Solar Electric Systems for Multi-Tenant Units Pacific Energy Center Tuesday, October 21, 2008 Presenters Pete Shoemaker Renewables Education Coordinator Pacific Energy Center pjsy@pge.com Chuck Hornbrook Sr. Manager, Solar & Customer Generation CSI/SGI Programs www.pge.com/csi Caitlin Henig Program Manager Low Income Solar cjsv@pge.com 2 1
Agenda Brief overview of typical PV sales/install cycle Unique challenges of multi-tenant units Technology and new products Incentive programs California Solar Initiative (CSI) Multifamily Affordable Solar Housing (MASH) San Francisco city programs Federal tax incentives Sample financial scenarios Open discussion 3 One Minute Summary Rent a portion of utility power plants Buy your own power plant CURRENT Same electricity POSSIBLE Courtesy of DOE/NREL Source: Pete Shoemaker Your home needs electricity The basic economics are just like the rent vs. buy of purchasing a home. 4 2
PV Terminology Cell Module Array Courtesy of DOE/NREL 5 Inverters Inverter DC AC Changes Direct Current (DC) to Alternating Current (AC) 6 3
PV System Sizing 200 HP engine: means that 200 horsepower is the MAXIMUM it will produce. 4 kw PV system: means that 4,000 watts (4 kw) is the MAXIMUM it will produce in full sunlight. 7 Typical System Components 1. Solar array 2. Inverter 3. House electrical panel Source: PG&E 8 4
Net Metering Source: Andy Black Eliminates the need for batteries. Reduces cost and maintenance. Ensures a constant supply of electricity. The utility grid is a two- way street! Electricity can be sent back to the grid by the customer. X Source: DOE NREL 9 PV Landscape PV Integrator (retailer, installer) Handles design, sales, procurement, installation, etc. 10 5
Typical SFH PV system All by homeowner Fairly simple process: installation, accounting, ROI, etc. Rebates Tax credits 11 Typical PPA PV system School, gov t building, nonprofit, etc.--- doesn t pay taxes Building owner is host 3 rd party owner makes finances more complex, but install is typical. PPA provider is owner Rebates Tax credits PPA = Power Purchase Agreement 12 6
Potential New Market What about when one person owns and others pay the bills? Multi-tenant building 13 Multi-tenant systems Building owner/landlord Multi-tenant building Tenants 101A 101B 201A 201B Meter Contract Money 14 7
Multi-tenant systems Equipment and installation: multiple systems, meters, and inverters Financing: system owner does not directly receive benefits, costs must be passed through Agreements and Regulations: rent control issues, legality of passthroughs, tenant turnover Etc. Additional complexity in 15 Multi-tenant systems A complex problem. Is it worth it? About 65% of San Franciscans are renters. Over 58,000 multi-tenant buildings. HUGE potential effect. 16 8
Trailblazers If you want to make a BIG difference, you re in the right place! 17 Technology Typical system layout Panel & meter Inverter Strings of modules Strings must be of specific length and number, of equal size, and on the same plane. Power production is very sensitive to shading. 18 9
Technology Multi-tenant system issues: Variable system sizes, some very small Can be multiple roof planes Limited roof space, reduced by shading Often hard to find space for inverters 19 Micro-inverter New Products One per module Inverts DC to AC right there System(s) layout Panel & meter Combiner box & communicator 20 10
New Products Micro-inverter advantages: Systems can be any size Can be on multiple roof planes Effects of shading greatly reduced, increasing potential roof space No need to find space for inverters 21 Incentive Programs Three Levels, can all work together: 1. State (rebates) 2. City (rebates) 3. Federal (tax credits, depreciation) 22 11
CPUC (CA Public Utilities Commission) Existing Residential Existing Commercial Commercial New Construction 1. California Solar Initiative (CSI) State Program: SB 1 Existing Low Income Low Income Solar (LISP) CEC (California Energy Commission) Residential New Construction 4. New Solar Homes Partnership (NSHP) 2. Multi-family 3. Single Family Program Administrators GRID Alternatives Program Administrators PG&E SCE CCSE PG&E SCE SDG&E BVES 23 State Program: CSI The California Solar Initiative (CSI) program is designed to help develop a self-sustaining solar market within 10 years CPUC and legislative commitment Provides incentives to residential retrofit, non-residential retrofit, new construction and low-income solar projects Transitions from capacity based incentives to performance based incentives Formally launched January 1, 2007 Total Statewide Budget -- $2.165 Billion, PG&E has $946M Two incentive types: one time upfront & performance based 24 12
