Video: Groundbreaking for 12 MW Kaua’i, HI Solar Project

anahola.revOn July 26, 2014, REC Solar and the KIUC Utility held a groundbreaking ceremony for a 12 MW solar project on the island of Kauaʻi. A 6 MW lithium-ion battery system will also be installed alongside the array to store and distribute energy when clouds reduce the solar installation’s output.

The groundbreaking event was attended by many notable Hawaii state officials, including Hawai’i Lt. Gov. Shan Tsutsui, Kaua’i Mayor Bernard Carvalho, Jr, and Rep. Derek Kawakami, House District 14. KIUC President-CEO David Bissell and KIUC’s Chairman of the Board Allan Smith were also in attendance.

When completed in 2015, over 57,000 solar panels will power 5% of Kaua’i with clean solar energy.  Check out this photographic journal of the ground breaking, below. For more details, you can also read about the project here:

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Beating the Heat: Hampton Inn Hotel Reduces Cooling Costs by 44% with New Solar Carport

It’s hot in Bakersfield, California, especially during the summer months when temperatures regularly hit 110 degrees. But as The Hampton Inn & Suites Bakersfield North-Airport is discovering, the sun also has its advantages for reducing utility costs and increasing customer acquisition and satisfaction when the hotel goes solar.

The attractively designed 102 kW solar carport installed by REC Solar, combined with energy efficiencies, will not only offset up to 44% of the 94-room hotel’s electricity costs, but it will also provide much appreciated shade for arriving visitors and hours of sun protection for 29 parked cars.

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Bakersfield North Airport Hampton Inn’s Solar Carport—By the Numbers

Solar System Size: 102kW DC
Est. Annual Production: 157,080 kWh
Utility Offset: 37%-44% (combined with energy efficiencies)
Projected Monthly Savings: $7,400-$8,800/month
Simple Payback: 7.75 years
Carport Size: 29 vehicles
EV Charging Bays: 2, expandable to 8

Why Solar for Hotels?

There are several advantages for hotels going solar. Most important are the reduced HVAC costs, says Braxton Myers, Vice President of Operations for Blackstone Hospitality Group Inc, which provides property management for franchise hotels throughout the U.S.

Myers says that HVAC and 24/7 lighting inside and outside of the hotel typically account for the majority of a hotel’s electricity expenses, and the Bakersfield’s location made cooling expenses even more dominant.

“The amount of electricity that this property consumed was pretty astronomical,” Myers says. He added that on top of the high temperatures, The Hampton Inn’s energy audit revealed that the property was built with vertical zoneline heating and cooling units, which are inefficient for hotels where temperatures regularly exceed 100 degrees. So, the solar system’s energy offset would provide a cost-effective solution to replacing the hotel’s entire cooling system.

Beyond the energy cost reductions, hotels with solar and other sustainability initiatives can also benefit customer acquisition.

Myers explains that Central California has many government and business travelers, and that the State requires employees to book rooms from an approved list of green hotels with pre-negotiated pricing.  As a result, Blackstone has been able to use its marketing resources to attract government travelers and large corporate customers that mandate the use of sustainable hotels like their Hampton Inn Bakersfield location.

Myers also points out that installing solar on hotels is part of Blackstone’s overall environmental stewardship. “We promote solar and other green initiatives to all of our owners and try to make sure that we’re a responsible operator. Hotels in small communities like Bakersfield are one of the largest consumers of natural resources based on water, electricity, and everything else that hotels consume. So we try our best to be a responsible operator in that regard.”

The Choice for Going Solar with Carports

Myers has personally been involved with two other hotel solar projects, but this is his first solar carport installation, and there were several reasons for this choice.

The first consideration was the Hampton Inn’s roof. Although rooftop solar installations are much less expensive than carports, the design of the Bakersfield hotel’s roof prevented REC from installing a system without first reconfiguring the roof and taking out the use—and income—of several top floor rooms for many months.

Second, the solar carport was attractive and provided extra comfort for guests.

“We do enjoy the appearance of the carport structure,” says Myers. “And from a guest’s standpoint, in an area with 110 to 115 degree heat, we think they’d welcome the shading carport structure that would allow them to get their vehicles out of that heat.”

Blackstone also saw the solar carport as an investment that would attract long distance electric vehicle (EV) travelers. The Bakersfield Hampton Inn installation includes two active EV charging bays that are wired to expand into a total of eight charging bays when EV visitors become more frequent.

Financing Solar for Hotels

There are a number of ways to finance solar PV systems for hotels, and those choices will depend on the company’s resources and business plan.

In the case of the Bakersfield North Hampton Inn, Blackstone included the cost of the solar installation and the energy efficiency upgrades within its initial financing of the hotel, which it purchased in late 2013.

By rolling in the solar improvements to the hotel’s purchase price,  Blackstone was able to take advantage of the 30% Investment Tax Credit and other tax benefits.

Solar power purchase agreements (Solar PPAs), commercial PACE programs, and solar leases are additional solar financing methods, but those vehicles didn’t make sense for Blackstone’s current business models, said Myers.

