<html><body><span style="font-family:Verdana; color:#000000; font-size:10pt;"><br>Hey everyone;<br> I've been asked to assist a customer in investigating the possibilities of utilizing renewable energy in his small manufacturing company. following is his last email. I'm up to me arm pits in summer work at the moment, and not in the position to properly investigate or respond. was wondering if any of you were in the position to share a perspective. (only the names have been changed to protect the innocent). thanks , db:<br><br><br><br><div class="wmMessage_user_text_special"><style></style> <div><font face="Arial">Dan,</font></div> <div> </div> <div> <div><font size="5" face="Arial"> <div><font face="Arial">Residential Analysis</font></div> <div> </div> <div><font size="3" face="Arial">On
the residential analysis, at best case ( NH $6k rebate not being
taxable) at $35k minus $6k and -30% federal tax credit you have
$20,300. net cost today. At a 25 year interest rate of 3.25% (5.41%
available today - 40% tax rate) the same dollars placed in a 25 year
interest earning account would grow to $45,696. (That is after taxes
are paid at 40%)</font></div> <div> </div> <div><font size="3" face="Arial">My
present residential kWh rate (not business rate) is .0633/kWh. Your
5kW system at 465 kWh generated per month x .0633/kWh = $29.43 saved
per year. If the savings per year earns a compounded interest at 3.25%
(after taxes) and the kWh stays the same each year, the compounded
savings in the 25 yr. lifespan at 3.25% (after taxes yield) = $13,653.
Now this assumes the $29.43 increases at a rate of 3.25% annually
(increase in utility charge per kWh) .</font></div> <div> </div> <div><font size="3" face="Arial">So
in 25 years (the projected lifespan of the solar system, if all goes
according to the plan) the $20,300. would grow to $45,696. after taxes.</font></div> <div><font size="3" face="Arial">The savings each month would grow too, at the same rate as the money placed at 3.25% and that total in 25 yrs. = $13,653.</font></div> <div> </div> <div><font size="3" face="Arial">In
order to reach $45,696. based on kWh savings, even at an astounding 6%
annual increase in the utility rate for 25 years, the savings the first
month would have to be $66.18 (not $29.43 which is today's reality) and
increasing from that number at an annual rate of 6% compounded monthly
to equal the same $45,696. </font></div> <div> </div> <div><font size="3" face="Arial">I
have ignored the $5.41 monthly basic charge that all rate-D (domestic
use) customers have, which would add to $2541. in 25 years at 3.25%
increase annually. I have ignored any maintenance costs, failed
electronic components beyond warranty period, and breakages on the
solar equipment in 25 years.</font></div> <div> </div> <div><font face="Arial"><font size="3">I used </font><font size="3" color="#0000ff"><a target="_blank" href="http://www.bankrate.com/">www.bankrate.com</a></font><font size="3"> loan calculators, savings goal calculators, and savings calculators to arrive at these numbers.</font></font></div> <div> </div> <div> </div> <div><font face="Arial">Business Analysis</font></div> <div> </div> <div><font size="3" face="Arial">On
the business analysis, it is a disaster because putting the kWh aside,
the utility company will not reverse the peak load (called demand
charge or distribution charge) per kW. Today they charge $4.44 per
kW. We run about 32kW now and 2400 kWh monthly. Even if we generated
100% of the kWh we consumed per month (on a much larger solar array)
the Demand Charge still hits us at about 40% of our electric bill, and
it will never be reduced by the solar energy. Since the reduction in
our electric bill will only be to a maximum of 60% reduction monthly,
the business side comes out worse than residential. The utility
company bases the peak kW number on ANY 15 minute period of time at
anytime during the billing cycle(a month) and it can only ratchet
upwards, never downward.</font></div> <div> </div> <div><font size="3" face="Arial">The
business rate G-2 is 9.2 cents per kWh today (not the 17 cents I
previously assumed by dividing the total monthly kWh into the utility
bill $ total.) Even at best possible rate of $6. per watt, which
doesn't exist, At 465kWh monthly from 5000 watts, we'd need to have a
25.8kW solar array to satisfy 2400kWh monthly. $6. x 25800 watts =
$154,800. for the system. That cost -30% = $107,800. When placed in
an interest bearing account for 25 yrs. at 3.25% (after 40% taxes on
5.41% APY) that money grows to $242,664. </font></div> <div> </div> <div><font size="3" face="Arial">Say
we matched our consumption in kWh with the energy generated, so our
supply cost drops to zero. That still leaves our $4.44 per kW which is
unaffected by the solar electric generation system. At $142.08 per
month (32kW x $4.44), each and every month, with an assumed increase of
the kW rate at 3.25% it amounts to $65,950. in demand charges. </font></div> <div> </div> <div><font size="3" face="Arial">On
the kWh, at 9.2 cents per kWh, 2400 kWh would generate a bill of
$220.80 monthly. Say we see an annual increase of 3.25% annually for
25 years. The potential savings is $102,491. Say we matched the kWh
consumption with the solar system 100%. That would leave us with an
outlay of $65,950. in demand charges. Take the $102,491. savings and
subtract the $65,950 demand costs. That leaves the business with
$36,541. compared to $74,223. left over if the utility bills had just
been paid in full at an increase of 3.25% annually.</font></div> <div> </div> <div><font size="3" face="Arial">In the business example, note I am stretching the cost of the installed system downward at $6. per watt,</font></div> <div><font size="3" face="Arial">stretching
the increase in the cost per kWh to a rate of 3.25% over a span of 25
years (perhaps it will not increase at that rate),</font></div> <div><font size="3" face="Arial">assuming no maintenance nor repair, nor replacement expenditures in 25 years operating the solar system,</font></div> <div><font size="3" face="Arial">and overlooking the monthly basic charge of $24.61 which when increased 3.25% annually for 25 years amounts to $11,423.</font></div> <div> </div> <div><font size="3" face="Arial">Interestingly
enough, aside from this analysis, I have never read anything about the
economic trap the utility company Demand Charge creates for the
installation of a solar electric system for small business. </font></div> <div> </div> <div><font size="3" face="Arial">The my competitor's solar array at $400k - $226k VT grant - 30% federal tax credit
calculates out to $2.09 per watt installed cost. Do they pay a Demand
Charge per kW load?.</font></div> <div> </div> <div><font size="3" face="Arial">Doesn't
it make more sense to wait until the price per watt on solar electric
generation makes economic sense? Correct me if I made any mistakes in
my analysis please. I would love to justify the installation from an
economic standpoint.</font></div> <div> </div> <div><font size="3" face="Arial">I
contacted the NH PUC and brought the issue of the Demand Charge to
their attention. I was told there is nothing they can do about it, it
is up to the small business consumer to uncover that little gem.</font></div> <div> </div>Jim<br></font></div></div></div><br><br>Dan Brown<br>President<br>Foxfire Energy Corp.<br>Renewable Energy Systems<br>(802)-483-2564<br><a href="http://www.Foxfire-Energy.com" mce_href="http://www.Foxfire-Energy.com">www.Foxfire-Energy.com</a><br>NABCEP #092907-44</span></body></html>