The Perfect storm: Why Now Is the Time to Seize the 30% Credit on Commercial and Industrial Solar

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Although the 30% business investment tax credit (ITC) for installing solar expires at the end of 2016, the window for taking advantage of the ITC is actually much sooner. Unless Congress extends the ITC—which is an open question at this time—business owners should begin planning now for solar projects to be completed by the end of 2016.  Combined with lower costs than ever before, businesses are seeing a perfect storm of conditions that make now an ideal time to go solar.

You might think that 2 years is a long time to pull the trigger on going solar, but like any large commercial or industrial upgrade, solar projects can take 1 to 2 years to complete and go online. Here’s why:

1) Commercial solar evaluations and decisions take months.

While some business owners can make a snap decision to go solar, we’ve found that most businesses typically need 1-3 months to complete the process. That includes learning about all the options and assessing solar’s value to the business, while waiting on several solar providers to prepare and revise comprehensive quotes. Regardless of whom you choose as your commercial solar partner, they will need to analyze utility charges and rates, the times that your business uses the most energy, roof integrity or existing site condition, and utility connection infrastructure.

The location and type of business also matters. Solar installed on a plot of land for an agricultural facility and solar installed at a hotel or shopping center with a solar carport each have specific considerations that a solar provider will have to evaluate for an optimal proposal and design.

Similarly, if you own multiple retail locations, or have multiple buildings on a single industrial campus, each potential site will need to be assessed for generating the most solar electricity at the lowest cost.

As a result, the solar evaluation process alone can take several months, and that inches everyone closer to the 2016 completion deadline to qualify for the 30% ITC.

2) Solar financing takes months.

Unless you intend to pay for your solar installation with cash, there are many financing options to consider when installing solar. Loans, solar power purchase agreements, solar leasing agreements, and commercial solar PACE loans may all be viable financing options, so your provider needs time to prepare and present these options so that you can choose the best financing option for your business. At REC Solar, we’ve found that this process typically ranges from 1-3 months.

Once you choose the best option to finance your solar installation, the financing partner will need time to go over the proposal and qualify your company. That can also take several months, depending on the size and cost of your commercial or industrial solar installation.

3) The solar permitting process varies wildly.

The solar permitting process is notoriously variable. Consequently, depending on your city and type of installation, the plans may need to be inspected and approved by several local authorities, potentially including the building department, the utility, the fire department, as well as environmental agencies.

After submitting plans, changes to solar designs are sometimes required by each agency, and subsequently, installers must resubmit plans. Even when plans are perfect the first time, the municipal engineering departments that approve solar designs for permitting are frequently overwhelmed and understaffed. Fortunately some cities are developing streamlined best practices for solar permitting, though today those are few and far between.

This unpredictable solar permitting process can range from 10 minutes in San Francisco to 6 months in Denver. This uncertainty can further extend the project development phase, before breaking ground on the project, bringing the 2016 deadline to qualify for the solar ITC even closer.

4) Solar installations take up to six months.

Once you’ve been through evaluation, design, engineering, procurement of equipment, and permitting, you’re finally to the second to last step: The actual installation.

A good solar installer needs to plan and schedule a time that is most convenient for you and your operations, avoiding any decrease in productivity or interrupting normal business.

Aside from the scheduling, the larger and more complex the installation, the more time it will take to complete. Yet even a relatively small 100-250 kW solar installation can take 1 to 3 months to construct. As we noted before, each site is unique and may require upgrades to infrastructure, trenching and concrete, roofing adjustments, or utility interconnection upgrades.

A large 1 MW and above solar installation can take 2 to 6 months to complete construction, which includes the last step: final inspections and approvals from the utility and other local permitting authorities.

5) Add it all up, and the solar process can take up to two years

While some installations can take just a few months, larger and more complex installations can run up to two years. The solar industry is innovating new systems to streamline this process in the future. But today, businesses stand to benefit by planning ahead and seizing the ITC today.

Will the Solar ITC be extended by Congress?

We hope so! Solar advocates in Washington DC are doing their best to convince Congress to extend the solar ITC by another year or more. However, many believe that this extension is unlikely, especially given the fact that the wind industry lost their own subsidy extension fight.

If nothing is done, the 30% ITC will sunset into a 10% credit. That’s better than nothing, but it’s certainly not better than the full 30%.

