, ,

Solar and the Resurgence of Manufacturing in Georgia

The resurgence of manufacturing in America, much like energy policy, has been at the forefront of political debate in our last election season. Aside from having similar political clout, these industries have a lot more in common than meets the eye.

Solar energy has been on the rise in the United States since the early 2000’s and has become a significant part of our national energy mix. This rapid growth has been primarily due to state and federal subsidies, improved manufacturing economics (cheaper production) and innovative financial vehicles. The vast majority of early growth in the industry came from third-party owned residential and utility scale systems. These third-party ownership structures were pioneered by large solar developers such as Solar City, SunRun, Sun Edison and other West Coast developers with access to large pools of tax equity.

With all of this growth in the industry there is still one sector which is considered to be underserved, but with massive potential for solar adoption. That is commercial and industrial (C&I) rooftop solar. Many can speculate as to the reasons for this lagging market sector, but from Velo’s years of experience in dealing with C&I clients we can tell you that the clear majority of these businesses prefer to own their own solar assets as opposed to entering into a third-party ownership agreement which would yield lower energy savings, lock them into a long-term contract, complicate real-estate transactions, and forgo all tax attributes associated with owning their own array.

Solar is starting to see a shift from a third-party ownership dominated market to customer owned. There are two reasons for this transition.

  1. Solar has become cheaper due to improved manufacturing, competition in the marketplace and overall economies of scale. This has helped to shelter the solar industry from impending policy risk. In other words, unsubsidized solar can stand on its own two feet and remain an attractive investment regardless of clean energy policy claw-backs.
  2. As solar has matured as an industry, financial institutions have become more comfortable with the long-term viability and risks associated with solar as an asset class. Thus, there are more traditional and cheaper vehicles with which to finance customer-owned projects.

These conditions have made it possible for commercial and industrial customers to own their own assets with traditional financial vehicles while keeping cash flow positive and achieving long-term attractive returns for their business.

While this is great news for all C&I rooftop solar customers, there is one market segment which is best positioned to take advantage of these new conditions above all others. Manufacturing seems to be one of the most receptive market segments to rooftop solar integration. There are several reasons why manufacturers are such great rooftop solar candidates.

  1. Most manufacturers understand energy as a part of their supply chain. There is a consensus that all the costs along the supply chain are absorbed into your product and thus make you less competitive. In most manufacturing operations, you see entire teams dedicated to sustainability focus groups where they look for best practices, whether that’s in looking for LED solutions, HVAC upgrades, or more efficient operating equipment. In a world where US manufacturing is under more and more threat to cheaper overseas production, we are forced to become more innovative and explore all available efficiencies which can advance our products in today’s global market. Solar is a major efficiency which can help accomplish this.
  1. Manufacturers typically have the most suitable infrastructure to accommodate rooftop solar installs. This would include having a large flat rooftop which is clear of heavy machinery and is typically only single story. This allows for easier installations of larger arrays which can provide maximum energy production to offset the operation below.
  1. One of the unique features of solar manufacturers in Georgia is that they’re exempt from sales tax, which helps tremendously with returns on projects where other manufacturers might suffer. They receive a 30% federal tax credit on their first year of using solar and can take advantage of accelerated solar depreciation on a 5-year schedule. In Georgia, manufacturers can start seeing a return on investment in as little as two to four years. This trend in ROI has been rising consistently over recent years.
  1. Solar can improve a manufacturer’s load factor – this is basically a measurement of how often the facility hits their peak energy demand and for how long. For example – if the manufacturer powers up all of its equipment at the same time and has intermittent spikes in its usage, this can cause a poor load factor leading to a higher rate of electricity from the grid. Solar can help by “shaving” these peaks during the day to help normalize the facility’s energy usage, thus improving their load factor resulting in a more favorable retail energy rate over time.
  1. Solar can also improve a manufacturer’s power factor – this is basically a measure of the difference of energy provided from the grid vs actual energy used to perform work in the facility. Manufacturers are exposed to power factor issues because of electric motors in their equipment, which require an electromagnetic field to operate. This is known as an induction load and can lead to inefficiencies in a manufacturer’s power factor. A poor power factor usually leads to a higher rate of electricity and a more expensive bill. Solar has the ability to perform power factor correction by way of injecting a leading or lagging voltage into the facility during daytime production thus improving the retail energy rate over time.

