Why the North Carolina Solar Industry is Set to Take Off

141023-north-carolinaThanks to a surefire mix of supportive renewable policies, research innovation and strong investments, North Carolina’s solar industry has led the southeastern U.S. — and is a national frontrunner in installed capacity.

That’s the conclusion of a report [PDF] recently issued by The Pew Charitable Trusts, which singled out the Tar Heel State for one in a collection of policy briefs it’s developing about the clean energy economy of eight states.

“Policy matters. It’s especially powerful when coupled with an innovative private sector and prime renewable resources,” said Tom Swanson, Pew Charitable Trusts clean energy futures manager, when asked about the components behind the state’s success. “North Carolina has all of these factors working in its favor.”

The state’s decision to adopt a renewable portfolio standard in 2007 — the first in the Southeast — was significant in helping to grow its clean energy economy, Swanson continued. State and federal tax incentives have also boosted its presence.

As a result of this climate, the sector brought in $2.6 billion in private investment during the past 5 years and is projected to generate an additional $8.1 billion over the next decade.

But the state’s Research Triangle — an area comprised of 12 universities and Research Triangle Park (home to 170 companies) — has played a key role in innovation due to a flurry of public-private partnerships funded by federal, state and private contributors.

“These policies have allowed North Carolina to harness its superb solar resources and creative research and business environment to generate new industries,” Swanson said.  “The Research Triangle has the second-largest cluster of smart grid firms in the nation, the eastern counties are seeing tremendous solar development, and there are a myriad of clean energy businesses cropping up around the state.”

And though it ranked third-place nationwide for both the amount (342 MW) of installed capacity and private investment ($1.2 billion) for 2013 — changes for continued growth isn’t completely out of the woods. Though its legislature turned down an effort to weaken the RPS last year, Duke Energy’s expressed interest in throwing up net metering roadblocks for state residents continues to linger in the air.

It’s an instance that indicates the importance of federal and state policies working together.

“A patchwork of state policies isn’t enough to fully capitalize on the United States’ potential for clean energy,” Swanson said. “To strengthen U.S. competitiveness in this sector—which is predicted to attract $7 trillion in investment globally by 2030— we need long-term federal policy. Establishing more certainty would send a strong market signal to businesses and investors that the U.S. is a good place to do business.”

North Carolina solar farm photo courtesy of Apple.

Employees at 3 Big Companies Now Have Cheap Home Solar as a Job Perk

solar homesIf free donuts, gym memberships, or flex pay programs aren’t your preferred employee benefit, cheap solar systems could soon be an option. On Wednesday, three major companies — Cisco Systems, 3M, and Kimberly-Clark — announced they will now give employees a deeply discounted way of buying or leasing solar panels for their homes.

Called the Solar Community Initiative, the program promises a flat rate that is on average 35 percent lower than the national average and roughly 50 percent less expensive than average electric utility rates. According to the announcement, the offer will start as a benefit to more than 100,000 employees. If one percent choose to power their homes with solar, more than 74,500 metric tons of carbon emissions would be avoided each year.

[Editor's note: This post originally appeared on ThinkProgress, and is reprinted with permission.]

Offered through Geostellar, a cost comparison site for solar panels, the program will also include options for employees’ friends and families in the United States and parts of Canada. The initiative was conceived and facilitated by the World Wildlife Fund.

“This takes the bulk purchase model from individual neighborhoods and organizations to a national scale,” Keya Chatterjee, senior director of renewable energy at WWF, said in a statement. “A coast-to-coast, low, flat rate helps mitigate two major barriers of solar adoption — complexity and price.”

The companies will offer a human resources intranet site that will provide a solar discount code and link them to Geostellar where online tools will help the employees determine their property’s solar potential.

“I get the emails: ‘Why aren’t we recycling this, or why don’t we have 45,000 more electric vehicle charging stations,’” Ali Ahmed, who manages energy and sustainability at Cisco, told the New York Times. “So we had a really good feeling that our employees would engage and latch onto this kind of discount.”

David Levine, chief executive of Geostellar, told the New York Times that homeowners paying an average of $147 a month for electricity would instead pay an average of $97 a month over 12 years if they financed the entire system, after which the payments would go to zero. The average base cost of a system will be $3 per watt, which is around 17 percent lower than Geostellar’s regular price and almost 34 percent lower than the average cost in the United States last year of $4.53, according to the New York Times.