The window to take advantage of the 30% ITC for solar is quickly coming to a close – especially for larger installations. If your business is sincerely interested in going solar, now’s the time to start the discussion.

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Relax with REC Solar, Learn Your REC’s, and Ride the Solar Coaster at SPI!

Here’s a rundown of all that’s happening at REC Solar’s Booth 850 at Solar Power International, as well as other events at the show.

Tuesday, October 21 – Thursday October 23

Just like the solar business, trade shows can be both exciting and intense, but REC Solar has you covered.

  • Relax with REC Solar. From finance to 
    construction, you’re in great hands with REC Solar… so stop by Booth 850 and enjoy a free 5 to 7 minute chair massage on us!
  • Win two tickets to the Big Apple Roller Coaster. While you’re waiting for your massage, follow REC Solar on Facebook and Twitter and upload a photo of yourself with our “Are you tall enough to ride the solar coaster?” sign. We’ll be selecting 5 random winners on Tuesday and Wednesday to win a pair of Big Apple Roller Coaster rides at the NY, NY Casino. (See full rules below.)
  • Know Your REC Solar’s. REC Solar has been in the solar industry for 17 years, but some people confuse us with a Norwegian panel manufacturer. Pick up our “Know Your RECs” cheat–sheet and learn about REC Solar’s history and the differences between REC Solar and panel manufacturer REC Group.


Wednesday, October 22nd, 12pm – 2pm

Meet the Solar Social Media Tribe at the SPI Tweetup!

REC Solar is sponsoring the SPI Tweetup, an annual gathering of the folks who “speak solar” through their solar brand’s Twitter, Facebook, Linkedin, and Instagram pages.  Put down your smart phones, speak more than 140 characters, and enjoy a fabulous lunch, beer, wine, and spirits, plus get a chance to win two $100 gift cards and other prizes! The event is free, but quickly sold out! Did you get your ticket? If not, we’re in Vegas, so try your luck and RSVP on the waitlist.

How to Win Two Tickets to the Big Apple Roller Coaster at SPI

The solar industry sure can be exciting, so REC Solar is giving SPI attendees a 5 minute massage and a chance to win 10 pairs of tickets on the Big Apple Roller Coaster at the New York, New York Casino in Las Vegas!

To play, follow these three simple steps:

1)   Drop by REC Solar’s Booth 850 at Solar Power International and take a picture of yourself with our “YOU MUST BE THIS TALL to ride the Solar Coaster?” sign, and be sure to smile or make a funny face, as this will count later.

2)   Follow @RECSolar on Twitter or “Like” our Facebook page (REC Solar).

3)   Upload your solar coaster photo on either Twitter or Facebook and include: “I’m tall enough to ride the #RECsolarcoaster at #SPIcon!”

That’s it. REC Solar will choose 5 winners with the brightest solar smiles on Tuesday and again on Wednesday, and we’ll post the winners. Then come by Booth 850 to pick up your pair of tickets and have fun riding the solar coaster!

See you at the show!

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Massachusetts Net Metering Cap Raised for Businesses and Municipalities Installing Solar

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The Red Sox may not win the Pennant again in 2014, but there’s still some good news if your business or municipality wants to install solar in Massachusetts: In a last-minute legislative compromise with utilities, the state’s net metering cap has been raised to 5% of grid capacity for government entities and 4% of grid capacity for private businesses.

This is a great—but temporary—win for installing affordable solar in the Bay State. If the cap hadn’t been lifted, solar savings and ROI for mid-size industrial, retail, and government solar installations would have been significantly reduced.

What’s Net Metering?

To understand why this is a savings win for solar, you have to understand the power (pun intended!) of the policy known as “net energy metering,” or net metering, for short.

Many people refer to net metering as “rollover minutes for solar.” It allows solar installations to get a credit for extra solar power produced during the day. Consequently, a facility can install enough solar panels to produce more solar energy than they need for daytime loads, and then that excess generation can be credited towards evening usage when the sun isn’t shining or on cloudy days.

To further explain, let’s say you have a retail store that’s open until 9 pm. Without net metering, your nighttime electricity usage would never be offset by solar production, no matter how much extra energy your solar panels produced during the day. The same goes for a 24/7 police station. Instead, any extra energy produced during the day by the retail store or police station would just feed back into the grid and be sold to other businesses without any compensation to you from the utility.

