a personalized solar electric analysis for: harry and cj...

Ichiban Hibachi(408) 111 1111H, (408) 222 2222C

Yaz's Solar Company is privileged to present

A personalized solar electric analysis for:

Harry and CJ Fair

Fax (989) 332 4447

April 8, 2010

[email protected], www.buyer.com

Site Address:149 Elderwood Ave, #1

Pelham, CA 10803

of a

11.0 kW Residential PV System

prepared by:

Carl YastrzemskiYaz's Solar Company

Voice (989) 332 1332

[email protected]

© Yaz's Solar Company and/or OnGrid Solar

Presented by: Carl Yastrzemski Yaz's Solar Company

Notice

California Solar Initiative - Solar 101: http://www.gosolarcalifornia.org/solar101/index.html

The DSIRE Database of Incentives: http://www.dsireusa.org/solar

Carl Yastrzemski

This information is provided as an illustration of potential financial benefits stemming from ownership of a renewable energy power system. This is not a production guarantee. A professional accountant or tax advisor should confirm these estimates. Neither OnGrid Solar nor any authorized user of the tool used to produce these results warrants the applicability of these estimates for particular business cases, and both disclaim all liability.The estimates of production and other results can be independently validated at the following websites:

California Energy Commission: http://www.consumerenergycenter.org/renewables/estimator/index.html

PV Watts Solar Performance Estimator: http://www.nrel.gov/rredc/pvwatts

Sincerely,I would be pleased to answer any questions. I will also follow up with you shortly.

Carl YastrzemskiYaz's Solar CompanyVoice (989) 332 1332Fax (989) 332 [email protected]

• A cost analysis, including incentive programs, tax credits and other critical information leading to the economic bottom line.

Please contact me at:

> If you finance the system, how much it will cost or save you on a monthly basis, both initially, and over time.

> As an investment, what its long-term Compound Annual Rate of Return will be (comparable to stocks, bonds, savings, etc).> An environmental analysis, showing how much benefit you'll be creating on top of the savings you'll enjoy.

Thank you for the opportunity to present you with a proposal for a solar electric system. Yaz's Solar Company is delighted to be working with you.

This proposal covers the following areas:

• How solar electric systems work

• A summary of your site conditions

• Our recommendation of a solar system to fit your needs

Dear Harry and CJ Fair,

Proposal for: Harry and CJ Fair, Ichiban Hibachi

> How much the solar system will save on your electric bill> How much the system will increase your property's value

• Your current usage profile and economic assumptions included in your customized analysis

• Opportunities to save energy

• A financial analysis of what the solar system will do for you economically, including:



The Tier pricing system is a progressive pricing system whereby the more you consume, the higher the rate becomes. The top of Tier 2 represents the 'average' user in your geography who uses 130% of 'baseline'. Baseline for your geography is 16.5 kWh per day in the summer, and 12.7 kWh per day in the winter. In a 30-day month, this translates to 495 kWh per month in the summer, and 381 kWh per month in the winter.

This home is above average usage, with top usage in Tier 5. The top rate you pay for electricity is 49.9¢ per kWh. The average rate was 34.3¢ per kWh. Solar will save electricity in the top tiers first.

1,500 kWh in the winter months (Oct thru Apr) and

This describes the historical usage of energy, a major factor in sizing a solar system

Your current electric rate is E1-SB, which is a Residential Tiered-kWh rate. TOU stands for Time-of-Use, which many times, is a beneficial rate for solar. TOU rates value electricity differently depending on time of day. Solar can sell back best during the day, which usually corresponds with the highest TOU rates. We suggest you switch to E6-SB, which is a Residential TOU Tiered-kWh rate.

The total annual usage has been: 21,000 kWh

Based on our discussions, it looks like your usage will be about 98% of historic due to lifestyle changes. We anticipate your bill will adjust to $558.65 per month when accounting for these lifestyle changes.We are not anticipating that you will improve your building's efficiency. However, Energy Efficiency is a cost effective way to improve the return on your solar investment, and do the right thing environmentally. There are federal tax credits that can make energy efficiency even more attractive. More on this later.

This equates to an average electric bill of $576.66 per month.


Energy Usage Profile

2,000 kWh in the summer months (May thru Oct)

Your property has used, on average:

Residential Tiered Usage Before Solar

0¢5¢

10¢15¢20¢25¢30¢35¢40¢45¢50¢55¢

444,

Tie

r 1

577,

Tie

r 2

932,

Tie

r 3

1376

, Tie

r

Tier

5

Usage (kWh/mo at top of tier) & Tier

Cen

ts p

er k

Wh

Usage



Rate escalation plays a big factor in future energy costs, and magnifies the amount a solar system will save you. Historically, escalation has been around 6.7% on average over 30 years from 1970-2001, much higher than the CPI. In this analysis, electric rate escalation of 4.0% has been factored in over the long term. The CPI-U (Urban Consumer Price Index) has increased about 3.1% annually since 1982. In this analysis, general inflation on maintenance, etc. is assumed to be 3.0%.

In addition to shading & orientation, there are numerous system efficiency factors that must be included to make a reasonable, conservative estimation of production. These include inverter efficiency, module heating, wire losses, dust & dirt, and module mismatch factors. We expect that these will account for a total system efficiency factor of 74%. Normal loss factors for most systems are estimated to be 69%-73% (from the CEC guidebook, see http://www.energy.ca.gov/reports/2001-09-04_500-01-020.PDF).

Site Conditions & System Efficiency FactorsThe anticipated orientation of your PV Array is 22° up from horizontal, and facing S. It will be mounted on your Foam roof.