New organizations — including companies, municipalities, schools, and clubs — can join the Solar Community initiative to increase their bulk purchasing power and utilize Geostellar’s platform to expand access to cheapsolar for employees, residents or members.

Solar home photo CC-licensed by JT on Flickr.

YieldCos, Crowdfunding Among 4 Megatrends Shaping Solar Financing

solar megatrendsIn recent years, we’ve witnessed the rapid erosion of many traditional barriers to solar adoption. Almost daily, there are new, sunny reports and forecasts regarding solar’s plummeting costs. But as the industry makes huge strides in areas of R&D and soft costs, and as the price of panels falls off the charts, it’s the recent boom in innovative solar financing that many believe will deliver the solar market into its next chapter.

Following on this idea, energy value chain experts DNV GL have just released a position paper looking at new frontiers in solar finance. “Bright Ideas: Global Trends in Solar Finance” identifies and analyzes four “mega trends” in solar finance:

Third-party ownership and securitization constitutes the majority of residential solar financing right now, so it’s no surprise that the report focuses on SolarCity as its use case. The popularity of SolarCity’s power purchase agreements (PPAs), where homeowners lease their roof in exchange for electricity at a fixed cost, has allowed the market-leader to issue securities backed by this enormous (and growing) solar portfolio. SolarCity has more recently thrown its hat into both the crowdfunding and solar loan markets as well, but those recent announcements didn’t seem to make the Bright Ideas report by press time.

New Equity Offerings, Corporate Structures and Bonds leverage the predictable cash flows from solar assets, and have been a recurring phenomenon among solar firms in the past year. The relative cost and complexity of yield cos and similar vehicles has relegated them to utility-scale projects for now, but Bright Ideas suggests that could change soon. The report looks at the successful-to-a-fault Yield Co IPO of NRG and two others, as well as investment trusts and partnerships. The section wraps up with a deep-dive into German-born green bonds, the issuance of which could potentially cap $40 billion by the end of 2014.

New Routes to Market are certain to attract interest as long as feed-in tariffs (FITs) continue to subside and costs of electricity/diesel rise. Bright Ideas looks at some of the most innovative and successful electricity off-take structures, namely direct power sales (PPAs), derivatives-based off-take agreements (“synthetic PPAs”), and the relatively risky hedging of merchant generators (merchant power plants).

The Future of Solar Finance, the fourth and final bright idea, focuses on the up-and-coming model of crowdfunding in solar. Consistent with other reports, Bright Ideas portrays crowdfunding as the new kid on the block, noting its limited contribution of capital raised and a (perceived) lack of protection for investors. Interestingly, the report’s crowdfunding case study focuses not on a major, investor-ready platform like Mosaic, but on United Photovoltaics Group, a China-based company that makes use of the public zhongchou.com (akin to Kickstarter in China).

The solar market is enjoying — and will continue to enjoy — a huge boost in capital resulting from the innovative and successful investment vehicles that Bright Ideas highlights. But as financiers continue to tinker with proven models and concoct new recipes in search of higher yields, DNV GL’s report dutifully reminds us of the inherent risk of any investment.

What’s crucial to keep in mind, says DNV, is that “investors’ returns are only as good as the solar assets that underpin them.” We don’t need to look back too far to remember what happens when the smartest guys the room become too “innovative” for the markets they serve.

Wind and Energy Efficiency Made the Big Drop in US Emissions Happen

wind turbinesOther than a slight uptick from 2012 to 2013, U.S. carbon dioxide emissions have been on a slow decline since 2007. And according to a new report by Greenpeace, 70 percent of that drop was thanks to renewables and energy efficiency.

The data crunching, carried out by Greenpeace energy analyst Lauri Myllyvirta and published by the group’s Energydesk site, dug into the dramatic 21 percent drop that U.S. coal consumption saw from 2007 to 2013. That was accompanied by a 16 percent fall in the country’s carbon emissions over that same six-year period. Natural gas generation also spiked over 23 percent in that time span, which has led many observers to credit the North American shale fracking boom with the drop in the emissions that contribute to global warming and climate change.

[Editor's note: This post originally appeared on ThinkProgress, and is reprinted with permission.]