Utilities also benefit from net metering, since they sell your excess solar generation to nearby homes and businesses that don’t have solar. Plus, the utility’s centralized power plants don’t have to burn as much oil, gas, and coal; so, net metering helps to reduce utility fuel costs, not to mention air pollution.

Where Net Metering Stands in 2014 in Massachusetts

Massachusetts solar advocates and utilities had been working on a deal that would eliminate the cap for most commercial customers using net metering, but that compromise fell through at the last minute.

What did get through and signed by the Governor is Massachusetts Senate Bill S.2214, which raises the net metering cap for local governments from 3% to 5% of a utility’s peak load. The cap was also raised for private sector installations from 3% to 4%, demonstrating a lower net metering capacity ceiling in that sector right now.

For now, the legislative compromise maintains the level of savings for Massachusetts businesses and government entities wanting to go solar, but rest assured that enough solar will soon be installed to reach those new caps.

To avoid that, S 2214 also creates a new net metering task force that will allow solar advocates and utilities to work out an agreement that will hopefully eliminate the net metering cap forever.

Solar advocates are trying to show the utilities how onsite solar generation benefits all ratepayers by decreasing transmission and grid costs, and they want to set a value for solar watts compared to traditional gas, oil, and nuclear watts. The utilities want the ability to withdraw brown energy from the grid as needed and charge solar owners for the transmission costs of feeding solar energy into the grid. .

One way or another, the new task force has to come up with an improved net metering plan by March 2015, so stay tuned to the REC Solar blog for updates, or please contact us directly for more clarifications on the Massachusetts net metering program, or any Massachusetts solar or energy storage incentives.

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Update: SCE Utility Rate Returns for 25% More Solar Savings through Decreased Demand Charges

12/18/Update: As expected, the California Public Utilities Commission has finally approved a settlement with solar advocates to increase the cap on its Option R rate from 150 megawatts (MW) to 400 MW, allowing more medium and large commercial and industrial customers to go solar. Below, we’ve described two examples that show how the Option R rate significantly increase the ROI of going solar in the SCE utility territory.

If you’re a business or a non-profit, your utility rate can be a crucial factor in your overall annual savings from installing solar. Now, thanks to a recent settlement between solar advocates and the Southern California Edison (SCE) utility that should be finalized by January 2015, commercial businesses and non-profits that go solar in SCE territory will once again be able to select the financially advantageous “Option R” Time of Use (TOU) rate that has been limited.

What’s Option R? Option R is an alternative to SCE’s “Option B” TOU rate, which could still reduce commercial electricity costs by installing solar panels, but … the Option B rate did not affect demand charges, a significant portion of commercial and industrial electric bills. The reintroduction of Option R would simplify SCE’s rate structures so that demand charges are reduced, and as a result, it can increase annual solar savings by around 25% over the Option B rate.

Before we get into a couple of examples, let’s get onto the same utility bill page. Your non-residential SCE utility rate bill is broken up into several components:

Service Charges: These are fixed charges and are not affected by going solar, no matter which rate your operations manager chooses.

Energy Charges: This portion of your bill is based on the amount of energy that you actually use from the utility and time of day that you use it. Peak daytime rates are higher than off-peak evening and weekend rates. Additionally, summer rates are higher than fall, winter and spring rates. (This is why Option B could be complicated.)

Demand Charges: We’ve discussed demand charges in a separate blog post, but this is essentially a charge for using a short surge of energy during certain times of the day. For example, a demand charge would be assessed for when turning on machinery or air conditioning. The amount you’re charged for this surge depends on the time of day and the season.

With the expected revised Option R, the demand charge seasonal rates and peak time rates are consolidated into a single relatively low rate, significantly reducing that portion of the bill. Option R’s energy charges are increased slightly compared to the Option B rate, but the decline in demand charges more than makes up for that slight increase.

Let’s go through two examples and see how much Option R can increase savings over the old Option B rate for a Large Retail Business and for a House of Worship, two types of SCE customers that use electricity at different times of the day.

Note: Because demand charges are calculated over a brief period of time and solar production can vary by the time of day, cloud cover, and other factors, solar panels may or may not offset demand charges when, for example, an air conditioner unit turns on at 10 am in the morning. Because of that unknown, the case studies below are worst-case scenarios and will assume that no demand reduction is taking place by solar. Consequently, actual savings may be even greater than these conservative examples. 