Your site location in Pelham, CA receives about 5.5 hours of equivalent full noontime sun. This is based on 30-year annual average data for nearby Sacramento, CA found in the NREL Redbook (http://rredc.nrel.gov/solar/pubs/redbook). This level of sunshine can vary +/- 9% year to year due to weather.

System Efficiency Estimations

Accounting for shading & orientation factors, we anticipate your system will have 5.5 hours of effective equivalent full noontime sun.

We've assumed the following tax brackets for factoring in certain tax implications:28.0% Federal Income Tax Rate9.3% State Income Tax Rate34.7% Combined Net Fed & State Income Tax Rate (assuming itemized tax deductions)

Tax Assumptions:


Rate Escalation Factors

CA Electric Rates, 30 YearsRates have risen on average,

6.7% per year since 1970

0

2

4

6

8

10

12

14

16

1970 1975 1980 1985 1990 1995 2000

Cen

ts p

er k

Wh

Residential Small Business



The American Council for an Energy Efficient Economy produces excellent guides for home and building energy efficiency and savings. More information is available at: http://www.aceee.org/consumer/consumer.htm

An energy efficiency audit can identify other ways to use less, and sometimes be even more comfortable.

Solar Electric System:

Opportunities For Saving Energy

Getting the same benefits and enjoyment, but in ways that require less input energy. These are often very cost effective, but less in vogue than solar electricity. They include lighting upgrades and replacing refrigerator and other equipment or appliances with more modern and efficient products.

Energy Efficiency:

Solar Electricity, or 'PV', is the most interesting, hottest new technology. Strongly supported by the state & federal governments. Solar Electricity is one of the fastest growing energy technologies worldwide, growing over 35% each year for the last 8 years. Not actually a 'new' technology, the first solar panel was put into use in 1954. Most of the bigger solar manufacturers have over 20 years experience in producing and refining their products. Some have over 40 years experience.

Conservation - simply using or doing with less. This is always the most cost effective, but not always doable. Can you turn off or unplug an extra refrigerator in the garage, and only use it when it's really needed? Are there other things that are rarely used that can be shut off without impacting your lifestyle?




When the solar system can put out power, it goes to reducing your usage at the time, or, if there is excess, to spinning the meter backwards, counting down your electric use and bill. Special metering, such as Time-of-Use metering and billing arrangements can help you take advantage of higher daytime rates, allowing you to sell power at a high rate, and buy it back at night at a lower rate. This helps reduce the necessary size of your solar system, while still cutting your bill by the same amount.

At night and during cloudy weather, the solar system's output is reduced or stopped; however, your home then gets electricity directly from the utility grid. You're always connected to the grid, so you can have as much power as you need, any time you need it, regardless of whether the solar system is able to put out any power.

Solar Electric systems generate electricity silently and without any moving parts. Sunlight falls on the solar array (blue, on the roof), generating DC electricity. That DC electricity is converted into household 120V AC electricity by the inverter (blue & grey, on the wall). The AC electricity is fed into your electric meter and circuit breaker panel (grey, on the wall). The electricity either goes to your appliances and lights, or to the grid, or some to each. This all happens silently and automatically every day.

How Solar Electric Systems work


.



Another method is using the nameplate rating system, also known as STC (Standard Test Conditions) or DC rating of the system. This rating system assumes standard, ideal factory conditions. Using this rating system, the modules have a rating of 215 watts. The nameplate rating (STC) of this system is: 12.545 kW DC. These ratings are useful in comparing systems side-by-side.

Over time, solar systems lose a little bit of performance each year due to ageing of the solar modules. The annual module degradation rate in your system is estimated to be 0.8% per year (normal ranges are from 0% to 1%). Solar modules typically have a 20 or 25 year performance warranty, typically for 80% of their 'as new' performance, so you can rest assured that your system will have long lasting high performance.

It will be mounted on your Foam roof.

This system, in this configuration (with the shading, orientation, tilt and other factors assumed) is estimated to produce 17,730 kWh per year of usable electricity to offset your electric bill.


That is about 1,615 kWh per year per kW CEC AC capacity rating, or 1,413 kWh per year per kW STC nameplate rating. This might be useful to you for comparison, on a per kW basis, to estimations you might see in other tools or estimators, or in print from government energy agencies. It's a way of checking the validity of the estimations and proposal being presented to you.

Recommended Solar Electric SystemBased on the above usage, site conditions and system factors, we recommend a 10.977 kW (CEC rating) system comprising 43 Sanyo Electric HIT-N215A01 modules and 3 SMA America SB3000US (240V) inverters in the primary array, and a secondary array comprising 15 BP Solar BP3220N modules and 1 SMA America SB7000US (240V) inverter. This system will offset about 97% of your electric bill.

Note: There are several ways of rating solar systems. One way is using the CEC AC rating system. The CEC AC rating system takes account of system performance reductions due to inverter efficiency and module heating effects. Using this rating system, the primary modules have a rating of 199.6 watts, and the inverters have an efficiency rating of 95.5%. The total system has a CEC AC rating of: 10.977 kW.



Your new tier is now Tier 1. Your new marginal cost of electricity is 12.0¢ per kWh (that is, the new cost to switch on the lights. Your old cost to do so was 49.9¢ per kWh). Note: it is not necessary to produce all the electricity you use, because you are taking advantage of selling at higher rates, and buying at lower rates.

Your new average electric bill will be approximately $14 per month when averaged over a typical year. This is an estimate, and will be affected by many factors including any unanticipated changes in your usage, variations in the weather in a particular year, and excessive dirt build-up on the array.

