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<DIV><FONT face=Calibri>The analysis on the business side leaves out the 5 year
accelerated depreciation allowed (federal level - in Texas it holds true with
state business tax, so he might want to see if that applies there). It
gets slightly convaluted in how the mechanics work depending on how depreciation
is taken and what quarter the property is installed, so an accountant can best
do the quick numbers.</FONT></DIV>
<DIV><FONT face=Calibri>I always want to ask these guys (but never do) how they
ever justify buying a car or furniture.</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>Holt E. Kelly<BR>Holtek Fireplace & Solar Products<BR>500
Jewell Dr.<BR>Waco TX. 76712<BR>254-751-9111<BR><A
href="http://www.holteksolar.com">www.holteksolar.com</A><BR></FONT></DIV>
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<DIV style="FONT: 10pt arial">----- Original Message ----- </DIV>
<DIV
style="BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: black"><B>From:</B>
<A title=dan@foxfire-energy.com
href="mailto:dan@foxfire-energy.com">dan@foxfire-energy.com</A> </DIV>
<DIV style="FONT: 10pt arial"><B>To:</B> <A
title=RE-wrenches@lists.re-wrenches.org
href="mailto:RE-wrenches@lists.re-wrenches.org">RE-wrenches@lists.re-wrenches.org</A>
</DIV>
<DIV style="FONT: 10pt arial"><B>Sent:</B> Monday, July 27, 2009 7:07 AM</DIV>
<DIV style="FONT: 10pt arial"><B>Subject:</B> [RE-wrenches] Solar electric
generation system seems to make noeconomic sense</DIV>
<DIV><BR></DIV><SPAN
style="FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Verdana"><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 face=Arial size=5>
<DIV><FONT face=Arial>Residential Analysis</FONT></DIV>
<DIV> </DIV>
<DIV><FONT face=Arial size=3>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 face=Arial size=3>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 face=Arial size=3>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 face=Arial size=3>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 face=Arial size=3>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 face=Arial size=3>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 face=Arial size=3>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 face=Arial size=3>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 face=Arial size=3>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 face=Arial size=3>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 face=Arial size=3>In the business example, note I am stretching the
cost of the installed system downward at $6. per watt,</FONT></DIV>
<DIV><FONT face=Arial size=3>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 face=Arial size=3>assuming no maintenance nor repair, nor
replacement expenditures in 25 years operating the solar system,</FONT></DIV>
<DIV><FONT face=Arial size=3>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 face=Arial size=3>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 face=Arial size=3>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 face=Arial size=3>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 face=Arial size=3>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>
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