Case Study #1: Large Retail Business Going Solar in SCE Territory

You’re a large retail store with heavy lighting and air conditioning being used during peak (expensive) times of the day. After REC’s analysis of your current SCE bill and usage profile, we determine that you would need a 250 kW solar system to optimally reduce your bill.

Before installing solar, your annual SCE electric bill looked something like this:

Large 50,000 Sq. Ft. Retail Store, Southern California Edison, TOU, GS-2 rate, Before Solar
Annual Service Charges: $3,190
Annual Demand Charges: $30,831
Annual Energy Charges: $41,986
Total Annual Bill Before Solar: $76,006

After you install a 250 kW solar system and used Option B, the numbers get better, but those demand charges are still pretty high:

Large 50,000 Sq. Ft. Retail Store After Solar Rate with Option B
Annual Service Charges: $3,190
Annual Demand Charges: $30,830
Annual Energy Charges: $3,588
Total Annual Bill: $37,607
Annual Reduction with Solar 51%

As we can see, the demand charges and service charges pretty much stay the same, and the real savings come from reducing your energy costs from solar. Now let’s switch to the Option R rate:

Large 50,000 Sq. Ft. Retail Store After Solar Rate with Option R
Annual Service Charges: $3,190
Annual Demand Charges: $10,789
Annual Energy Charges: $5,451
Total Annual Bill: $19,430
Annual Reduction with Solar

So, yes, the annual energy charges have slightly increased from Option B, but look at the dramatic reduction in the demand charges! Clearly, Option R is the best rate to choose to go solar in this type of heavy daytime usage business. In fact, Option R increased annual savings with solar by an additional 23%!

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Case Study #2: House of Worship Going Solar in SCE Territory

For non-profit houses of worship, such as churches, synagogues, and temples, the energy usage profile is quite different from the large retail store. Here, energy usage spikes more on the weekends and during early morning and evening services. Nevertheless, the Option R rate is still the most cost-effective rate and is a significant improvement over Option B.

Let’s take a look at a House of Worship scenario where a 100 kW solar system is recommended.

25,000 Sq. Ft. House of Worship,  Southern California Edison, TOU, GS-2 rate, Before Solar
Annual Service Charges: $3,190
Annual Demand Charges: $18,785
Annual Energy Charges: $17,099
Total Annual Bill Before Solar: $39,073

Now let’s see what happens after solar and Option B rate are applied:

25,000 Sq. Ft. House of Worship After Solar with Option B
Annual Service Charges: $3,190
Annual Demand Charges: $18,789
Annual Energy Charges: $1,739
Total Annual Bill: $23,718
Annual Reduction with Solar 39%

39% savings is not too shabby, but let’s see how Option R reduces demand charges even more:

25,000 Sq. Ft. House of Worship After Solar with Option R
Annual Service Charges: $3,190
Annual Demand Charges: $8,072
Annual Energy Charges: $1,920
Total Annual Bill: $13,181
Annual Reduction with Solar 66%

Once again, we see how demand charges have been significantly reduced under Option R, while energy charges have gone up only slightly. In terms of overall savings, solar with Option R produces significantly more annual savings. Take a look:

House of Worship ImageIn both of our above solar case studies, SCE’s Option R rate with solar creates dramatically higher savings and hence, a faster payback.

Option R is expected to be available in January 2015 for medium and large-scale solar customers with demands between 20 kW and 4 MW in SCE rate classes GS-2, GS-3 and TOU-8.

How much would your business or non-profit save with solar and switching to Option R? Contact an REC Solar expert for a comprehensive solar evaluation, as well as information about new low-up front cost financing options.

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What You Need to Know about Solar, Storage, and Microgrids – Solar Webinar Recap

REC Solar recently participated in a webinar on Renewable Energy World that invited several experts to discuss the U.S. landscape for solar PV with microgrids, and energy storage. The panelists included:

Peter H. Asmus, Principal Research Analyst at Navigant Research. Peter is a leading global expert on microgrids and virtual power plants and the author of four books on energy and environmental issues.

Ben Peters, who serves as Director of Solar Finance & Policy at REC Solar. Ben provides strategic guidance on the commercial and utility sector, and he also manages REC’s economic analysis group, which helps REC customers to develop projects based on relevant regulatory and policy changes.