In conclusion – The C&I solar rooftop market can be a tremendous asset to our manufacturing sector in this country as we continue to compete in a smarter global economy. Solar is an instrument with the potential to provide us with yet another competitive edge we can use to revitalize our manufacturing economy while advancing us towards energy independence. The cost of solar has gone down significantly because of better manufacturing of the solar equipment. It’s Velo Solar’s equipment costs that brings turnkey production costs down 70% in the last 10 years. For more information about how your company can get involved with going solar, please contact us to discuss your plans.

/by
, ,

Is Solar a Good Decision for my Business?

The answer to this question is more complicated than most might think. It’s true that rooftop solar technology, specifically photovoltaic systems, have experienced a huge drop in price over the last five years along with a steady increase in system efficiency. For instance, solar arrays were being built for up to $12/watt for a commercial system back in 2007. Today we are seeing average commercial systems built for under $2/watt – that’s a reduction in price by a factor of 6 in just the last 8 years!

This reduction in price has ultimately driven market demand in the commercial and industrial sectors with the promise of an attractive payback through substantial energy savings. Though rooftop solar can seem like an attractive investment to many companies, it’s important to understand the feasibility of a potential project before diving too deep into the development phase. There are several criteria which can make your business a good candidate for rooftop solar.

Facility Ownership Structure

First and foremost, we like to understand our customer’s ownership structure regarding their facility. The best candidate is an owner-occupied building with a single electricity meter although multiple meters are not necessarily a huge obstacle. The second-best candidate is a long term building owner with either a single or anchor tenant under a gross lease structure.

Entity Type

Typically, we discourage any business with a 501C3 nonprofit status from going solar. This is because, as a non-profit, they do not have a tax appetite necessary to monetize the federal solar tax credit or accelerated depreciation. Since the tax attributes are some of the primary ROI drivers for solar, it is necessary that the purchasing entity qualify for these incentives.

Energy Profile

Another primary driver of ROI for solar projects is the retail cost of electricity from the grid. Since your rooftop solar array is offsetting this cost on a kWh basis, the payback will be directly proportional to the retail electricity cost avoided from the grid. In today’s market, solar power can compete with retail electricity costs above $0.10/kWh at a commercial scale. The scale of the project does play a part, meaning that a larger system may be able to yield an attractive payback even against retail electricity prices below $0.10/kWh.

Rooftop Conditions

One of the more obvious concerns businesses have with rooftop solar is the impact it will have on their roof. We look for several things when it comes to an adequate roof space for solar.

  1. No Significant Shading from trees, equipment or adjacent buildings
  2. Rooftop should be less than 12 years old
  3. Adequate space, free of rooftop equipment including safety anchors for window washing

Solar systems are compatible with just about any type of commercial rooftop and typically do not require penetration. Your solar EPC should work directly with your roofer to maintain your roof’s warranty after the installation.

Does my utility offer net metering?

Net metering is a game changer when it comes to solar. This basically means that your utility will offer to buy back any excess energy sent back to the grid at retail cost. This is not essential to generating a good payback, however it does play a role in how your system should be sized. Georgia does not currently have a net metering policy.

What should my payback look like?

A viable commercial project should have a payback between 2- 5 years at the most. In today’s solar market, any payback over 5 years should be indicative of an incompatible business profile for rooftop solar.

