PV buydown policy request [RE-wrenches]

Tue Apr 27 00:43:54 PDT 2004

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Allan S, esteemed Wrench that he is, asked:

1. Should a utility PV buydown be production-based or based on an upfront
rebate (such as a flat $4/watt rebate for systems meeting certain
requirements)? It seems to me that production-based will promote higher
quality installations (thus giving my business a competitive edge) over some
type of formula based on nameplate rating. How is this done in Europe, where
incentives are mostly production-based?

2. What type of technical system requirements should be imposed, and how,
when, how often, and by whom should systems be inspected?

3. What requirements should be placed on installers?

Wow Allan... You don't ask for much, do you?  LOL

In an effort to find my head nearer a pillow sooner than later, I'll try to
keep this response short.  (We all know that's not likely!)

First of all, "where the $ is coming from" is major.  Is it "out of the
Utility's pocket" or is it from some form of Public Good taxation?  What are
the statutory & regulatory requirements and guidelines for administration
and acceptable uses of PG funds, if that is the source?  Answering your
questions effectively requires this minimum background understanding.  In
absence thereof, I nevertheless sally forth....

In response to #1, loaded a question as it is, Production Based!  This keeps
everybody involved in the transaction honest in more ways than just the ones
you mentioned.... Whatever "honest" is anymore... Europe is predominately
production-based on a "$ per kWH" basis.  They got savvy to rhetoric an
dead-ends earlier than us Yanks.  Germany is paying somewhere in the
neighborhood of $0.48 per kWH (Euro depandent) for some set time period.
(Sorry, can't remember the exact # years at this moment)  My quick math
comes out to around 5-7 years, levelized (My version of "levelized"...)

The trick here Stateside is to actually get it done to "everybody's
satisfaction".  Metering... Errrrrrr.... Measuring and reporting actual PV /
RE production along with the timeline over which it is paid, are the
toughies.  "Who does it? How often? With what type of equipment? How much
does that cost? How do we get paid?"  This issue leads the Utility &
Regulatory wonks to the "easy way out" conclusion that "Central Station RE"
is the best way to go if "we have to meet this RPS".  You will likely
encounter "both perspectives" coming from the Utilities as you go down this
windy road.  One part of the Utility (The traditional "Central Station"
culture side) will say that "buy it at nameplate and call it a day".  The
Beancounters will propose Production Based and try to assume a low REC
valuation.  DO NOT KID YOURSELF INTO THINKING THAT IT IS STRICTLY A BUYDOWN!
REC'S ARE A COMMODITY!  THEY WILL ABSOLUTELY BE COMING AFTER THEM AND
ARGUING THAT "THEY" ALREADY PAID FOR THEM.  Make sure you keep this aspect
in mind in any perspectivizing you may do going forward.  Keep the Aces up
your sleeve and don't show your cards!  Oh, and don't blink!

Since you are blazing new trails where you are at and aren't as burdened by
as much political BS as we are here, I advise using standard kWH Meters that
are compatible with the Utility Entity adminstering the buydown, and that
plan on buying the Renewable Energy Credits (REC's), own metering
infrastructure.  Installation, maintenance, and all administrative costs
should be their responsibility and strictly at "their cost".  Installation
cost of the Meter Socket is the Customer's responsibility.  This leaves them
with something they are familiar and comfortable with and already "have
on-hand".  It also means the Customer isn't faced with "added costs", etc.
It puts the burden on the Utility.  This comes with some "getting used to"
on the part of PV providers, installers, and end-users... The Utility
administering the Buydown, must incorporate the standards for installation
of the Generation Metering Device in their program guidelines... I'll stay
out of all the nuances of "internal and external" personalities, cultures,
and perspectives for now and just say that putting in a Generation Meter
ain't that big of a deal.  I don't care if it's "required or not".  I am
totally for installing one on every single job!  If you did your job right,
it is your ultimate proof of that, one way or the other.  I can't even count
how many "alarmed customers" I've calmed down over the years because there
was a production meter there that they could read for themselves no matter
what "blinky lights were blinking".  They could track dailies as often as
they wanted.  They became my "eyes in the field".  They will become yours,
too.  Saves a lot of "wild goose chases"....  The more installations you
have, the thinner you get!

OK, I'll move on to #2.  This is what I call a "multi-question".  There is a
very big difference between "technical requirements" and "how often a system
should be inspected" even though they are closely intertwined.  It also
matters which Buydown model you are assuming... Produciton Based or
Nameplate Based.... Properly designed and implemented technical requirements
will minimize "inspection frequency requirements" by default under either.
Enforcement of the "tech specs" becomes the major hurdle.  

A production based model minimizes the need for burdensome technical
requirements and enforcement comparitively.  Minimum Technical Specs (I'd
rather see a couple of them tougher, personally) would include: Orientation
(nothing North of East or West), Shading (no part of the array located in
greater than 15% annual loss area), IEEE & UL (or "equal") listed Inverters,
UL listed glass, Building Permit and Final Inspection signoff,
Interconnection Agreement, Generation Meter Socket, and... kWH production
projection (Signed by the Owner and the Seller / Contractor). 

Inspection under this model (assuming it is privately owned) would include:
Review & Approval of System Design, Building Department Inspection, Utility
Interconnection Pre-Op Inspection including Visual Verification of
Orientation & Shading Compliance, Loss of AC Voltage Anti-Islanding
Verification, and Reading the Generation Meter.  The Generation Meter
Reading is the "ongoing inspection" element by default.  This approach also
minimizes some of the issues embodied by your #3 question.

Depending on whether or not the $'s are coming from Public Goods funds, a
responsible nameplate based incentive setup gets involved.  If you care to
explore some of that, give me a call.

#3.... Oh, what a question!  Let's see... Hmmmm.... "If their company isn't
named Positive...."  LOL!  Nice try, Allan!  Kidding aside, this is also a
biggie.  Contracting laws and other "right to work" related stuff has to be
considered... Not to mention whether or not you want to go down the road of
NABCEP certification in NM.  There are other things to consider in all this
like: Will it be admistered by individual utilities or a State Bureacracy...
Errrrrrrr..... Agency?  Minimum or Maximum standards?  There are many paths
to chose from in this arena.  By nature, I am from the school of "less
requirements".  When there is
 "other people's money involved", it automatically adds a need for some
requirements.  I'm not personally familiar with NM's contracting environment
or "where the whole buydown process is at", so I would need more info before
specifically addressing all the issues as I see them.

Thanks for all you do and your commitment to all we do.... I hear that ol'
pillow callin' my name!

Matt Lafferty
Universal Energies Institute
mlafferty at universalenergies.com
(916) 422-9772
(916) 628-7694 Cell
(916) 914-2247 Fax
www.universalenergies.com

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