As Boston faces its fourth major snow storm in a month many New Englanders have sunk deep into the “dark months” blues. And each day as I stare at Groom Energy’s snow-covered solar array I can’t dismiss some level of guilt for our environmental faux pas.
But with storms January 12th, 20th, 26th and tomorrow’s monster, I’m left wondering whether we should bother reducing global warming by shoveling tomorrow? or maybe wait a few more days since another storm is probably coming anyway.
A quick look at Fat Spaniel’s solar performance site confirms a variety of approaches to this decision. Some shovel. Some wait for it to melt. Some wait, then shovel, then another storm comes – do they shovel again? You get the picture.
Although HBS feels greener for the effort, their shoveling investment calculation should be based on the Y-axis of the Fat Spaniel performance graph – ie. kilowatt hours produced – vs. snow covered kilowatt hours. And how long they think until the next storm hits…
What’s the payback for shoveling? Are the folks at Harvard Business School or Salem State better investors?
As with all things energy related, its entirely based on the math – and the assumptions.
We made the following for Harvard and Salem State:
Cost of Solar Array:
System size: 100kw monocrystalline
Current cost of electricity per kWh: $0.12
Escalation rate: 3% per year
Total cost of original installation (circa 2010 at $5 per watt): $501,400
NPV of MA SREC’s value @ $0.285 kWh: $254,194
No Federal incentive as Harvard and Salem State are tax-exempt.
Therefore, total net cost: $247,206
Our solar energy model says this system’s average daily production in January is 171.4 kWh per day so the cash flow payback is @ 10 years.
Cost of Shoveling:
Hourly rate (laborer prevailing wage): $15.00
Number of panels (230 watt): 436
Minutes to fully clear a panel: 2
Efficiency: 8 hour day/1 hour of break
Therefore the estimated cost to shovel the 100kW solar array: $249 (+ $14 for shovel)
Cost Benefit for Shoveling:
Interestingly, while the value for the daily solar energy production for this system is only $20.60, the value for the daily Massachusetts SREC production is $48.85.
So the daily economic benefit for shoveling is $69.41 – or a breakeven of 3.6 days.
Which, as it turns out, is almost exactly when the next snow storm hit us.
Maybe the HBS folks figured out that in today’s economic climate getting your original investment back isn’t that bad a deal?
Or maybe Salem State just has a better meteorology department.
With last night’s tax bill passage by the House, the renewable energy industry has been given a wonderful holiday gift. But this toy’s battery only lasts one year and you might not be able to replace it.
By extending the Section 1603 provision for just another 12 months Congress has extended life for renewable grants, but kicked off another year of scrambling by project developers and customers. During 2011 activity will be harried as everyone wonders if this extension will disappear in 2012, be extended yet again for another year, or be part of a broader cleantech/energy package with different economics, better or worse, starting January 1st 2012.
As we outlined a year ago the key for any energy related incentive, (Federal, State grant or utility rebate) is to have consistency and visibility. Customers, developers and investors need this in order to make long term decisions and not be encouraged to try to game the system – or worse be gamed by missing a holiday special.
While this 1603 extension was bundled into Washington’s more politically important consumer tax cut deal, we have to hope that in early 2011 our legislators can figure out how to give the cleantech market these more permanent signals about economic support, regardless of whether they’re higher or lower. Only then can they catalyze more rational, long term cleantech investment decisions.
Labor Day typically marks the time when our year-end project installation schedule becomes more clear. Our corporate customers, often operating on a fiscal-calendar year for budgeting, also exhibit end-of-year psychology and “get it done by year end” becomes a priority. Normal product lead times, procurement contracts, permits, and even potential interruptions from winter weather means by Labor Day our construction year is pretty much set.
This year many cleantech project developers have even more tension leading up to their 2011 New Year’s party planning. With Section 1603, the US Federal program for renewable Grants in Lieu of an Investment Tax Credit (ITC), set to expire at the end of 2010, projects which are not at least 5% underway by year end will miss the proverbial party. Read the rest of this entry »
When considering a new roof-mounted commercial solar project our engineers need to quickly address key financial questions such as “in which state is your facility? (ie. is there a strong state rebate) and “will you be buying or financing it?” (ie. solar PV still sits outside normal corporate ROI hurdles). If both these answers are affirmative the next question we focus on is the age and type of the existing roof.
A few years ago we performed site visits for adding solar thermal to a series of multi-unit homes. We had gathered data on their historical fuel costs, the type and efficiency of their existing boilers, had a design for the pipe runs connecting the panels and heat exchanger, had determined the optimal orientation of the panels relative to tree shading and had run our energy models with all this data.
In the end their 10 year old EPDM roof made the whole project hard to pull together. At 10 years their roof was too new to require a replacement but too old to support an additional 25 year life span for a solar thermal installation. The project would be burdened with the new roof cost but there would be no financial return for this upgrade. These days we’re a little more sophisticated before we get in a truck for a site visit!
Recently we’ve seen solar technologies which can have an added financial incentive addressing this roof issue. With commercial thin film solar, because a new roof membrane comes with the installation, a portion of the system cost can be included in the Federal Investment Tax Credit – effectively a tax incentive for a new roof. This can also be the case with technologies like Solyndra, which require a white roof for the system to operate effectively and hence take this pro-rata tax benefit when calculating their financial return. Of course, you must be careful to confirm with your (or your financier’s) accountants on their interpretation for your installation.
So perhaps going forward there will be a better opportunity to apply this value in the corporate financial analysis for adding solar. In addition to solar PV systems serving as a (1) a long term energy price hedge, (2) a greening corporate statement and (3) a potential mechanism for carbon tax savings, perhaps our corporate customers will soon begin to look at this opportunity principally as a cheaper way to replace their aging roofs?