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<DIV dir=ltr align=left><SPAN class=734573215-27072009><FONT color=#0000ff
size=2 face=Arial>In helping my residential customers define value, I talk about
three things:</FONT></SPAN></DIV>
<DIV dir=ltr align=left><SPAN class=734573215-27072009><FONT color=#0000ff
size=2 face=Arial></FONT></SPAN> </DIV>
<DIV dir=ltr align=left><SPAN class=734573215-27072009><FONT color=#0000ff
size=2 face=Arial>1 - economic value</FONT></SPAN></DIV>
<DIV dir=ltr align=left><SPAN class=734573215-27072009><FONT color=#0000ff
size=2 face=Arial>2 - environmental value</FONT></SPAN></DIV>
<DIV dir=ltr align=left><SPAN class=734573215-27072009><FONT color=#0000ff
size=2 face=Arial>3 - prestige value</FONT></SPAN></DIV>
<DIV dir=ltr align=left><SPAN class=734573215-27072009><FONT color=#0000ff
size=2 face=Arial></FONT></SPAN> </DIV>
<DIV dir=ltr align=left><SPAN class=734573215-27072009><FONT color=#0000ff
size=2 face=Arial>economic value - I like to show my customers at least
a 10 year payback period, with a 10% pre-tax ROI on a 25 year term. With
that I feel I can look them in the eye and assure them that they are not
throwing their money into a black hole.</FONT></SPAN></DIV>
<DIV dir=ltr align=left><SPAN class=734573215-27072009><FONT color=#0000ff
size=2 face=Arial></FONT></SPAN> </DIV>
<DIV dir=ltr align=left><SPAN class=734573215-27072009><FONT color=#0000ff
size=2 face=Arial>environmental value - I have had very few customers that
purchased PV based solely on the environmental value of making clean green solar
energy</FONT></SPAN></DIV>
<DIV dir=ltr align=left><SPAN class=734573215-27072009><FONT color=#0000ff
size=2 face=Arial></FONT></SPAN> </DIV>
<DIV dir=ltr align=left><SPAN class=734573215-27072009><FONT color=#0000ff
size=2 face=Arial>prestige value - the light side, being the first one or
joining with others to own the solar roof jewel or solar pagoda. the dark side,
some folks will pay simply for the pleasure of sticking it to the man (in
this case the utility company).</FONT></SPAN></DIV>
<DIV dir=ltr align=left><SPAN class=734573215-27072009><FONT color=#0000ff
size=2 face=Arial></FONT></SPAN> </DIV>
<DIV dir=ltr align=left><SPAN class=734573215-27072009><FONT color=#0000ff
size=2 face=Arial>I try to give my customers as much accurate information as I
can and then let them decide what they value, letting them decide if the
cost/benefit is a go.</FONT></SPAN></DIV>
<DIV dir=ltr align=left><SPAN class=734573215-27072009><FONT color=#0000ff
size=2 face=Arial></FONT></SPAN> </DIV>
<DIV dir=ltr align=left><SPAN class=734573215-27072009><FONT color=#0000ff
size=2 face=Arial>I do not use my customers a unwitting tools to further the
cause of global solar salvation. PV is not a good choice for many of my
potential customers and it is part of my job to make that clear if
that is the situation as I see it.</FONT></SPAN></DIV>
<DIV dir=ltr align=left><SPAN class=734573215-27072009></SPAN> <BR><SPAN
lang=en-us><FONT size=2 face=Arial>Mark Frye</FONT></SPAN> <BR><SPAN
lang=en-us><FONT size=2 face=Arial>Berkeley Solar Electric Systems</FONT></SPAN>
<BR><SPAN lang=en-us><FONT size=2 face=Arial>303 Redbud Way</FONT></SPAN>
<BR><SPAN lang=en-us><FONT size=2 face=Arial>Nevada City, CA
95959</FONT></SPAN> <BR><SPAN lang=en-us><FONT size=2 face=Arial>(530)
401-8024</FONT></SPAN> <BR><SPAN lang=en-us></SPAN><A
href="http://www.berkeleysolar.com/"><SPAN lang=en-us><U><FONT color=#0000ff
size=2 face=Arial>www.berkeleysolar.com</FONT></U></SPAN></A><SPAN
lang=en-us><FONT size=2 face=Arial> </FONT></SPAN> </DIV>
<DIV> </DIV><BR>
<DIV dir=ltr lang=en-us class=OutlookMessageHeader align=left>
<HR tabIndex=-1>
<FONT size=2 face=Tahoma><B>From:</B> re-wrenches-bounces@lists.re-wrenches.org
[mailto:re-wrenches-bounces@lists.re-wrenches.org] <B>On Behalf Of
</B>dan@foxfire-energy.com<BR><B>Sent:</B> Monday, July 27, 2009 5:08
AM<BR><B>To:</B> RE-wrenches@lists.re-wrenches.org<BR><B>Subject:</B>
[RE-wrenches] Solar electric generation system seems to make noeconomic
sense<BR></FONT><BR></DIV>
<DIV></DIV><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 color=#0000ff size=3><A
href="http://www.bankrate.com/" target=_blank>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
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