John Wood, Chief Executive Officer of Ecoult, an energy storage solution company. John first joined the energy storage community in 2008, having previously launched technologies globally in security, identity, payment technology, and telecommunications.


The Growing Demand for Solar Microgrids

Peter Asmus began the webinar with a brief description of microgrids and their advantages, including the ability to “island” (produce energy independently of the grid) during any kind of blackout or natural disaster. They’re also an economic advantage over fossil fuel-based generators in isolated areas, such as Hawaii and Puerto Rico, where most fuel for the grid is imported.

Peter also touched on the fact that energy markets and policies are rapidly changing and moving favorably toward renewable energy.  States are implementing mandates and incentives that make solar competitive with fossil fuels. In some states like California, solar is already at grid parity without incentives, and storage costs are also rapidly declining.

The U.S. military is also noting the potential benefits of microgrids, both in the field, as well as adding to the security of a base’s infrastructure in case of attack or a natural disaster.

Another reason why the U.S. is getting more interested in microgrids is climate change. The grid is getting less reliable thanks to the increasing number of super storms and extreme weather, both hot and cold. Peter’s graph on slide 10 shows how the number of power outages are increasing throughout the U.S.

Of course, there are also challenges to solar micrgrid growth, and Peter mentioned several. For one, utilities are putting up obstacles to microgrid integrations, not understanding their technology and questioning their benefit to the larger grid—as well as to their bottom line.

Given all of the above, Navigant is now forecasting a conservative estimate of 4000 MW of installed microgrids by 2020 in North America, and may be as high as nearly 8000 MW. Asia and the East may install even more, and Europe is also strong.

The U.S. Market for Solar Market Grids: Venues, Regulations, and Business Models

REC’s Ben Peters was next on the panel and began by highlighting all of the potential venues of microgrids, such as off grid applications for villages and island nations, as well as systems that might be integrated with military bases, universities, and research centers.

Ben then moved on to discussing the ideal physical and economic environment for an interconnected solar microgrid. With certain state incentives, many businesses and landowners might benefit from installing a microgrid to simply profit from providing solar electricity and grid storage directly to their local utility. This is known as a “front of the meter” business model scenario.

In the “behind the meter” scenario, the solar microgrid would be installed on site and feed solar electricity to the actual business or institution, thus reducing its energy costs and utility demand charges while also providing some backup power in case of a grid outage.

Beyond your potential microgrid business model, Ben talked about the physical and financing challenges of implementing a solar microgrid. Typically, microgrids are financed, so an institution needs to be approved by a lender or financier experienced with these types of energy infrastructure projects.  Moreover, engineers have to be able to physically interconnect the project with the overall grid, and in some cases, that may not be possible due to the need for expensive grid upgrades.

In terms of markets, Ben displayed a map of the different solar microgrid markets that exist in the U.S.  today. The map reveals that most microgrid projects are being installed in areas of California, Arizona, New Mexico, Texas, Florida, North Carolina, Michigan, and New Jersey. Other states, especially in the Midwest, are installing them too, but these are smaller projects and fewer in number.

Solar with Storage and Microgrids and Their Applications

The last speaker, John Wood, focused his presentation on the storage component of solar microgrids.  John really dives into the details of solar storage applications and the advantages of storage today when combined with renewables and fuel-based microgrids, especially for islanding.

In particular, John highlights storage as a solution for grid variability, especially for wind smoothing and solar shifting, which help balance the grid from these renewable energy sources that can fluctuate and surge by the minute.

He also discusses how battery storage can be added to existing diesel microgrids to increase efficiency, reduce the fuel costs, and of course reduce emissions.

Finally, John outlines the technology and advantages of his Ecoult UltraBattery lead acid-based battery solution, which combines diesel generation with renewables and battery storage. John discusses how this hybrid energy combination can be a cost-effective, efficient, and reliable solution for existing fossil fuel-based microgrids.

Those are the highlights of our webinar. You can see the entire webinar, as well as the post-webinar Q&A that dives deeper into costs, on (Click “Register” fill out the form, and the webinar will be replayed.) You can also view or download the PDF slides of the presentation here:

Of course, if you have any questions about this presentation or about solar microgrid solutions and the economics for your facility’s operations, please contact us.

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