Your net energy use will be substantially lower because of the production from the solar system. The total area in the chart below shows your total usage, and matches the usage in the previous chart above. However, the area in green is the fraction that will now come from solar.


This translates to a savings of approximately $544 per month when compared to what we expected your usage to adjust to with anticipated lifestyle changes. Over a year, we expect you will save about $6,534 The Pre-Tax value of the first year annual savings due to solar is $10,420. This is important for valuing the solar savings compared to other investments, which are often taxable.

Electric Usage with Solar:

Residential Tiered Usage With Solar

0¢5¢

10¢15¢20¢25¢30¢35¢40¢45¢50¢55¢

444,

Tie

r 1

577,

Tie

r 2

932,

Tie

r 3

1376

, Tie

r

Tier

5


Cen

ts p

er k

Wh

Net Usage Production



121,857$ 400$ 500$ 600$ 700$

(3,722)$ 120,336$ (13,768)$ 108,567$

100$ 200$ 300$

107,167$ -$

107,167$ 560$

(3,600)$ (32,750)$

-$ 71,377$

(16,768)$ 61,945$

ENERGY EFFICIENCY:1,000$ (500)$

64,745$

Estimated Permit Fees NOT included in system contract price

Net System Cost after Tax Benefits, Rebates, Grants, and PBIs

Efficiency ROI improvement calculations based on cost of measure & savings on system sizeCost of Energy Efficiency improvements

Other Fees NOT included in system contract priceUtility Fees NOT included in system contract price

Cost After Rebate, non-Fed Grant, & Fees (may be the Tax Creditable Amount, see Tax Advisor)

State Tax Credit Benefit (net), after Federal Tax on the State Tax Credit

Net Cost Up Front (after Rebate, Grants, & Fees)Federal Tax on Grant

Fed Tax Credits for Energy Efficiency improvements

Sales Tax (if not included above)Total System Cost (includes full service, parts, delivery, installation, warranty)

Gross Top Line Cost ($10.96 per CEC AC Watt)

Net System Cost after Tax Benefits, Rebates, and Grants

TOTAL NET COST OF SYSTEM PLUS ENERGY EFFICIENCY IMPROVEMENTS (after all tax effects)

Incentives are reducing your cost of the system by approximately 46%, or about $55,590

Your solar system is eligible for incentives to help make it more affordable and attractive. The breakdown for the cost of your system, from the top line, to the net cost, after all incentives is:

PBI Incentive after Federal Tax

Federal Investment Tax Credit (ITC)

Other Fees included in system contract priceYaz's Solar Company 3.0% Discount

Rebate and non-Federal Grants (as applicable)System Price after Rebate and non-Federal Grants

Estimated Permit Fees included in system contract priceUtility Fees included in system contract price

Solar System Capital Cost and Incentive Summary




ConclusionThank you again for the opportunity to present you with a proposal for a solar electric system. Yaz's Solar Company is delighted to be working with you. Please let us know what we can do to win your business.

2,020 lbs of S02, which causes acid rain137

Or planting 6.0 acres of trees.

lbs of particulates that cause asthma1,131,338 miles driven in an average car, or 45,254 miles a year

These can also be thought of in other forms of avoided environmental impact:

It's like taking 3.7 cars off the road for 25 years.


2,231

Your solar system will generate substantial environmental benefits in the form of avoided emissions from power plants. Over 25 years, this solar system is estimated to offset:

lbs of NOx, which creates smog695,310 lbs of CO2, the leading greenhouse gas

Environmental Analysis

Area of Equivalent Number of Trees Planted Relative to a Typical 6000 sqft House Lot (.14 acre)

Equivalent Area of Trees Planted

Typical 6000sqf Residential Lot Area


11.0 kW Solar Electric System

Harry and CJ FairIchiban Hibachi

Carl YastrzemskiSolar Designer

By

Prepared For

Yaz's Solar Company



Proposal for: Harry and CJ Fair, Ichiban HibachiDesign: 11.0 kW Residential PV System

Notice

Sincerely,

The estimates of production and other results can be independently validated at the following websites: PV Watts Solar Performance Estimator: http://www.nrel.gov/rredc/pvwattsThe DSIRE Database of Incentives: http://www.dsireusa.org/solar

To start that process, enclosed are the documents that will need to be signed. Please review them carefully and let us know of any questions. Once executed, we'll be able to submit them to reserve your incentives and begin the permitting and full design process. I'll contact you shortly to follow up, and please be aware that this proposal is valid for 14 days, after which we'll need to reconfirm the pricing and proposed schedule.

Thank you again for the opportunity to present you with a proposal for a solar electric system. Yaz's Solar Company is delighted to be working with you.

Carl Yastrzemski

Yaz's Solar CompanyVoice: (989) 332 1332, Fax: (989) 332 [email protected]

Quality and your satisfaction in every way are our primary foci. We will be contacting you regularly during the project to ensure everything goes smoothly, but we also ask that you not hesitate to let us know if there's anything we can do to make your experience going solar more positive.

Ichiban Hibachi149 Elderwood Ave, #1Pelham, CA 10803


We are delighted to present a proposal for your consideration of a solar electric system. Thank you for this opportunity.

Based on the site analysis we performed, we have designed a system that will offset a significant fraction of your electrical usage via clean solar electricity, produce substantial savings on your electric bill, and provide you with a valuable long-term investment. The pages that follow detail the important features and benefits of the system. Please don't hesitate to contact me with any questions - I would be very happy to discuss any aspect of it with you.