New Solar Homes Partnership: NSHP New home construction Usually large subdivisions Often building integrated PV products 25 New Solar Homes Partnership: NSHP Program runs from January 1, 2007 through 2016 Builders & developers of new residential custom, production, multifamily and affordable housing homes and projects Statewide - PG&E, SCE, SDG&E, BVES Goal: 400 MW ; $400 Million Incentives: One time, up-front, expected performance based on CEC s PV calculator Starting at $2.50/Watt, higher incentives for new low income affordable housing starting at $3.50/W for residential systems Decline as MW goals/triggers achieved Goal Create a self sustaining market for solar homes where builders incorporate high levels of EE and high performing solar systems 26 13
Multifamily Affordable Solar Housing (MASH) Program 27 MASH Overview Budget: $108 M Administration: Current CSI PAs (PG&E, SCE, CCSE) Program Goals 1. Stimulate the adoption of solar power in the affordable housing sector; 2. Improve the energy utilization and overall quality of affordable housing through the application of solar and energy efficiency technologies; 3. Decrease electricity use and costs without increasing monthly household expenses of low income tenants 4. Increase awareness of and appreciation for the benefits of solar among low income tenants and affordable housing developers 28 14
MASH Overview Higher Incentives to low income building owners: $3.30/Watt to offset common load (Track 1a) $4.00/Watt to offset tenant load (Track 1b) Third incentive type that offers grants to building owners who can demonstrate significant tenant benefit (Track 2) Virtual Net Metering for MASH participants proposes to allow credits from one solar system be applied to other low income accounts at the same site 29 MASH Timeline CPUC voted on a decision on October 16 Following the final decision: CSI PAs will have two subsequent advice filings to incorporate MASH into CSI CSI PAs will have four months to implement the MASH Program 30 15
San Francisco Solar Program For city residents and businesses. Extra rebates for SF-based PV companies, and those who hire SF-trained installers. 31 San Francisco Solar Program Gives rebates from $3,000 to $6,000 for residences, up to $10,000 for businesses per system. PV system may be considered allowable capital improvement Landlord may be able to pass through costs to tenants Within guidelines, no rent board approval is required 32 16
Federal Tax Incentives Tax credit of 30% of system cost, can be taken over a number of years. 5-year MACRS accelerated depreciation, typically worth about 25% of system cost Exempt from AMT (alternative minimum tax) Recently extended through 2016. In addition, property taxes can NOT be raised due to a solar system. 33 $ample Financial $cenario$ 34 17
$ample Financial $cenario$ System size of 2 kw: System cost per unit: $20,000 = average current cost of $10/watt State rebate (CSI): ($3,200) = est. of $1.60/watt, SF average SF City rebate: ($6,000) Out-of-pocket cost: $10,800 Federal tax credit: ($3,240) = $10,800 X 30% MACRS depreciation: ($4,860) = $10,800 x (36% Fed + 9% State tax) NET SYSTEM COST: $2,700 = 13.5% of total cost This system should cover about $50/month of electric bills (first year). Therefore the simple payback (no inflation adjustment) would be: $50 x 12 = $600/yr $2,700/$600 = 4.5 years 35 $ample Financial $cenario$ A building with 7 systems of varying sizes, totaling 10.9 kw: Total cost (all 7): $116,418 State rebate (CSI): ($19,070) = 10,900 watts x $1.60/watt SF City rebate: ($42,000) = $6,000 x 7 systems Out-of-pocket cost: $55,348 Federal tax credit: ($16,604) = $55,348 X 30% MACRS depreciation: ($24,906) = $55,348 x (36% Fed + 9% State tax) NET SYSTEM COST: $13,838 = 11.8% of total cost These systems should cover about $34/month of electric bills (first year). Therefore the simple payback (no inflation adjustment) would be: $34 x 12 x 7 = $2856/yr $13,838/$2856 = 4.8 years 36 18
Resources PG&E Solar Website: www.pge.com/solar PG&E CSI Website: www.pge.com/csi San Francisco Department of the Environment: http://www.sfenvironment.org CPUC Solar Website (general information and list of eligible equipment): www.gosolarcalifornia.ca.gov Locate Solar Installers: www.findsolar.com 37 19