Juice: Cleantech Starts At Home

By Published On: July 13, 2012

Editors’ note: Current watches the policymaking side of moving into a more renewable California, but we often don’t see the results of the policy instituted from the top. Two Current staffers decided to put our roofs where our “mouths” are--one in Northern California, one in SoCal--to install distributed solar, each using different suppliers/installers. As the California Public Utilities Commission is considering using “on-bill” financing for efficiency and other distributed installations, the on-the-ground stories may be of assistance. Taking the Bait Cool trout lurk at the bottom of a lake. A little worm. A little line. If you’re lucky, you’ll reel some in. The distributed solar market reminds me of summer lakes and predatory nature. The metaphorical bait is the state’s self-generation incentive program, the California Solar Initiative, and California’s goal of 33 percent renewables for scenery. California’s caught so many shiny solar fish. In total, 122,000 installations provide 1,000 MW on-site capacity through one state program, according to the California Public Utilities Commission July 2. Now what do we do with that experience to make distributed generation a healthier outdoor experience? Do we freeze ‘em for later? See if the streams have a few pollutants we should be concerned about. Do we say, “There could be a better trout stream if we just re-route the water a little bit here and there?” More fish for everyone. Do we catch-and-release? Everything’s going just swimmingly as is. Now that I have the end user experience after turning my home into its own neighborhood test in Northern California (along with senior correspondent Bill Kelly in Southern California--see below), I propose some questions for policymakers to consider ways to increase use, decrease risk, and lessen hassle. Line-caught v. store bought--Why go through the aggravation of installing solar instead of staying with a utility that’s integrating 33 percent renewables that you can simply buy shrink wrapped from the utility? There’s the promise of lower bills from both. But policymakers could control some costs related to rooftops. With enough rooftop solar in cities, for example, there’s less call for billions of dollars of transmission for that utility bought renewables. But those with solar installations still pay transmission costs, and in some cases, their distribution costs soar. Perhaps ancillary cost incentives are an idea, something like allowing those who consume more electricity than they produce to remain on the baseline rate for the balance, even though their consumption kicks them to higher tiers. Mom cleans the fish--To what degree should policymakers look over the shoulder of those who install solar? Should they tell owners, “You should’a read the small print.” Or should they craft ways to make sure those who are helping the grid and the state’s renewables policy aren’t shafted by fly-by-night companies whose small print is onerous and solar panel installations shoddy? City permitting can help with the crappy installation part. But then again, local government permit offices are so financially tapped out and under heavy pressure to make quick assessments. Predatory nature--Should the state require a solar Better Business Bureau where solar companies band together to promote higher standards and out those who are grubby profiteers? When the stream dries up--There are a bunch of companies nurtured by state and federal policies that suddenly appeared and ballooned, begging the bankruptcy question. While that’s a federal court issue, the state may be interested in protecting consumers when bankruptcies (or takeovers) occur. On the state side, it’s possible to prevent utilities from buying up failing companies--rather than sticking homeowners with the very utility (or utility subsidiary) they are trying to escape. The state may also be interested in keeping investor-owned utilities out of the distributed business for monopoly reasons. Consumer protections could avoid literally pulling the plug on home solar installations if companies go under. So far, the only notable bankruptcy or corporate sell off was on the utility scale solar. But, there surely will be consumer-scale solar business problems. Investigations are what the California Public Utilities Commission does well. The cautious policy approach would be to study where distributed solar stands at the end of the year. It wouldn’t be just the MW installed, but looking into the effectiveness of those MW: are they helping the distribution grid or making it more onerous? Are the companies doing as promised? What are the ultimate costs to consumers who’ve made the installations? Are the systems actually providing the promised amount of electricity, or are the panels not working as planned? When I throw my line into that Sierra lake, there might be trout at the end. I also might pull up sucker fish. I haven’t figured out a way to avoid those ugly catostomidae--but policymakers could give me a few fishing tips if they put their minds to it. --J.A. Savage Streamlining Solar Based on my experience (details below) I’ve concluded that California is off to a reasonably good start and needs to aim for making solar systems as commonplace and easy to buy as the millions of cars that clog our highways. California needs to start thinking about millions of solar roofs, not just a million. This rests on a few fundamental conditions: -That energy policy changes don’t restructure how solar homeowners pay for electricity from the grid, a political risk that many home and business owners may not consider; -That solar and finance companies don’t take advantage of consumers through misrepresentations and complicated contracts that require a law degree to understand; and -That the equipment and installations are high enough quality to perform as promised. Without these three elements--not to mention continuing incentives for the immediate future--California’s distributed solar dream is likely to become a bust. My main doubt about the wisdom of my choice to install a solar system relates to the political risk that, ahem, vested interests will persuade lawmakers or regulators to shift more costs to solar home and business owners, just as the solar industry itself is being weaned from subsidies. If this happens, what will be next, loading more system costs on home and business owners who’ve retrofitted for energy efficiency, purchased energy efficient appliances, and screwed in energy efficient light bulbs? Policymakers should be figuring out how to make installing solar rooftops more accessible to more people. Strive to make it as easy as buying a car--three hours, a wash, the key, and you’re on the road. I know