But burning natural gas also releases carbon dioxide, just in smaller amounts. So while it made up 44 percent of the hole in energy consumption coal left behind, it only accounted for 30 percent of the drop in carbon emissions. According to Myllyvirta’s analysis, growth in renewable generation — and wind in particular — contributed to 40 percent of the fall in emissions, and rising use of energy efficiency covered the other 30 percent.

chart 2

CREDIT: Greenpeace Energydesk

“The supposed climate benefits of fracking have been a big selling point for the shale lobby, but this myth has now been cut down to size by compelling new evidence,” said Myllyvirta. “Our analysis shows that it was the clean tech boom, not the fracking rush, that slashed the bulk of carbon emissions from the US power sector.”

Renewable energy consumption grew just over 48 percent from 2007 to 2008, making up 35 percent of the energy consumption coal left behind. Rising energy efficiency measures made up the remaining 21 percent in energy consumption.

The Energydesk study also did not account for any leakage that may occur from the natural gas industry’s infrastructure. That means natural gas is almost certainly doing considerably less good on the global warming front than even Greenpeace’s numbers suggest, as the methane that makes up natural gas is, pound-for-pound, a far more potent greenhouse gas than carbon dioxide. Multiple studies suggest the leakage is so bad it completely undoes any climate advantage to burring natural gas. And a new study published by Nature last Wednesday concluded that, absent a big regulatory crackdown on those leaks, burning more natural gas won’t work as a method to curb global warming.

Greenpeace also pointed to a recent report by Alliance Bernstein that anticipates coal use in the U.S. will rise by another 7 to 25 percent by 2020, thanks to both new federal regulations and state-level renewable energy policies. The bulk of coal plant retirements is expected in 2015 as federal rules to cut mercury and other air toxins kick in, and coal generation has been dropping for years as natural gas has cut into the power market and the raw physical limits of mining harder-to-reach deposits have begun to assert themselves.

The Bernstein analysis suggests renewables could account for 10 percent of U.S. power by the end of this decade, though Greenpeace noted that if renewables stick to their current pace of growth they could make up 20 percent of the mix by that time. Whether they’ll hit that mark is currently uncertain, however. Investment in renewables grew at its fastest pace in 2013, but it’s expected to plateau after that due to the failure of governments around the world — and especially in the United States — to build in a reliable pricing mechanism for carbon emissions.

Meanwhile, the Union of Concerned Scientists recently concluded that the new federal cuts to power plant emissions were not as ambitious as they could be. Instead of aiming for a 30 percent cut from the industry by 2030, emissions could be cut 40 percent with little to no economic drag. The International Energy Agency also anticipates that energy efficiency alone could get the world 40 percent of the emission reductions it needs to stay under 2°C of global warming.

“Ahead of a crunch year for global negotiations on a new climate deal, all the evidence points to clean technologies and smarter energy use as the most effective solutions to tackle climate change,” Myllyvirta continued. “Our political leaders will do well to remember this.”

Wind turbines photo CC-licensed on Wikimedia by Winchell Joshua of the U.S. Fish and Wildlife Service.

The Cost of Solar Dropped 15% in 2013, Prices Will Fall More by 2016

solar homesWhen the cost of solar gets lower and lower, that is only good news for people and the planet — and the National Renewable Energy Laboratory (NREL) has some great news out this week.

In a new report, the third in their Photovoltaic (PV) Pricing Trends series, researchers at NREL find that, between 2012 and 2013 alone, the average cost of a solar installation dropped by as much as 15 percent, and in 2014 prices will fall another 3 to 12 percent.

These price drops come largely as the result of the cost of solar modules — the panels themselves — getting cheaper. And while that continuing trend is great news, there are still some wrinkles in the story.

In addition to finding good news on solar module pricing, “the report also indicates that there are significant variations in reported pricing both geographically and across market segments,” explained David Feldman, a senior financial analyst at NREL, in a statement about the report. These price variances are “due to a variety of factors, including value-based pricing based on local competition within the marketplace and prevailing electric retail rates.”

Note, for example, just how broad a range of prices exist in the study between Florida, the cheapest solar state, and North Carolina, the most expensive solar state. In the chart below (click for a larger version) you see that Floridians pay about $3.33 per Watt on average, while North Carolinians pay $5.31 per Watt on average — that’s a 62 percent difference in the cost to go solar in those practically neighboring states.

