 American Indian and Alaska Native reservations with 565 federally-registered tribes living on or off reservations. The 56.2 million acres of reservations which lie mostly west of the Mississippi however many states have them. This is about 4% of the U.S. landmass which is significant because it was determined some years ago that if just 1% of U.S. land was covered with solar panels, it would meet America's electricity demand.

The Obama Administration's all-of-the-above approach to energy development has allowed tribes to make their reservations available to large-scale solar projects. The first such project started in June when Sec of Interior Ken Salazar approved the 350-megawatt (MW) solar project on land of the Moapa Band of Paiute Indians northeast of Las Vegas, NV. Building in three stages of 100-150MW each 2000 acres, the project will generate lease payments, jobs and clean energy to improve the tribe's overall economy. Power will be used in the immediate area but most is being bought by Los Angeles Dept of Water & Power in a 25-year deal.

California, Washington, Nevada, Arizona, Utah, New Mexico and Oklahoma--seeing rapid population growth as the country moves West--have the most reservations in number and land mass. Reservation solar development could provide an answer to distributed energy throughout those states.

The fast-track of solar on reservations is not without its pitfalls, however. In 2011, tribes have filed suit against the federal government for installing solar near abondoned villages, Native drawings and other cultural landmarks (see The afore-mentioned Moapa solar project has required the relocation of 157 desert tortoises, a threatened species of the area, after ten died of predation and heat exhaustion as they fled the site of the solar array.

The BIA and BLM have both insisted that the concerns of Indians have been carefully considered. The Moapa solar project must also be measured against the antiquated, coal-burning Reid-Gardner Generating Station it is replacing. Asthma, lung disease, heart disease and cancer have plagued the community for decades, ills the Moapas blame on pollution from the Reid Gardner plant (see for disrupting the native habitats of endangered species, more due diligence in environmental impact studies are forthcoming.

One band of the Kumeyaay Nation east of San Diego has looked into solar as a revenue generator in lieu of a third Indian casino in five-mile radius. Instead they completed an agreement with San Diego Gas & Electric to lease land for more high-producing wind turbines.



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