Commercial Solar Opportunities. Kevin Moore Koch

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1 Commercial Solar Opportunities Kevin Moore Koch

2 WHY SOLAR? Environmental Reduce Carbon Footprint Financial Fixed utility costs Good ROI Strategic Showcase environmental leadership Reliable/Low Maintenance Proven technology 30+ yr design life

3 Tucson Energy Use and Impacts Coal 4,817,000 tons/year CO2 10,598,000 tons/year Water 10,558,250 gallons/day (40%)

4 20 KW System - Environmental Coal 2,900 pounds/month CO2 3.2 tons/month Water 1,700 gallons/month Equivalent to 7000 miles not driven (21MPG)

5 Solar Incentives Utility Rebate Commercial $2.5/watt UFI <20kw $0.14/kwh PBI >20kw Residential $3/watt Federal Tax Credit 30% gross 30% net State Tax Credit 10% capped at $25K 25% capped at $1K Depreciation basis 80% of net cost None Utility offset $0.11 $0.09-$0.102

6 20KW Financial Analysis HIGHLIGHTS 135,000 Initial Cost 40,500 Federal Rebate 13,500 State Rebate 50,000 Up-front Energy Provider Incentives 31,000 Initial Outlay 14,805 Later Costs 0 Energy Provider Incentives over time 19,720 Depreciation (5-year asset) 26,085 Net Cost, excluding impact of reduced energy bills 326 First year ave monthly electricty savings 3.5 Simple payback (years) 33,254 NPV at 8.0% discount rate 23.7% IRR

7 20KW Financial Analysis Cumulative Cash Flows $000s % Standard Inflation 2.00% Annual Energy Cost Inflation 34% Tax Rate (for Depreciation savings) 0.5% Annual Rate of Decay in Solar Production $14,805 Later Costs

8 80KW Financial Analysis HIGHLIGHTS 500,000 Initial Cost 150,000 Federal Rebate 25,000 State Rebate 0 Up-front Energy Provider Incentives 325,000 Initial Outlay 59,159 Later Costs 185,311 Energy Provider Incentives over time 140,250 Depreciation (5-year asset) 58,598 Net Cost, excluding impact of reduced energy bills 1,415 First year ave monthly electricity savings 6.2 Simple payback (years) 98,949 NPV at 8.0% discount rate 13.5% IRR

9 80KW Financial Analysis Cumulative Cash Flows $000s % Standard Inflation 2.00% Annual Energy Cost Inflation 34% Tax Rate (for Depreciation savings) 0.5% Annual Rate of Decay in Solar Production $59,159 Later Costs

10 Financing Options Small <26 kw Cash, loans, capital lease UFI Medium kw Above plus operating lease w/ good credit history Large >100 kw Above plus third party ownership (Power Purchase Agreements) PBI PBI For Profit Non Profit Public Loan, lease, PPA PPA PPA, CREBS, Stimulus Funding

11 Common Challenges/Considerations Tax Liability 30% of system cost Utility Rate GS-10 I-13 ($0.06/kwh) Treasury Grant may be available for some businesses Non Profit >100 kw PPA with good credit history >$2,000/mo electric bills Roof Mounting Power Density Tracking Ballasted no penetration Low angle, high capacity/sq ft Higher system output Standard racking Roof access Higher angle Higher rebate and production/kw Maintenance for moving parts, higher cost

12 Haley & Aldrich 51.6 kw 5 Yr Operating Lease to capture Tax Credit 8,971 KWH produced May 09 ($1,094) 85% of Building Energy Use

13 Brooklyn Pizza Company Dedication Event with Mayor Walkup Print and TV exposure Used in Advertizing and promotion

14 Canyon Ranch, Tucson Discretely visible by guests 34KW system first major private commercial system in Tucson Over $11K in electricity savings since Jan 08

15 Questions? Kevin Moore Koch

16 PV Module Types Schott SAPC 170W Schott SAPC 175W Schott ASE 270W Sanyo HIT Double 190W SunPower 215W SunPower 230W

17 How it works 1. Solar modules convert sunlight into DC power. 2. The power is sent to an inverter which converts the DC power to AC power synchronized with the utility grid. 3. AC Power travels from the inverter to the electric service panel, where it is distributed to electrical loads. 4. Excess power flows into the utility grid and registers a credit with the utility company.

18 80 KW Cash Flow by Year Reduction Energy Installation State / Fed in Energy Provider Year Cumulative Annual Costs Rebates Bill Incentives Depreciation

19 Resources TEP Rebate and Net Metering Federal, State and Local Incentives Solar Energy Industry Association

20 TEP Energy Sales By Sector Energy Use % 42% Residential Commercial Industrial 24%