There are big differences in the cost of solar installations from state to state. For example, in California, which is the nation’s solar leader, high costs for everything in the state mean that solar installations also cost more. The average cost of electricity also effects the cost of solar in California and elsewhere. But in every state, the amount of competition, customer awareness and other factors all impact how much you’ll pay to go solar.

The other big factor with solar installations across all states are the “balance of system” costs, also known as “soft costs” — everything except the modules and inverter, which means the cost of finding and acquiring customers, labor costs, permitting and interconnection costs and more. The chart below (click image for a larger version) shows how much the cost of modules has dropped over the years — and how, particularly for home solar, the balance of system costs have stayed remarkably similar.

NREL and the Department of Energy have already taken a number of steps to reduce solar’s soft costs, and the big takeaway from this new report is that NREL researchers and the analysts they surveyed all expect continued declines in solar costs for at least the next two years. Beyond 2016, costs are expected to continue to decline into the next decade and then level out.

The good news, then, is that going solar is going to continue to be a smart move for many years to come. But if you’re serious about going solar, now is the best time — not only will you start saving money and emissions immediately, but not even the NREL researchers know what will happen with state- and federal-level solar incentives in a few years’ time.

SolarCity’s New Bond Offering Lets Everyone Invest in Home Solar

solar installersOn top of new storage-plus-solar deals for businesses, lease-to-own models, and business partnerships, SolarCity has just cooked up a new way for everyday Americans to invest in the solar power it provides.

The country’s biggest solar services firm and its leading installer of rooftop solar systems, SolarCity announced on Wednesday that it’s now offering bonds online to everyday investors, the New York Times reported. Bonds are a form of debt: the purchaser pays the bond seller a fixed amount, then the seller pays back the amount over a pre-determined amount of time (maturity) along with interest. It’s a way for a company to build up capital to finance future expansions, particularly in its start-up years. SolarCity’s bonds will be sold in $1,000 increments, and will be available to any U.S. citizen, 18 or older, with a domestic bank account. The bonds will mature in one, two, three, or seven years, and will offer interest rates between two and four percent.

[Editor's note: This article originally appeared on ThinkProgress, and is reprinted with permission.]

The company has already raised $575 million through the traditional bond market, which is generally only available to wealthy and institutional investors, and is run through middlemen in the financial services industry. Mosaic is the only other solar company to use similar “crowdfunding” structures to finance individual projects on the small- and medium-scale. But unlike SolarCity it doesn’t install the arrays itself, and it only just recently began moving into the residential solar market.

“We’re similar to crowdfunding in that we’re doing this directly through our own online platform with no fees to purchase,” said Tim Newell, the vice-president of financial products at SolarCity. “We don’t look to earn revenue from the sales of the bonds.”

SolarCity will handle the bond sales and the paperwork through its own website, and the plan is to offer $200 million worth of bonds initially, but expects to make additional offerings on a fairly regular basis in the future. The company will also pay back the bonds using the monthly electricity payments from its solar customers. “The big innovation in this announcement is not solar-specific; it’s the offering of simple, attractive corporate bonds to the general public,” observed Shayle Kann, the vice-president of Greentech Media, a renewable technology research outfit. “The fact that these are ‘solar bonds,’ meaning bonds backed by SolarCity’s revenue streams, is just icing on the cake.”

“By expanding the pool of people who can participate in financing solar with us, we’re diversifying our sources of capital,” Newell added. “That also makes us more resilient in any economic environment and over time should help us be able to have the lowest cost of capital.”

The new direct-to-consumer bonds are admittedly smaller and come with lower rates than the bonds SolarCity has sold in the traditional market. The latter offered longer maturities and interest rates at 4.03 percent or even 4.59 percent.

But in a national and global financial market that’s still seen as somewhat uncertain when it comes to renewable power, direct-to-consumer models, crowdfunding, and other forms of financial innovation have emerge as useful — even crucial — tools in building up green power capacity, either at the level of utilities or for the individual homeowner. “If you look at the task we have to overcome in transforming the energy infrastructure, it’s a massive task,” SolarCity CEO’s Lyndon Rive also said. “We need to deploy large amounts of money as fast as humanly possible… One of our biggest tasks is raising awareness and helping people understand that solar is not a 10-year investment with minimal payback.”