Please contact me at: Carl Yastrzemski

April 8, 2010

Harry and CJ Fair

This information is provided as an illustration of potential financial benefits stemming from ownership of a renewable energy power system. This is not a production guarantee. A professional accountant or tax advisor should confirm these estimates. Neither OnGrid Solar nor any authorized user of the tool used to produce these results warrants the applicability of these estimates for particular business cases, and both disclaim all liability.




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A turn-key system that includes all design, parts, sales tax, $500 in estimated permit fees, and labor, including:Electrical Work: labor, permitting & inspection labor, wiring, conduits, breakers, disconnects, and any other needed materials.

Stamped Engineering drawings or Architectural Review drawings or labor, if required.Ground rod and grounding conductor wiring, if required.

Proposed System:

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Roofing & Mechanical Work: labor, permitting & inspection labor, racking and mounting hardware.Excluded items:

Secondary Array: 15 BP Solar BP3220N modules and 1 SMA America SB7000US (240V) inverter.Included items:

10.977 kW (CEC rating) system producing 17,730 kWh/year, consisting of:Primary Array: 43 Sanyo Electric HIT-N215A01 modules and 3 SMA America SB3000US (240V) inverters.

,-./01)I)23<O05/)PL03L40CNFor:

Harry and CJ FairIchiban Hibachi149 Elderwood Ave, #1Pelham, CA 10803(408) 111 1111H, (408) 222 [email protected], www.buyer.com

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Recommended System:Based on the above usage, site conditions and system factors, we recommend a 10.977 kW (CEC rating) system comprising 43 Sanyo Electric HIT-N215A01 modules and 3 SMA America SB3000US (240V) inverters in the primary array, and a secondary array comprising 15 BP Solar BP3220N modules and 1 SMA America SB7000US (240V) inverter. This system will offset about 97% of your electric bill. It will be mounted on your Foam roof.


Site Conditions & System Efficiency Factors:

We are not anticipating that you will improve your building's efficiency. However, Energy Efficiency is a cost effective way to improve the return on your solar investment, and do a good thing environmentally. There are federal tax credits that can make energy efficiency even more attractive. More on this later.

The anticipated orientation of your PV Array is 22° up from horizontal, and facing S. It will be mounted on your Foam roof.


,4/0)I),-./01)203T<316:50)Q:6?-.4.NEnergy Usage:

1,500 kWh in the winter months (Oct thru Apr) and2,000 kWh in the summer months (May thru Oct)The total annual usage has been: 21,000 kWh

Based on our discussions, it looks like your usage will be about 98% of historic due to lifestyle changes. We anticipate your bill will adjust to $558.65 per month when accounting for these lifestyle changes.










System Performance:




We strongly recommend you including system monitoring. Monitoring helps ensure your system performs continuously and provides you immediate notification if there is a problem, allowing it to be addressed right away. Monitoring improves your peace of mind and enhances your customer experience so that you are sure you are getting what you paid for. Finally, if you include building load monitoring, several studies have found that consumer tend to use up to 10% less electricity, which further adds to your savings.

Our customers feel that monitoring the system and their building more than pays for itself several ways. We would be happy to discuss monitoring choices with you.

It will be mounted with leak-free attachment methods on your Foam roof so that it can withstand up to 90 mph winds and won't add more than 4 lb/sqft, which is well within your roofs design capabilities and follows the requirements of the Uniform Building Code. Our designers will reconfirm each of the design choices.

Conduit to protect the systems conductors will be used and will be routed in the most attractive pathway. Conduit can sometimes be hidden in false downspouts or in other ways. This may be available at an extra charge if you are interested.

Electrical:

Based on the above usage, site conditions and system factors, we recommend a 10.977 kW (CEC rating) system comprising 43 Sanyo Electric HIT-N215A01 modules and 3 SMA America SB3000US (240V) inverters in the primary array, and a secondary array comprising 15 BP Solar BP3220N modules and 1 SMA America SB7000US (240V) inverter. This system will offset about 97% of your electric bill.

Your system will use Sanyo Electric HIT-N215A01 modules, which are an attractive, well-built, high-quality module. All the modules we provide have at least a 20-year performance warranty, assuring you they will put out at least 75% or more of their rated power during the warranty period. We will provide you with specific warranty documents with your Owner's Manual.

Your system will also include SMA America SB3000US (240V) inverters. These are top-quality inveters that are widely recognized for their high performance, converting 95.5% of the solar array's DC power to utility-compatible AC power.

The power produced from the solar system will be feed into your property's existing electrical system with all the required interconnection and safety gear to ensure safe, long-lasting, high performance. Any power your existing loads don't absorb will be sent back to the utility under the Net-Metering laws that allow you to get retail savings on your electric bill.

Monitoring:

,-./01)U0.4V:NThe designed system balances performance and aesthetics, but always keeps safety and structural integrity paramount.

Roofing, Structural, and Mechanical:

The anticipated orientation of your PV Array is 22° up from horizontal, and facing S to ensure good performance.




559$ Previous Average Adjusted Monthly Electric Bill14$ Estimated New Average Monthly Electric Bill

545$ Average Monthly Electric Bill Savings6,534$ Average Annual Electric Bill Savings97.5% Percentage Of Bill Offset

22.3% Pre-Tax Compound Annual Rate of Return (IRR) over 25 years204,218$

231,717$ Net Savings over 25 years including bill savings, sRECs, maintenance, & inverter replacement (net after-tax values)

3.7x Total Lifecycle Payback (25-year Net Savings divided by Net Cost)8.7 years Payback (after-tax $ - not a good measure)

126,128$ Theoretical Initial Increase in Property Value


,6L4:V.)I)>4:6:546?)Q:6?-.4.N

Tax & Rate Escalation Assumptions:



121,857$ 400$ 500$ 600$ 700$

(3,722)$ 120,336$ (13,768)$ 108,567$

100$ 200$ 300$

107,167$ -$

107,167$ 560$

(3,600)$ (32,750)$

-$ 71,377$

(16,768)$ 61,945$


64,745$
























New average monthly electric bill:Monthly savings:Annual savings: 6,534$

Home resale/appraisal value increaseCurrent and future cash flow if financed

The Total Lifecycle savings is $231,717, including bill savings, sRECs, maintenance, & inverter replacement (net after-tax values) over 25 years compared to a system cost of $61,945. This yields a Total Lifecycle Payback of 3.7x. Payback occurs at Year 8.7.