Given their extra expense, solar carports aren’t the best solution for every hotel, but their overall advantages to this particular Hampton Inn’s  climate and roof structure made it the best solution for Blackstone—as well as for its guests.

If you have questions about carports or solar for hotels, contact REC Solar for more information.

 

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Evaluating Commercial Solar: Payback, ROI, NPV, and IRR

Harris.Freeman.013How much your business saves over the 25 to 30 year lifetime of a typical commercial solar system depends on many factors, including how you finance it, federal and local incentives, your utility rate, and the amount of sunshine available on your commercial rooftop.

To help commercial and industrial solar customers evaluate the financial benefits of installing solar, REC Solar can provide a free quote and a detailed financial analysis to determine:

  • Payback
  • Return on Investment (ROI)
  • Net Present Value (NPV), and
  • IRR (Internal Rate of Return)

Let’s briefly explore each of these finance evaluation concepts. Some variables will change if financing through a solar lease or solar power purchase agreement (solar PPA).

Payback

“Simple payback” is the length of time it takes for your upfront solar investment to pay for itself through solar energy savings. To calculate it, most commercial installers take the net cost of the solar system after incentives have been applied and divide it by your projected annual electric bill savings:

Net Solar System Cost/Annual Utility Savings from Solar = Simple Payback in Years

As an example, if your net commercial installation cost $50,000, and you saved $10,000 per year in utility savings, your payback would be 5 years.

However, simple payback does not account for inflation, depreciation, maintenance costs, project lifetime, and other factors. So, it doesn’t really give the true value of solar over the full lifetime of a solar system, and it doesn’t give any rate of return.

REC Solar’s proposals go beyond simple payback formulas and include inflation, depreciation, etc, plus other costs specific to a solar installation. For example, energy bill savings from solar represent a cost not spent, and therefore gives money back to the company, which is then taxed as revenue. REC Solar’s payback definition includes the taxes that may be paid on energy savings.

Return on Investment (ROI)

ROI gives you another relatively simple perspective of how much money you’ll save over the entire (typically 25 to 30 year) lifetime of a commercial solar project. A comprehensive ROI formula for commercial solar will include:

  • Your current utility kilowatt-hour (kWh) rate and any demand charges.
  • Your annual bill without solar.
  • The projected annual increase of utility costs over 25 to 30 years based on historical increases.
  • The projected amount of solar kWh your system will produce over 25 to 30 years
  • The lifetime costs associated with the solar installation, including installation costs, inverter replacement, operations and maintenance cost
  • The estimated value of all solar rebates, performance based incentives, and tax incentives received over 25 to 30 years.
  • Any applicable taxes.
  • Any applicable interest/loan costs.

REC’s proposals include ROI values over 10, 20, and 30 years. When all of these negative and positive values are calculated over those time periods, you’ll not only see the payback year, but also the total amount of money saved by going solar.

Net Present Value (NPV)

While ROI takes into account all of the financial benefits and costs of going solar, it doesn’t take into account the future value of the money being invested. That is, it doesn’t factor in inflation, risk, or the lost opportunity of investing in another type of investment, such as stocks and bonds. This is commonly referred to as the time value of money.

NPV does account for the time value of money. Using a solar NPV formula, REC Solar can show you how the 25 to 30 year lifetime cash flow of a solar project compares in today’s dollars, factoring in for inflation, interest, and other lost opportunity costs.

If you’re not familiar with the concept of NPV, the video below explains it in more detail.

In terms of a solar project, the future value (FV) for each year would include all of the upfront costs of installation, plus the projected net annual utility savings and income from any production based incentives, divided by a discount rate.

Over 25 to 30 years, the typical commercial solar project will show a large and positive NPV.

IRR (Internal Rate of Return)

Whereas NPV can show the project’s net present value in dollars, the IRR reveals the rate of return from NPV cash flows received from a solar investment. So, if your IRR is 12%, it means that your solar energy investment is projected to generate a 12% return through the life of the solar system.

IRR is useful for comparing the returns on two or more investment opportunities. Given the accurate data of each investment, a business can compare the IRR of investing in solar to the IRR of some other capital investment and select the one with the highest return.

If you’re not familiar with the concept of IRR and its formula, the video below explains it in more detail:

Calculating the IRR for commercial solar installations depends on many factors, including how you finance it. For a loan, data will include the net cost of the system after upfront rebates and tax incentives, the amount of debt, interest rate on debt, debt term, projected annual cash flow from utility savings, and any pre-tax performance based incentives, as well as O&M costs.

Get a Free Solar Financial Analysis

Unfortunately we’ve had to be very general with these terms because each commercial solar project can vary widely.

To get more specific information for your potential solar project, REC Solar offers a free financial analysis that includes estimated costs, finance options, payback, ROI, NPV, and IRR. To receive your free solar estimate and financial analysis, get started here.

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Really Fast Commercial Installs: Two REC Solar Time Lapse Videos

Below are two time-lapse videos filmed at two REC Solar installations.

The first is from IKEA’s southwestern US distribution center in Tejon, California. The 1.8 MW DC system covers 216,000-square-feet of the expansive rooftop, and produced 3.05 million kWh of electric power in 2013, over 110% of expected yearly production.