By giving everyday investors a stake in the energy source, solar bonds can also serve as an implicit marketing program or awareness-raiser for solar power and green policy. “If you have some skin in the game, then you’re going to want [solar] to succeed in the same way as when you invest in a stock, you want that stock to be successful,” Amy Davidsen, the U.S. executive director of The Climate Group, a non-profit organization that seeks to promote clean energy technology, told The Guardian. “[This] will include supporting policies to help support clean energy.”

A similar dynamic has played out in Germany, where citizens locally own about half of the country’s renewable power capacity, meaning they benefit from the returns on the investment. That’s kept support high for Germany’s green energy policies, even as they’ve arguably helped contribute to high residential electricity bills, thanks to some quixotic design choices. SolarCity’s situation is a bit different — its raising capital to install solar systems, as opposed to offering ownership in the systems themselves — but the end effect of giving the bond customer a personal stake in the social and economic fate of renewable power more broadly.

Over the long haul, SolarCity hopes the bonds will become a “significant part of our financing strategy,” according to Newell. But, he added, “this is new –- no one has done this before — and we’re going to have to see how it proceeds.”

SolarCity installers photo CC-licensed by Steve and Michelle Gerdes on Flickr.

In Europe (and Everywhere Else), Solar is Cheaper than Dirty Energy

europe solarHopefully, there’s not much surprise in a recent European Commission report (PDF) explaining that the real “direct total cost” of 20th-century energies like coal and nuclear is actually higher than 21st-century solar. The facts are as bright as day.

But the numbers don’t lie, which means the truth is that the EU’s energy competition is clearly tilted toward photovoltaics. Solar world leader Germany has been installing panels like an infrastructure that wants to be taken seriously, and as a result German distributed solar has chopped the value of some of its utilities value in half. So the overall political and economic lesson to be learned from the European Commission’s report is that any utility that wants to have a future should to divest from last century’s globally warmed power plays and turn up the sunshine. The data, and its dollars, more or less demands it.

“With its increasing cost-effectiveness, solar is set to overtake conventional technologies in the short term,” explained European Photovoltaic Industry Association policy director Frauke Thies in a press release. “Despite decades of heavy subsidies, mature coal and nuclear energy technologies still rely on similar levels of public support as innovative solar energy is getting today. However, support to solar electricity is already coming down, in line with the rapid technology cost reduction, as opposed to coal and nuclear energy which remain locked into subsidies as they have been for the last 40 years.”

Of course, it’s just a matter of time before the subsidy crutches are kicked out from oil, natural gas and nuclear, sending them further crashing. Universities, companies and consumers are fleeing them with every new report on global warming’s exponential emissions and disasters. Companies like SolarCity are rolling out solar bonds directly to the people, instead of just powerful financial institutions like Goldman Sachs, who in turn are fielding concerns from their investors about the cratering oil sector.

Everything points toward solar as the prime mover for the energy markets going forward, from the EU outward. Buy in.

German solar home photo CC-licensed by johnathaneric on Flickr.

A Look at the Energy Efficiency Trends that Save Everyone Money

energy efficiency trendsIf you’ve been listening to the candidates in this election season, you’re likely to be pretty depressed about the nation’s energy future (and present). The typical attack ad these days is a litany of complaints about energy prices, security and reliability. But despite all these gloom and doom claims, it just ain’t so, as a new NRDC report released today shows in analyzing the latest available data from government and other sources.

Here are some of the highlights from NRDC’s 2nd Annual Energy Report, “Positive Energy Trends Bode Well for U.S. Security and the Economy,” which underscores that the economic and environmental performance of America’s energy systems has never been better:

  • Forty years of sustained improvements in the productivity of energy use have made energy efficiency not just America’s largest single-energy resource, but a resource whose cumulative contributions to the nation’s energy needs now exceed those of all competitors, from oil and coal to natural gas and nuclear power. This means that when we use energy smarter, we don’t need to generate as much of it or purchase dirty resources like coal and oil.
  • Total U.S. energy use peaked in 2007 and has trended downward since. Despite a small 2.8 percent uptick in 2013, the total still was below the level recorded a full decade earlier. Any lockstep linkage between economic growth and total energy use ended almost 40 years ago.
  • Americans rely increasingly on electricity to power their homes, offices and factories. Yet since 2000, for the first time in modern history, the national growth rate for electricity consumption has dropped below that of the population for an extended period, thanks in large part to our increased energy efficiency (see chart). From 2000 to 2013, electricity consumption rose by a total of less than 7 percent, with a miniscule average annual growth rate of about 0.5 percent, even as the population grew by about twice that rate during the same period. NRDC is working with the nation’s utilities on new business models so they won’t need growth in electricity use in order to prosper.