Conclusion

Before you decide to take your company solar, make sure to ask yourself the following:

  1. Does my business have the right ownership structure of the facility?
  2. Can my business qualify for federal tax credits and depreciation?
  3. What is my cost / kWh?
  4. What are my rooftop conditions?
  5. What are my utilities policies on buying back electricity?
  6. What kind of payback will justify my capital expense?

If the answer to these questions points to rooftop solar as a viable option for your business, it’s time to start getting estimates from your local solar provider. If you would like to see if solar makes sense for your business, give Velo Solar a call or visit our website at www.velosolar.com for a free estimate and solar energy assessment.

/by
, ,

How to Maximize Your ROI with Solar

If you are thinking about using solar for your business, be aware of local policies which will affect how your system is engineered and sized to maximize your return on investment. When speaking to a solar provider, be sure to ask about the net metering policies with your state and local utility and how they will impact your ability to go solar.
Here are a few things to keep in mind when considering solar:

1. Do I live in a net metering state?
This will determine how your provider should engineer and size your array. A true net metering state requires utilities to credit their customers for all energy pushed back to the grid at a retail rate. This means that you can offset much more of your energy bill by avoiding daytime costs while offsetting remaining utility costs accrued during non-production times. In a nutshell, the bigger the system the better the return!

In contrast, if you are currently living in a non-net metering state such as Georgia, you should look to your solar provider to properly size your array to minimize the energy you push back to the grid. In states such as these, the utilities are only required to compensate their customer’s for electricity pushed back to the grid at a wholesale rate or “avoided cost” rate. This means your system size should be engineered to meet your peak demand, thus maximizing your ROI

2. Understanding My Peak Demand.
If you are living in a non-net metering state like Georgia, it is important to understand your peak energy demand in order to ensure you are getting the best return on your investment possible when going solar. Sub- meters such as Velo Solar’s PowerEnfo, allow you and your solar provider insight into your energy consumption patterns which include peak times of use and the frequency of energy spikes throughout the day. In addition to sizing an array to fit your facility’s energy production needs, this system also provides useful analytics which can lead to improved consumption behavior and uncover energy efficiency measures which can further lower your operating overhead.

3. How to maximize my ROI with Solar.
Once your solar array has been properly sized and engineered to meet your peak demand, there are a few extra steps which can be taken to further improve your energy savings. First- now that you know your consumption patterns, think about shifting some of your heavy equipment loads (HVAC, manufacturing equipment, lighting ext..) to times of maximum solar production during the day.

For Example: Instead of using your AC in the early morning to cool the building, blast the air during the heat of the day when it’s most needed. This will shift a large portion of your energy load to correspond with your highest solar production times thus maximizing your energy offset and ROI!

For more information on going solar or a free quote please visit www.velosolar.com

/by
, ,

Considering solar for your business?

Here are 8 things you need to know.

By using solar power, your business saves on electricity you now buy from the grid. Less utility-provided power means lower power bills. When you invest in solar power, you control a meaningful portion of your energy use. And, depending on conditions, you may recoup your initial solar system investment in as little as three years. Because solar power systems can last over 30 years, you’ll see savings for many years. Here are the things you need to know when deciding whether solar is right for your business.