Total Lifecycle Payback Payback is often looked at as a measure of financial soundness of an investment. However, for long-term investments such as stocks, bonds, homes, and solar systems, payback isn't easily found or comparable to other investments to determine which investments form the best options for a diversified portfolio. 'Payback' has several other drawbacks as well, including the difficulty in accounting for escalation and inflation, time-value-of-money, one-time expenses such as inverter replacement cost, or the savings available after 'payback' has been achieved.

Compound Annual Rate of Return (comparable to stocks, bonds, savings, etc)

The savings will increase over time due to escalation, which we've agreed to anticipate being 4.0% for electricity over the long term. Historically, electric escalation has been 6.7% in California for the 30 years from 1970-2001, even though the CPI has only been 3.1% since 1982.

544$ 14$

Direct, Immediate & Future Savings

Other ways of looking at Payback include analysis of the Total Lifecycle Payback over the 25-year warranted life of the solar modules. In the graphic below, the steadily increasing steps reflect each year's savings from the solar system affected by 4.0% escalation. The red area in the graphic below shows the needed accumulation of savings before payback. The green area shows additional savings received after payback. As you can see, savings after payback are substantial.

These immediate and future savings will immediately reduce the operating expenses of your home and improve your cash flow:


Financial Analysis & PaybackYour solar system will generate substantial savings on your electric bill. These savings can provide a variety of direct and future economic benefits. Some of the ways these economic benefits are measured include:

Direct, immediate & future savings on your electric bill creating improved cash flowTotal Lifecycle Payback

$0.00

$2,000.00

$4,000.00

$6,000.00

$8,000.00

$10,000.00

$12,000.00

$14,000.00

$16,000.00

1 3 5 7 9 11 13 15 17 19 21 23 25

Ann

ual S

avin

gs

Annual Savings Before Payback

Annual Savings After Payback

Payback Year (Occurs at 8.7 Years)

Annual Savings Before and After Payback



The maximum resale value of $158,382 based on estimated remaining savings to 25 years occurs at year 10.

Because savings increase over time due to electric rate escalation, the increase in resale value will increase as well. However, the limit to this increase will be the anticipated remaining savings left in the system before it's 'end of life', which has been conservatively estimated at 25 years (the module warranty life). The actually design life is much longer, but to be conservative, we'll use this shorter time horizon.

This home's annual savings of $6,534 translate to an immediate theoretical increase in resale value of $126,128. This translates to 195% of the system's net cost.


Home Resale/Appraisal Value IncreaseSolar systems increase home values by reducing operating costs. The Appraisal Institute published a study in the Appraisal Journal in 1998 & again in 1999, that stated that if a home's operating costs can be reduced through an energy efficiency measure that reduces its operating costs, those savings have a tangible connection to increasing the home's value. The rationale is, that instead of paying the utility, a future buyer could take a larger mortgage, and instead pay the bank and their operating costs would remain unchanged.

The article established that a homes resale value increases $20 for every $1 saved in operating costs. This is based on a 5% after-tax long-term average for mortgage costs. For more information see www.ongrid.net/AppraisalJournalPVValue10.98.pdf which is from The Appraisal Journal, Oct '98. While this may sound dated, it is based on solid math that doesn't vary with time, only long term averages in mortgage interest rates.

Resale Value Over Time

$0.00

$50,000.00

$100,000.00

$150,000.00

$200,000.00

$250,000.00

$300,000.00

1 3 5 7 9 11 13 15 17 19 21 23 25

Res

ale

Valu

e

Effective Resale Value

20 times Annual Savings

Remaining savings within 25 years

Years




Year 5Solar Cost w/ Smart Financing $2,887Old Electric Bill with inflation $5,438

Cash Flow (Annual) $2,551$2,632

$2,700$4,977$2,277

$3,272$6,304$3,033

Year 1 Year 10Year 2$2,200$4,832

Proposal for: Jeff Sun

Option 2: Fully amortized 'Optimistic Loan' of the above interest rate and term; the initial principal is the net system cost after all near-term incentives (rebates, grants, tax credits, tax deductions, PBI's, and depreciation) except SRECs if any (SRECs are excluded because their value is usually uncertain) are received. This loan is optimistic (for the salesperson) because it has the lowest payments, but requires the customer to get a bridge loan or provide their own cash until some of the near-term incentives are received (tax credits, tax deductions, PBIs, depreciation).

The payment amount for this loan is $281/mo on $39,791 borrowed.

Current and Future Cash Flows if Financed

If the system is financed, a cash flow analysis compares the cost of the loan (principal, interest and tax effects) to the savings on the electric bill (minus maintenance and other costs). For this analysis, we've assumed a financing interest rate of 7.5%, and a term of 30 years. Here we present 3 options for financing the system; what we'll call the 'Inefficient Loan', the 'Optimistic Loan', and 'Smart Financing' using a Line of Credit:

Option 1: Fully amortized 'Inefficient Loan' of the above interest rate and term; the initial principal is the net system cost after up-front incentives (such as rebates and grants) are received. This requires no out-of-pocket costs to the consumer to acquire the solar system, but as other incentives and benefits are received (such as tax credits, tax deductions, PBI's, and depreciation, each as applicable), the consumer ends up with cash on hand which they also are paying loan interest on, so this loan ends up costing unnecesary interest, making it inefficient and expensive.