Thumbnail image for TrendsInUSElectricityUse_F2_lrg.jpg

  • In June 2013, President Obama set a goal of cutting 3 billion tons of carbon pollution by 2030 through his administration’s efficiency standards for appliances and federal buildings. We’re already two-thirds of the way there, and the resulting reductions in our energy bills will exceed $4 billion.
  • The amount of oil used in U.S. vehicles, homes, and businesses rose slightly in 2013 (about 1.5 percent), but is still down almost 12 percent from its 2005 peak. Surprisingly, 2012 oil use was lower than in 1973 (when the nation’s economy was only about one-third its current size), as we reported last year in “America’s (Amazingly) Good Energy News.” Lowering our reliance on oil reduces our need to import it from unstable overseas locations, too.
  • Wind power has dominated the nation’s renewable energy growth since 2000, with a 30-fold increase in its share of generating America’s electricity. By 2013, wind was providing more than 4 percent of U.S. electric generation, and the absolute increase in wind generation from 2000 to 2013 was almost five times greater than the increase in nuclear generation over the same period.
  • Solar is surging too, and in June 2014, for the first time in U.S. history, the U.S. Department of Energy also recently reported that hydropower generation over a full year was less than the combined contribution of other renewable electricity sources (including wind, solar and geothermal).

Looking ahead

But the best is yet to come, in terms of mobilizing clean energy resources to reduce carbon pollution. The U.S. Environmental Protection Agency proposed power plant standards in June 2014 that will keep more than 5.3 billion tons of carbon dioxide (CO2) out of the atmosphere by 2030. Put differently, in just 16 years, the standards will reduce harmful emissions from America’s power plants by 30 percent compared to 2005 levels. And because the EPA proposal calls for states to be credited for energy efficiency improvements in all sectors of the economy, EPA expects that electricity bills would drop as a result (by about 8 percent). For the average customer, that represents an annual savings of about $100.

EPA’s findings are one more reminder that progress toward a clean energy economy goes hand-in-hand with economic health more broadly, and America’s success in linking them will help inspire worldwide progress toward stabilizing atmospheric concentrations of greenhouse gases.

And, as NRDC’s new report shows, fortunately we’re already leading the way down the path to more stability in America’s economy and security – despite the fear-mongering that all those candidates want you to believe.  

This article originally appeared on NRDC’s Switchboard blog, and is reprinted with permission. Visit NRDCs Switchboard Blog

California Backs Some West-Facing Solar Panels to Meet Peak Demand

Last month, the California Energy Commission (CEC) revised the guidelines for its New Solar Home Partnership – a 360-megawatt program within the 3,000-MW California Solar Initiative (CSI) – to provide an incentive for builders to include west-facing photovoltaic systems in newly constructed solar homes instead of more typical south-facing systems.

As detailed in the eighth edition of the official program guidebook, solar installations on new homes oriented with an azimuth between 259 degrees and 281 degrees – that is, 11 degrees plus or minus of due west – will receive 15 percent on top of standard incentives. These currently range between 75 cents and $1.50 per Watt, or an expected performance-based derivative thereof.

Regardless of incentive level or type, the maximum additional amount is capped at $500 per system. Thus, a new subdivision with 100 solar homes all equipped with west-facing PV systems, for instance, theoretically could be worth up to $50,000 in additional incentives.

But why entice builders to point PV systems west in the first place, when on an annual basis south-facing systems clearly have superior output?

“We are hoping to squeeze more energy out of the afternoon daylight hours when electricity demand is highest,” explained David Hochschild, the CEC’s lead commissioner for renewable energy, in a statement. “By encouraging west-facing solar systems, we can better match our renewable supply with energy demand.”

Most residential systems in California today are aligned with a strategy of maximizing annual output for the individual owner rather than with such a holistic renewable energy strategy for the grid.

South-Facing Panels Are Superior on Annual Basis

It’s easy to understand why. As in the rest of the Northern Hemisphere, south-facing solar electric systems in California will generate in the range of approximately 15 to 20 percent more electricity than west-facing systems over the course of a year – even though west-facing installations will generate more output than south-facing systems during the two- to three-sunniest months.

