the newsletter of tbd consultants - Autumn/Winter 2019
The Internet of Things has given hackers a lot more targets. California's Senate Bill 327 is first piece of legislation in the U.S. to specifically address this issue, helping to keep our buildings secure.
We all depend on electricity for so much of what we do, but utility costs keep rising. PV (photovoltaic) panels convert sunlight directly into electricity, so doesn’t it make sense to go solar? Well, there are a few things to consider first.
For a typical solar installation on a single-family home, you would need the panels to produce the electricity and an inverter to convert that DC (direct current) power to the AC (alternating current) that you need to run your lighting and appliances. There are times when the sun isn’t shining, so you will still need to be connected to the utility’s power grid, and you’ll need something to automatically switch between the grid and the solar power. In recent years, battery technology has improved to the point where a solar installation can economically include a bank of batteries to provide backup for times when the sun isn’t shining. Other associated costs include the design of the installation and obtaining permits.
Being connected to the utility grid also means that when you are producing more power than you are using, you can feed that power back into the grid and get paid by the utility company. With a battery backup, the system can store the excess power and feed it into the grid at times of peak demand, so that you can get a higher price for it. There are a couple of ways that the utility might buy power from you. With net metering, the utility pays the full retail value per watt, using a single meter that can count up and down, depending on whether power is being drawn from or fed into the grid. Feed-in tariff utilizes a second meter to separately record the power fed into the grid, and then a different rate can then be charged for taking power from the grid and for feeding it back in.
There are a variety of companies offering solar installations, and, as with any construction project, obtaining multiple bids is worthwhile. The larger companies will probably not show an economy of scale as far as cost is concerned, but there can be other things to consider in that regard. For instance, you may be offered a 20 or 25-year warranty with the installation, and you need to consider the odds on whether the company will still be there for that duration. You might also want to consider what the technology will be in 25 years’ time. There are already roofing shingles available that can generate solar power. If it is likely that your building will need reroofing during the next 20 years, will the roofing material be incorporating solar power generation anyway?
When comparing quotes from different suppliers, some describe their systems in kWh (kilowatt hours) and others in kW (kilowatts). They might sound very similar, but kW reflects the rate at which the electricity is being produced, while kWh is the total amount of electricity used and is what you see on your utility bill. As a rule of thumb, 1 kW equates to about 4.25 kWh if you have a good location for your solar installation.
We are now in 2019, which is the last year that the Federal rebate for residential solar installations will be at 30%. So what are the economics of residential solar installations today? There are many things to consider, including how much power you consume, what make of panel to choose, and how much battery backup you want to provide. Different regions can expect different amounts of sunshine, so the same number of panels will produce differing amounts of power, and installation costs can vary substantially from one region to another. One advantage of installing solar on residential buildings is that the roofs are normally sloped at an angle that works well for the panels.
Currently, a PV array can increase the value of your house. In future, having old tech up there may not be as attractive.
The Federal solar rebate goes down to 26% in 2020, 22% in 2021, and disappears in 2022, but solar panel costs have also been dropping and are likely to continue doing so, while utility bills rise. You may also be fortunate in having local credits available for solar installations.
For this study, we are looking at a solar installation for a house in California, which has ample sunlight but where labor costs are high. The annual power consumption is approximately 5,500 kWh for a total bill of about $1,300/annum. The quotes for the solar system came to around $18,500 (of which about $7,000 is for the battery) to purchase the system outright, about $875/annum over 25 years to purchase it through a lease, or $15,000 to prepay for 25 years’ electricity generation from the system. With that last option, the system remains the property of the company supplying it, and they would monitor and maintain the system, including the battery, for 25 years. The quotes include the allowance for the 30% Federal rebate, but no local rebate was available.
The payback period worked out at around 14 years for the direct purchase, and 11 years for the lease and prepay options. That is assuming a 3%/annum increase in the electrical utility charges, which is probably on the low side. The lease and the prepaid generation options have the same payback period because the total for the prepaid option ($15,000) is equal to the lease payments when using the formula for Cumulative Present Value.
The CPV formula calculates the capitalized costs of a series of future amounts (basically, what you would have to invest initially to finance the future payments). The formula is P = S/((1 + i)^n) where P is the present value of S for year n, S is the future value amount, i is the interest rate, and n is the year that S is due.
Talk of a recession has been increasing in recent months, but how realistic are the indicators and how can we negotiate the market confusion?
Design consultant: Katie Levine of Vallance, Inc.