Option 3: Fully amortized 'Smart Financing' of the above interest rate and term, usually using a line of credit; the initial principal is the net system cost after up-front incentives (such as rebates and grants) are received. This financing method is both Efficient and Realistic in terms of true consumer cost because it borrows exactly the amount needed so that the consumer never needs a bridge loan, but also pays no unnecessary interest because it applies any near-term incentives received towards the principal owed.

The calculation is complex, but the Smart Financing with a Line Of Credit cost falls between the Optimistic and Inefficient loan costs. It requires the customer to be disciplined to apply any depreciation, tax credits, PBIs and other near-term incentives to pay down the principal owed as taxes are filed and benefits are received. Note: in the first year, the principal and therefore the interest is large, so the interest tax deduction is large; sometimes the interest exceeds the payment, allowing for a large tax benefit but also temporarily increasing the principal amount. This situation is temporary as long as any tax credits and depreciation are applied to reducing principal as they are received.

The monthly payment is $289/mo on $56,845 borrowed. The net annual payments or solar cost with Smart Financing (after tax deduction of interest paid) in the 1st, 2nd, 5th, and 10th years is:


Please see the 25 Year Financing Timeline table for details on the principal, interest, tax benefit, and payment amount, etc for each year in details.


The bottom graphic shows the accumulated savings. Note that this is pure savings, with no out-of-pocket costs. All system costs came from financed sources. This is the accumulation of excess savings above what was needed to pay off the principal and interest for the loan.


As in the Appraisal/Resale calculation above, electric escalation will increase the electric bill savings over time. The Smart Loan's cost is affected by the factors previously mentioned. The top graphic below illustrate the loan cost vs. net bill savings over 25 years. The middle graphic represents their difference and hence the the net cash flow.

Annual Costs: Solar plus Loan vs. No Solar

$0.00

$2,000.00

$4,000.00

$6,000.00

$8,000.00

$10,000.00

$12,000.00

$14,000.00

$16,000.00

$18,000.00

1 3 5 7 9 11 13 15 17 19 21 23 25Years

Ann

ual C

ost

Old Utility Bill w/ 4.0% inflation Solar Cost w/ Financing

Net Annual Savings When Financed

$0.00

$2,000.00

$4,000.00

$6,000.00

$8,000.00

$10,000.00

$12,000.00

$14,000.00

$16,000.00

1 3 5 7 9 11 13 15 17 19 21 23 25

Ann

ual S

avin

gs

Net Annual Savings (Old Bill minus Solar with Financing)Years

Accumulated Net Savings When Financed

$0.00

$20,000.00

$40,000.00

$60,000.00

$80,000.00

$100,000.00

$120,000.00

$140,000.00

$160,000.00

1 3 5 7 9 11 13 15 17 19 21 23 25

Acc

umul

ated

Sav

ings

Accumulated Net Annual Savings (with Financing)

Years



Annual savings:Pre-Tax value of the annual savings:

Pre-Tax Compound Annual Rate of Return (IRR) over 25 years: 22.3%

Compound Annual Rate of ReturnThe Compound Annual Rate of Return (CARR) is an analysis method that makes the solar investment comparable to other interest-rate-based investments, such as stocks, bonds, CDs, money markets, savings, etc. The goal is to include all the cost and benefit components in a multi-year timeline and look for the effective annual rate of return using Internal Rate of Return analysis (the IRR tool in most spreadsheets).


In residential solar analysis, it's important to treat and view the system properly with respect to taxes. A solar system saves the homeowner after-tax expense. However, most of the other investment opportunities provide pre-tax returns, and are usually thought of in a pre-tax context. Therefore, in order to make a good side-by-side comparison of the two, it is then appropriate to translate one to the other's realm.

When comparing analyses, it is also important to look at the compound annual rate of return (CARR), rather than an annual average, which can also appear misleadingly high. More information on financial analyses for solar systems is available at: http://www.ongrid.net/papers/PaybackOnSolarSERG.pdf

Please see the attached 25-year financial timeline analysis for details of the amounts and timing of items included in the CARR analysis.

Looked at another way, if the system were substantially financed, such that there was no initial outlay, and only a cash positive result, what is the rate of return on that - infinite. While it may be true in this specially created case, it does not produce a useful result for purposes of comparison. Hence, this analysis assumes an all cash transaction.

Loan costs do not get included in this analysis as that muddies the waters and can create excessively optimistic looking results. The CARR analysis should be done in pure form as if the choice were between investing in this opportunity vs. another. It is irrelevant in comparing the two choices what the source of funds might be, and only creates confusion.

10,420$ 6,534$

All relevant cost components must be included to ensure completeness of the analysis. These include; system capital cost, rebate, tax credits, performance based incentives, REC sales, maintenance costs, tax consequences of any incentives and state credits, depreciation and the tax consequences of depreciation, electric bill savings, tax consequences for the loss of deductibility of such savings (commercial analyses only), and inverter replacement cost at an appropriate year in the future.

Because most people think of their investments in pre-tax terms, the attached analysis translates the solar Compound Annual Rate of Return analysis to it's pre-tax equivalent (note, all other analyses in this pro forma are unaffected by this translation). This requires that most amounts be converted based on the purchasers tax bracket. The amounts that do not get converted are the system's net capital costs (top line, rebate values, etc) and any state tax credit amount.