The exact annual output advantage of south-facing PV systems compared to other orientations depends on many variables, including the precise location of the system and its azimuth, tilt, shading, modules, inverter and other factors. But generally, over the course of the year, a system oriented due south at 180 degrees will generate considerably more electricity than that same system facing west at 270 degrees.

Tracking the sun from east to west throughout the day, as many ground-mounted systems do, can boost system yield even further, by another approximately 15 to 30 percent, depending on whether the system uses single- or dual-axis tracking. Because they’re usually attached to or integrated with rooftops, residential systems generally do not use tracking.

Several convenient online or downloadable system output calculators exist for homeowners, builders and laypersons to explore the production differences of fixed residential systems under various orientation scenarios, such as the National Renewable Energy Laboratory’s PV Watts and the CEC’s PV calculator.

For example, PV Watts shows that south-facing 6-kW systems installed at a fixed tilt equal to latitude in Sacramento, Phoenix, Denver and Tampa would produce 16- to 29-percent more electricity annually than the same systems oriented at due west.

Another example, performed using the CEC’s PV calculator, shows that a south-facing 2.18 kW system in San Jose, installed at a 30-degree tilt, would generate 3,920 kWh per year, and qualify for $1,640 in New Solar Home Partnership incentives. That same system, aimed west, would generate just 3,284 kWh per year and qualify for $1,543 in incentives.

This is why it takes an added incentive to encourage west-facing systems. In this scenario, adding 15 percent to the incentive of the west-facing system would boost the total CEC incentive amount to about $1,774 – higher than the incentive for the south-facing system.

Addressing the ‘Solar Duck’ Problem

The problem that the CEC’s new incentive seeks to address – which the California Independent System Operator has depicted in its now-famous “solar duck chart” – is that increasing volumes of south-facing fixed-tilt solar systems contribute to the risk of over-generation on the grid during the midday hours and require ever more flexible operations from conventional power plants, which are required to ramp up at increasingly steep rates in the late afternoon when south-facing solar ramps down.

A paper published earlier this year by the Regulatory Assistance Project identified orienting fixed PV systems to face west instead of south as one of several strategies to help “teach the duck to fly” – to level out load – and to help grid operators “manage the renewable energy transition without fear or resource inadequacy, prices spikes, curtailment of renewable energy or other duck-related symptoms.”

According to the paper, “With time-varying rates, consumers will realize greater value from their PV investment by installing racking to orient the panels toward the west. Properly designed, this should compensate customers for any slight reduction of total PV output that results from this strategy – a significantly higher price per kWh for the same or slightly lower output.”

The CEC’s new west-facing solar incentive is just a start. Taken alone, its impact is likely to be small because the program represents just a fraction of the state’s solar market as a whole.

According to program statistics, more than 29,000 systems, totaling about 87.8 MW, have leveraged the CEC’s New Solar Homes Partnership incentives to date, with just under half of that already installed and the rest reserved.

This compares to 133,233 systems installed on existing homes, or about 1,548 MW, supported by the California Solar Initiative. Including commercial systems, more than 2,200 MW of distributed PV has been installed under CSI. In addition, the California Independent System Operator registered more than 4,200 MW of large-scale PV and around 700 MW of solar thermal electric capacity on the state’s wholesale power grid at the end of September.

But combined with other load-leveling strategies outlined in the Regulatory Assistance Project paper, west-facing incentives like the CEC is offering could help address challenges associated with adding more intermittent solar to the grid.

Other strategies identified in the paper include targeting energy efficiency to the hours when load ramps up sharply; deploying energy storage in targeted areas; substituting some large-scale PV with solar thermal using a few hours of storage; concentrating utility demand charges into the “ramping hours;” and implementing aggressive demand-response programs.

South-facing solar panels photo CC-licensed by Bernd Sieker on Flickr.

How Carla Peterman and the CPUC will Make Calif. an Energy Storage Leader

Energy storage has been hailed as a “holy grail” for clean energy. Through energy storage, renewable power can be tapped whenever it’s needed, not just when nature cooperates.

This means that utilities can overcome the intermittent production of renewable energy while controlling power supply and demand. And residential homeowners capturing unused electricity from rooftop solar systems for later use can enter into a new level of freedom from utility rate volatility.