it’s not that simple or easy with solar--which involves construction and specific locational factors--but let’s make streamlining the goal instead of penalizing those who’ve done what that state’s asked. --William J. Kelly Green Living Motivation--Last fall, I went to the Green Living Exposition at the Los Angeles Convention Center. On a lark, I signed up with PermaCity for a free consultation about installing a solar system on our home. Come the holidays, I signed a 25-year lease agreement for a 4.1 kW system, paying $5,000 down with an option to buy in year six of the lease for a shade over $15,000. Meanwhile, I pay the finance company, Clean Power Finance, $73/month, an amount that slowly escalates based on past increases in the cost of electricity. Money--Between the credit from Southern California Edison and the payment to Clean Power Finance, I paid $23 net for electricity over the last month. Last year at this time I paid $82, so that’s a savings of $59. Counting the $5,000 prepayment, my breakeven period is projected to be about 10 years, less if I opt to purchase the system in year six, my current plan. That’s a long payback period, so obviously savings were not my primary motivation, but instead doing the right thing for the environment, resource conservation, and economic rejuvenation. Modus operandi--Under the deal, Clean Power Finance owns my system--valued at $22,000, including installation costs. It got more than $13,000 in government rebates, in addition to my $5,000. It now has a revenue stream from me of about $900/year, so it had to risk a bit over $3,000. In terms of my risk, it’s minimal as long as Clean Power Finance doesn’t go bankrupt and a judge orders its customers--like me--to get a haircut. That’s because the finance company guarantees my system will produce a certain amount of power each year over the life of the lease or pay me for any shortfall at the rate of 17.7 cents/kWh. Clean Power Finance also agrees to maintain my system through the life of the lease. The bottom line for Clean Power Finance is that by risking $3,000--if I buy the system in year six--it will have made $38,000 in income over six years. After I buy the system, I should pay less than half of what I otherwise would pay for electricity. Of course, that’s after spending more than I would have spent to go solar in the first place. When I signed the contract I viewed it as a break even proposition for myself, not a money saver. Meanwhile, the state achieves its policy objectives of advancing renewable energy, improving the environment, and creating new economic opportunity for companies like PermaCity that design, install, and maintain solar systems. Method--My solar contract was relatively straightforward, helped no doubt by the federally-required financial disclosure statement. I also am confident that the equipment on my roof is relatively reliable since it was made by Canadian Solar, which has a well-established track record. I could have gotten a system for less using Chinese panels, but PermaCity recommended against this due to quality and durability concerns. When it came to the quality of the system plan and installation, California’s rebate criteria--as enforced by Edison--and my own city were my best advocates. They made sure I didn’t get a system that wouldn’t perform as promised, at least initially. --William J. Kelly Off Grid Motivation--Ever since I lived truly “off grid” in a rural area of this state, I’ve wanted to be energy independent. My neighbors sometimes had a solar panel propped against the fence. They would buy marine appliances using direct current, so they could make blended margaritas on hot afternoons. Me, I was stuck with a manual typewriter and kerosene lamps. I want to rely on fossil, nuclear, and big transmission as little as possible. I want to put into practice what I think is a good path. Alas, technology and cash flow have impeded that path for the last decades. With policy backing, technical advances, and federal tax motivation, it all came together this year. Saving money on rates wasn’t much of an issue to me. Modus Operandi--After the state and federal governments began to grease the way for more solar investments, some companies were able to aggregate equity investors. In turn, those investors use the tax credits that I could have used personally--IF I had the cash, know how, connections, and the ability to withstand the permitting process myself. Policy made it easier to centralize all that. Technology too. The company I used, Sungevity, takes advantage of satellite mapping to make a quick decision whether an individual’s roof is workable for solar panels. Its investors take advantage of tax breaks. That gives consumers the advantage of free installation with a lease-payback. I chose the 15-year lease. I might own it in old age. Method--The company brought together all the permit and other paperwork, sent it FedEx, tabbed everything for me to sign. After Sungevity went through all those hoops for the installation, about two months later a crew showed up. Took two days for installation of the panels and associated inverter. After the city (in an amazing show of speed for such a strapped municipality like Oakland) signed off, the switch was pulled and I saw my meter reading negative. A month later, PG&E installed a net meter to report my panels sending power to the grid as well as my home taking it out at dark. Money--It costs me more. For most people it would be even, but I’ve been under baseline rates. The lease is $70/month. But, PG&E has a proposal before the California Public Utilities Commission to lower the amount of baseline usage eligible for that price break. Assuming PG&E prevails, I’d be kicked into the more expensive rate anyway. My distribution cost went from 6 cents/month to $12/month. Sungevity guarantees that its rates rise 2.9 percent/year. I still have to pay Pacific Gas & Electric for distribution, transmission, etc. In summer months all that nets out to costing $50/month more than if I stayed with the utility. I’m informed that Sungevity’s requirements are more onerous now, with longer leases required, among other changes. Meter--So much for “smart” meters. Mine was disabled when the solar switch got flipped. I chose time-of-use rates. I discovered that the option is meant for those who want to get credit for overproduction when my production fits nicely. I switched back to standard rates. I’ve now inherited an old-fashioned human meter reader with my “smart” meter sitting useless. My meter reader advised me that PG&E won’t have a “smart” meter for solar use for another year. According to Southern California Edison, its “smart” meters can handle solar feedback. --J.A. Savage

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