137


It's like taking 3.7 cars off the road for 25 years.Or planting 6.0 acres of trees.

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lbs of particulates that cause asthma1,131,338

2,020 lbs of S02, which causes acid rain


695,310 lbs of CO2, the leading greenhouse gas2,231 lbs of NOx, which creates smog

miles driven in an average car, or 45,254 miles a year







We would be happy to provide references for your review.

• Instructions on how to monitor your system’s performance

Yaz's Solar Company has quality control procedures in place for design, installation, and sales of grid-tied solar electric systems. These practices allow Yaz's Solar Company to carefully control the quality of any work done within the company.

Our staff has received training on and installed many types of grid-tied inverter.

This system is designed to require the minimum of maintenance. PV systems are simple, and require no moving parts, and therefore few mechnical failures. It is designed for a 30 year lifetime, using components chosen to match this lifespan.

Recommended system maintenance consists of:• Periodic rinsing of modules with water to get the thick layer of dust off (no scrubbing required or recommended).

Yaz's Solar Company has the capability to perform virtually any type of residential grid-tied installation. We have project managers and installation crews in the Pelham area. Yaz's Solar Company has the general construction experience required to develop and implement mechanical solutions to most installation issues. We have the electrical experience required to work with commercial & residential electrical systems.

In our many years of experience we have performed custom mechanical installations on many types of surface. We have installed penetration systems on a variety of commercial and residential roofs. We have worked with various non-penetration systems. We have designed and installed a number of ground mounted systems.

• Checking the monthly and annual electric bills and statements to ensure the savings expected is being enjoyed.

Upon completion of the project Yaz's Solar Company will provide the following:• As built drawings of the roof layout

• Owner manuals for the modules and inverter

Yaz's Solar Company provides a 1 year warranty for all materials and workmanship which covers all parts and installation. In the event of a problem with your system, Yaz's Solar Company guarantees that it will be fixed in three days. If we are unable to fix your system in three days, we will pay you for your lost production until it is fixed. In addition to our warranty, your system is also backed by Sanyo Electric who warrants the production of the solar modules for 25 years and SMA America who provides a 10 year warranty for the inverters.

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• As built electrical diagram

• Checking the display on the inverters or monitoring system to ensure there are no error warning indicators and that the production seems to be in the right range for the time of day, day of year, and current conditions

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Project Milestone

Sign contract, submit rebate paperworkOrder materialsSubmit application and design package for permitDelivery of Materials, Begin construction

May 9, 2010July 25, 2010

August 1, 2010August 8, 2010August 11, 2010

Note, all dates above are estimates and may change depending on how soon we put an agreement in place, the supply of modules and inverters at the time of ordering materials, and any local permitting delays.

September 5, 2010

Complete constructionReceive permit final signoff Submit Incentive Claim Form Receive utility signoff and interconnection, Commission system

Approximate DateApril 18, 2010May 2, 2010

Based on our current backlog, we estimate we will be able to work towards the following approximate timeline:

Phase 1: Initial system design and incentive application paperwork.

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Phase 4: System final check, permit inspection, utility inspection and interconnection, and commissioning.

Phase 2: Final system design and permit applicationPhase 3: Electrical and mechanical construction

The project will be completed in four phases:



Compound Annual Rate of Return Detail

Year:0 1 2 3 4 5 6 7 8 9 10 11 12

10,420 10,551 10,788 10,815 11,166 11,529 11,904 12,291 12,690 13,103 13,529 13,968 848 842 836 1,382 1,372 1,362 1,352 1,342 1,864 1,850 1,837 1,823 (120,936)

13,768 4,242 4,210 4,178 4,147 4,116

(500) (362) (373) (384) (396) (408) (420) (433) (445) (459) (473) (487) (501) (399) (411) (423) (436) (449)

(107,667) 14,749 14,818 14,994 15,513 15,798 12,471 12,823 13,187 14,096 14,481 14,878 15,290 (2,042) (1,471) (1,460) (1,641) (1,629) (473) (469) (465) (647) (642) (637) (633) 109,167 52,233 107,167

7,974 (2,233)

(107,667) 72,915 11,115 13,535 13,872 14,170 11,999 12,354 12,722 13,449 13,839 14,241 14,657 (107,667) (34,752) (23,638) (10,103) 3,769 17,938 29,937 42,291 55,013 68,462 82,300 96,542 111,199

| <----- <----- <----- next 13 years follow below <----- <----- <----- <----- <----- <----- <-----

v

Year:13 14 15 16 17 18 19 20 21 22 23 24 25

14,422 14,891 15,375 15,875 16,391 16,923 17,473 18,041 18,627 19,233 19,858 20,503 21,170 1,809 1,796 1,783 1,769 1,756 1,743 1,730 1,717 1,705 1,692 1,679 1,667 1,654

(516) (532) (548) (564) (581) (599) (617) (635) (654) (674) (694) (715) (736) (7,684)

15,715 16,155 8,926 17,080 17,565 18,068 18,587 19,123 19,678 20,251 20,843 21,455 22,088

(628) (623) (619) (614) (609) (605) (600) (596) (591) (587) (583) (578) (574)

15,087 15,532 8,307 16,466 16,956 17,463 17,986 18,527 19,086 19,664 20,261 20,877 21,514 126,287 141,818 150,126 166,591 183,547 201,010 218,997 237,524 256,611 276,274 296,535 317,412 338,926

ANNUAL RATE OF RETURNPre-Tax Annual Rate of Return

22.3% IRR (Pre-Tax Rate of Return)

For comparison with other investmentsAdditional value as a hedge against future electric rate increases

Operating Profit (loss):

Pre-Tax Cash Flow, Cumulative

Avoided Electricity Purchases / Annual Savings

Operating Expenses:

Inverter Replacement at $700 per kW in Year 15System Maintenance at 0.25% of gross system cost per year

System Cost & Incentives:Performance Based IncentiveEnergy Efficiency Net Expense

REC (Green Tag) Income

Pre-Tax Net Annual Profit/Loss for IRRPre-Tax Cash Flow, Cumulative

Operating Savings:

System Maintenance at 0.25% of gross system cost per year

.