  1. Can I use solar to power my business?A solar system can power your entire business’ electrical systems, including lights, cooling systems, appliances, and equipment. But, remember that solar PV only produces power during the day. Your business probably needs power at night, too. While you can offset a significant portion of your electric power needs with a solar PV system, you’ll first need to consider how much sun exposure your building has, your daily energy consumption patterns, the condition of your roof, your current utility rate, and more.
  2. What size solar system do I need?Velo Solar will visit your site and evaluate the installation location for space and the amount of shade/sun. We also review your energy use. System size is usually determined using available space, energy demands and budget. Solar systems can offset a significant portion of your current energy costs and, in some cases, generate additional electricity that your utility will buy back from you, albeit usually at a reduced rate. Depending on utility buy back opportunities, we aim to offset 20-50% of your annual electricity costs. We also can help you evaluate your energy use and shift high-consumption activities to daylight hours using advanced monitoring technology.
  3. How long does a solar system last?Your system will continue to generate electricity for 25 to 30 years, although production declines 25% to 30% as the solar panels age. In the summer, high temperatures and humidity also can decrease output. Weather factors are considered when designing your system.
  4. What happens to my system during a power failure?If there’s a power failure, unless you have an independent energy storage system attached to your solar array, you will lose power. This is a safety precaution to protect utility technicians from being electrocuted as they troubleshoot power failures. The solar system only operates when grid power goes down if your system includes a battery backup designed to provide power to your home or business’s critical loads in such instances.
  5. Will I know if the system is producing electricity?Your inverter includes a display, which shows electricity production. Velo Solar also will set up a system that monitors your total energy usage and solar PV system output, then provides the information to you online. We can even install a display system in your operations center or lobby that informs anyone passing by about solar production, net energy usage and associated carbon offsets.
  6. Does a solar system require maintenance?Solar systems are very low-maintenance because they have no moving parts. Periodically, they may require cleaning to remove dirt, leaves and debris. Our PowerEnfo smart grid software monitors the activity levels of your solar system, so if something malfunctions, we can take action immediately to get you back up and running in no time.
  7. Are there incentives available?In addition to utilities’ buy-back programs and tax incentives offered by state and local governments, the IRS offers a business energy tax credit of 30% of the cost of a commercial solar system. You may also qualify for an accelerated equipment depreciation (MACRS) schedule. Check with your tax professional. Sometimes, depending on state and local incentives, the combined savings on rebates from government and utility companies can pay as much as 60% of your system installation cost. Our initial proposal will include these potential financial options. Click here to find policies and available incentives by state.
  8. What is Georgia Power’s current solar program?Georgia Power offers a solar energy purchase program to encourage new opportunities for solar development in the state. To learn more, click here.
/by
,

Expert Helps Make Economic Sense Of Installing Solar Energy

WABE Logo

Georgia is offering incentives for residents and businesses to invest in solar energy. But when does it make the most economic sense to switch to solar?

The president of Velo Solar Corporation, Mark Bell, joined Rose Scott and Jim Burress on “Closer Look” to answer that question and more.

You can listen to Bell’s  interview right here for more information on solar power and how to harness the sun’s rays for energy use.

/by
,

Third-party solar ownership can energize the Southeast

Just last month, Georgia Gov. Nathan Deal signed the Solar Power Free-Market Financing Act of 2015, making Georgia the first state in the Southeast and the 25th in the nation to approve of third-party ownership of solar. Earlier this year, the bill unanimously was passed by the General Assembly and was backed by the Green Tea Coalition, a unique alliance of the Tea Party and the Sierra Club calling for freedom of energy choice.
The Solar Power Free-Market Financing Act of 2015 allows solar energy procurement agreements (SEPAs), which include leases and power purchase agreements (PPAs) (PDF), for the construction and operation of solar systems. These solar systems can be on either side of the meter and must not exceed peak generating capacity requirements (10 kW for residential installations and 125 percent of actual or projected maximum annual peak demand for commercial installations) among other provisions.Previously, under the Territorial Electric Service Act of 1973, residents both had to own the solar on their rooftop and could sell it only to their utility. Thanks to the new legislation, now someone else can own the solar on a homeowner’s rooftop and that solar electricity can be sold to someone other than the utility. This new legislation opens up a third-party rooftop solar market to a degree that does not exist elsewhere in the Southeast.The Solar Power Free-Market Financing Act also has the potential to accelerate an already flourishing solar market in Georgia. Between 2012 and 2013, employment in Georgia’s solar industry grew by 225 percent — the largest gain of any state — and the state moved from 26th nationally in new solar capacity to seventh. In 2014, Pew Charitable Trusts named Georgia the fastest-growing solar market in the country.