 

The second time lapse displays an installation for Pandol Bros., Inc., based in Delano, California. This 1.135 MW DC solar array is projected to produce 1,900,000 kWh of solar power annually, powering the Pandol Bros. fresh produce cold storage, packing and shipping facility.

 

 

While time lapse videos do not capture all details of commercial solar installations, large solar projects like these can be completed within 6 months or less, depending on size and permitting requirements. Proper planning for rooftop or ground site preparation, environmental compliance, utility infrastructure upgrades, etc. helps to eliminate potential delays in the construction process.

If you’ve got questions about solar installation times and the construction process for your farm or facility, please let us know.

 

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New Program Solves the Stranded Solar Meter Problem for California Farms

Net Ag MeteringSB 594, a law that went into effect in PG&E utility territory February 2014, now allows property owners to aggregate the electricity load of multiple utility meters scattered throughout a single parcel or multiple continuous parcels and credit the bills with a single “Net Metered” installation.

This new program is called ‘Net Meter Aggregation’ and reduces the cost of installation and increases flexibility for farmers that may alter individual electric meter consumption from year to year. This removes financial and technical barriers to going solar for farmers that have multiple utility meters on a single property or meters scattered throughout many parcels and were unable to take full advantage of  California’s net metering program.

The Old Net Metering Rules

Similar to rollover minutes on a cell phone, net metering allows  a solar  customers electric bill to be credited for any extra power produced by the solar array.

Before Meter Aggregation, however, regulations limited the net metering incentive to the meter that was directly connected to the solar installation. For homes and small businesses, that structure worked fine, but farms often have multiple meters and usage on those meters can change from year to year based on growing crops  on a particular parcel or not. This program now eliminates the cost that was previously required to connect all those meters to a solar system or the bill credits wasted if a water pump is not run for a year while solar is generating.

In the case of agricultural land, a single meter is often installed for each water pump across multiple acres of farmland. For factories, industrial facilities, and large government compounds such as an army base, a utility meter is often installed for each building on the compound.

Under the old rules, only a single meter connected to the solar installation could receive net metering credits. So, even if the solar installation could power all of the water pumps, the landowner would only receive credit for the single water pump tied directly to its meter and the nearby solar installation.

The New Net Metering Aggregation Rules Under SB 594

Under the new rules, multiple electrical accounts can now aggregate the electrical load of all the meters on the property where the solar system is located, or on property that is contiguous to the solar system.

Instead of building multiple solar systems for multiple meters on a large farm, solar companies can install a single  solar PV system in one area. From this single location, the solar power generated—and any net metering credits produced—will offset the electricity used by all of the farm’s various loads, such as water pumps, electric fences, cold storage facilities, etc.

Take for example Bowles Farming Company, Dos Palos, California.  They had over 20 meters scattered throughout hundreds of acres.  Under the old net metering system, a solar system would have to be built for each of those meters and would not be feasible.  Under the new aggregate net metering law, REC Solar will build a ~800 KW solar array to offset 100% of their expected kWh consumption throughout all meters.

The new aggregate net metering rules decrease installation costs for several reasons:

  • A single large solar installation requires less equipment, labor, and time to build than multiple smaller installations producing the same amount of energy.
  • A single solar array can now be installed in the most ideal location on the farm, potentially producing more power than multiple installations tied to individual meters that have less than optimal sunlight.
  • Extra equipment and engineering won’t be necessary to accommodate bad terrain or interconnection issues.
  • It’s now cost effective to build a larger solar array that offsets more utility power.
  • Similar to changing your allocation within an investment portfolio, Solar generation credits are allocated to meters and customers can easily change allocation percentages as usage patterns become different.

Similar to the farm’s meter issues, an industrial facility can now install solar on an adjacent empty plot of land or rooftop and be able to offset the power of all the property’s buildings.

SB 594 Meter Aggregation Limitations

While Meter Aggregation frees net metering’s restrictions, the CPUC did impose some limitations.

  • The maximum size of the solar system is 1 MW. So, if a farm needs to build a larger system, then  an alternative program for larger systems will apply .
  • Net metering is only applied to the maximum load (i.e., energy use) of all of the meters on site. So, if the solar system over produces and generates 110% of the farm’s energy needs, the extra net metering credits will not be as valuable. . Consequently, it’s important for a solar installer to design a system that is optimal and understand every aspect of the project.
  •  This program is only available for a limited time and will end once the current Net Metering program expires.

This last caveat is important. Currently, customers benefit from being  credited at the full retail rate for their solar net metering credits. However, with the passage of a similar piece of legislation, California’s AB 327; the CPUC is now in a process of redefining the value of net metering, effective Summer 2017 – or until 5% of the utility’s customers have Net Metering.

It is unknown whether the new net metering  program will reduce its value to customers, but many insiders suspect it will. In order to take advantage of this opportunity before it expires,  customers must have a system installed  before the new program takes effect. Once your system is installed, you will be grandfathered under the current net metering rules for the next 20 years!

REC Solar will be hosting a webinar on the new net metering aggregation rules. To sign up for the webinar, contact REC Solar, and we’ll let you know the specific date and time.


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