Despite the promises of energy storage, adoption has been historically slow. It’s been hard for businesses and consumers to justify the premium price tag that comes with this emerging technology.

But many industry watchers say we are at a tipping point. And now is the time to integrate storage in a meaningful way into the energy mix so we can take full advantage of the increasing amount of renewable power being generated.

Helping to drive energy storage adoption on a large scale is Carla Peterman. She is one of five commissioners serving on the California Public Utilities Commission (CPUC).

Peterman was appointed by California’s governor in December 2012 to the commission, which in part regulates privately owned electric companies. In addition to her work at the CPUC, Peterman is pursuing a doctorate in energy and resources at the University of California Berkeley.

Peterman’s previous experience includes a post at the California Energy Commission where she was lead commissioner for renewables, transportation and natural gas. She has also been a Rhodes Scholarship recipient.

Since taking a seat at CPUC’s head table she has been charged with implementing the nation’s first energy storage targets. An assembly bill, formally called AB 2514, gave the CPUC the authority to set energy storage targets for investor-owned utilities.

In October of last year, the CPUC approved a mandate requiring the state’s big three investor-owned utilities — Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric — to procure a total of 1.325 gigawatts of energy storage by 2020. Of that, 200 megawatts will be carved out for customer-side storage.

At the time, the CPUC said the target was a six-fold improvement from California’s then 35 megawatts of energy storage. The commission also said it was the largest energy storage target of its kind in the world.

Carla PetermanAccording to the mandate, utilities will procure energy storage through four solicitations. The first request for proposals will be issued at the end of the year.

It’s a big job to make sure all stakeholders come through with hitting the 1.325-gigawatt storage target. SolarEnergy.net spoke with Peterman about the task at hand and the challenges she foresees.

SolarEnergy: Will utilities be including new residential consumer storage in their first round of energy storage solicitations slated to take place at the end of the year?

Carla Peterman: The utilities didn’t propose new programs at this time for customer side storage. They are relying on the existing Self-Generation Incentive Program, which supports storage as well as permanent load shifting programs in order for them to meet they’re customer side target this side around. Those are existing programs that provide incentives for installing storage that customers can take advantage of already.

SE: What needs to happen at a policy level to increase energy storage for residential consumers?

CP: We need to be thinking about how to align our policies that promote distributed generation with our policies to promote storage. For example, the commission this past year adopted some changes to the net metering program to allow for rooftop PV that is paired with storage to be able to qualify for net metering.

We also need to get more systems out there and learn from them. Learn what are the grid impacts, understand how customer side storage can help reduce peak demand, and how it can help with reliability. Because energy storage is in its infancy, we’re going to need to gain some operational experience with it.

SE: What will guide you as you work to assess the value of customer-side storage?

CP: In terms of AB 2514, the legislation sets out objectives for us to think about as we’re procuring storage. One is greenhouse gas reduction, another is helping to integrate renewables, and another is avoiding upgrades to the distribution system. To the extent that customer-side storage can help with those, particularly upgrades to the distribution system, there will be some value.

SE: How will the CPUC help evaluate the technology being used for energy storage?

CP: One of the things that we are collectively working on is better identifying when and how storage is needed on the system. This will help customers and suppliers of customer side storage figure out what the best products are to provide.

SE: How do you think California’s mandate will impact storage adoption across the country?

CP: I think it’s been a signal to the market that this is a product that has value. I hope that we’ll spur providers of this technology, and more choice for customers. This is all about giving customers some choices in terms of their energy procurement and management.

SE: What measures are in place to make sure California stays on track with hitting its energy storage target?

CP: We are going to do a big assessment of the program in 2016. We’ll have a chance to evaluate what we’ve been doing and whether new measures are needed. We are also coordinating with the Independent System Operator on a storage roadmap so we can identify what are the regulatory barriers to developing more storage.

SE: How do you create policy that fairly pushes the adoption of an emerging technology among diverse, at times adversarial, stakeholders?

CP: No one gets everything that they want, but ultimately I hope that we are able to address the largest concerns and the largest barriers.

My general approach is that we need to be moving forward. We need to be sending the right signals for the type of energy system we want. But we have to have enough sensibility in our approach to adapt to uncertainty, and I think that’s the challenge.

Photos courtesy of Carla Peterman.