The Peach State’s growth in the solar industry is expected to continue, not only with small-scale residential and commercial installations, but also with utility-scale solar as well. Georgia Power, the largest investor-owned utility in the state, plans to add an additional 525 MW of solar capacity by 2016, including 90 MW of solar PV plants on three Army bases across the state, which broke ground last month.

Third-party ownership: What does it mean?

Across the country, third-party ownership is becoming as prevalent in the rooftop solar market as leasing is in the car industry. In fact, in 2014, when one-quarter of all car sales were leased — the highest rate of car leasing than at any time in over a decade—two-thirds of all new residential solar installations were third-party owned.

Similar to car leasing, third-party solar ownership can be advantageous for a number of reasons. Many residents do not have the full upfront investment capital for solar systems and lack knowledge of local permitting and incentive programs. Other entities, such as nonprofits and schools, cannot access tax credits and rebates that companies can access. And for many others, installation and maintenance are major barriers.

Therefore, it often makes sense to involve a third-party developer in investing and installing a solar system. Residents sign long-term contracts in exchange for electricity prices typically lower than retail rates.

Third-party ownership of solar typically takes one of two forms: a lease or a PPA. Under a lease, the lessee pays a fixed monthly fee that is not tied to the amount of power generated, while under a PPA, the lessee agrees to purchase all of the electricity produced by the solar system.

Increasingly, companies such as SolarCity, Sungevity and Sunrun have seen success in the residential solar market. In fact, third-party-owned systems make up 60 to 90 percent (PDF) of new residential systems in Arizona, California, Colorado and Massachusetts. And in Georgia, third-party ownership could accelerate an already booming solar industry.

So how do other Southeastern states stack up?

Status in the Southeast

In many states in the Southeast, the law is silent with regards to third-party ownership of solar, and some even disallow the approach. (The authorization of third-party ownership hinges upon how a utility is defined [PDF] by state law, regulation and rules for incentive programs.)

South Carolina recently adopted the South Carolina Distributed Energy Resource Act of 2014 (also known as Act 236). This law enables third-party leasing of solar and other renewable energy facilities, but it does not allow for energy generated by the leased system to be sold to third parties — only back to the utility under net metering programs. Act 236 caps leased facilities at 2 percent of the utility’s previous five-year average retail peak demand.

North Carolina is one of two states, including Florida, which does not allow third-party ownership of solar. Under state law, power producers are required to sell all output to utilities, which then sell to customers. Recently, the Energy Freedom Act was introduced, which would allow third-party-owned renewable energy projects to participate in net metering arrangements.

The Energy Freedom Act has support from a number of major employers in North Carolina, including Walmart, Lowe’s and Target, but the North Carolina State House of Representatives and Senate have not passed the bill.

Florida currently does not allow third-party ownership of solar. However, recently a broad coalition called Floridians for Solar Choice launched a ballot initiative to enable third-party ownership of solar. If the process moves forward, the initiative could appear on the ballot in November 2016.

The status of third-party ownership of solar in Alabama, Arkansas, Louisiana, Mississippi and Tennessee remains unclear.

Today, only one state in the Southeast, North Carolina, has a renewable energy portfolio standard, and only South Carolina has a voluntary renewable energy goal. While many states may choose not to pursue a “command and control” approach to renewable energy, they still may be able to build a robust solar market by enabling third-party ownership and by creating financial incentives.

On the horizon

Solar is an abundant resource in the Southeast, although in many places an underused one. Third-party ownership may be key to accelerating solar deployment in a region where many states prefer markets to mandates. Moreover, third-party ownership could attract investment and create jobs throughout the region, while affirming energy choice for property owners.

Looking ahead, Florida and North Carolina will be states to watch as third-party ownership discussions continue to unfold. It’s time for other states in the Southeast to follow Georgia and South Carolina’s lead that the entire region can become a solar energy leader.

This story first appeared on: Rocky Mountain Institute

/by