.

.

.

.

.

Pre-Tax Net Annual Profit/Loss for IRR

Monitoring Cost

Federal & State Tax Effects:

.

.

Federal Tax on Grant & PBI. Federal and State Tax on RECs.

.

.

State Tax Credit Basis35.0% State Tax CreditFed Tax on State Tax Credit

.

.

.

Harry and CJ Fair, Ichiban Hibachi

Operating Savings:Avoided Electricity Purchases / Annual SavingsREC (Green Tag) Income

.

Federal Tax on Grant & PBI. Federal and State Tax on RECs.

Rebates & Grants

Operating Expenses:

Inverter Replacement at $700 per kW in Year 15Monitoring Cost

Federal & State Tax Effects:

Operating Profit (loss):

Federal Tax Credit Basis30% Federal Tax Credit

Residential Pre-Tax Analysis: After-Tax amounts are adjusted to pre-tax equivalents. Pre-Tax amounts are not adjusted

System Cost & Incentives:System Capital Cost with Fees, before Rebates

Performance Based IncentiveEnergy Efficiency Net Expense



Financing & Resale Value Annual Detail

FINANCING: Year:0 1 2 3 4 5 6 7 8 9 10 11 12

107,667 107,667 67,581 63,694 58,188 52,366 46,209 41,540 36,591 31,345 25,785 19,890 13,643 (620) (620) (620) (620) (620) (620) (620) (620) (620) (620) (620) (620) (538) (338) (318) (291) (262) (231) (208) (183) (157) (129) (99) (68) 201 126 119 109 98 86 77 68 58 48 37 25

(419) (494) (501) (512) (522) (534) (543) (552) (562) (572) (572) (595)

39,105 500 1,886 1,872 1,858

6,920 7,058 7,270 7,343 7,636 7,942 8,260 8,590 8,934 9,291 9,663 10,049

864 935 1,012 1,083 1,172 976 1,067 1,163 1,264 1,372 1,485 1,605

5,548 6,519 6,686 6,656 6,880 6,826 7,025 7,236 7,241 7,478 7,729 7,995

1,372 540 584 687 757 1,116 1,234 1,354 1,693 1,813 1,933 2,054

114 45 49 57 63 93 103 113 141 151 161 171

1,372 1,912 2,496 3,182 3,939 5,055 6,290 7,644 9,337 11,149 13,082 15,136

126,128 127,625 130,462 130,655 134,914 139,312 143,852 148,541 153,383 158,382 163,544 168,875 241,149 232,830 224,461 215,975 207,277 198,393 190,870 183,124 175,147 166,715 158,038 149,109

126,128 127,625 130,462 130,655 134,914 139,312 143,852 148,541 153,383 158,382 158,038 149,109

| <----- <----- <----- next 13 years follow below <----- <----- <----- <----- <----- <----- <-----

v

Year:13 14 15 16 17 18 19 20 21 22 23 24 257,020 (620)

(35) 13

(607)

10,451 10,869 11,304 11,756 12,226 12,715 13,224 13,753 14,303 14,875 15,470 16,089 16,733

1,732 1,866 9,691 2,156 2,314 2,480 2,655 2,839 3,034 3,239 3,454 3,682 3,921

8,275 1,131 8,961 1,432 1,595 1,766 1,946 2,136 2,336 2,546 2,767 2,999 3,243

2,176 9,739 2,342 10,324 10,632 10,949 11,278 11,617 11,967 12,329 12,703 13,090 13,489 181 812 195 860 886 912 940 968 997 1,027 1,059 1,091 1,124

17,312 27,051 29,393 39,717 50,349 61,298 72,576 84,192 96,159 108,489 121,192 134,282 147,771

174,379 180,062 185,931 191,991 198,248 204,710 211,381 218,271 225,384 232,730 240,315 248,147 256,234 139,918 130,459 120,720 118,378 108,054 97,422 86,473 75,195 63,579 51,612 39,282 26,579 13,489

139,918 130,459 120,720 118,378 108,054 97,422 86,473 75,195 63,579 51,612 39,282 26,579 13,489

FINANCING & RESALE:

Net Monthly Financing Cost

INCREASED RESALE VALUE:Increased resale value factor: 20

Net New Annual Cost (Line of Credit plus New Net Energy Cost)

Line of Credit Balance


Maximum Resale Value: $158,382 occurs at Year 10

25-Year Accumulated Net Positive Financed Cash Flow: $147,771

Net New Annual Cost (Line of Credit plus New Net Energy Cost)

ACCUMULATED FINANCING CASH FLOW:

Cash Flow (annual) (Old less New Net Costs)Cash Flow (monthly)

Effective Resale Value (lesser of 20x annual or remaining 25yr savings)

20 times Annual SavingsRemaining savings within 25 years

INCREASED RESALE VALUE:

Line of Credit Balance

New Net Annual Energy Cost (including new electric bill with tax effects, maintenance, inverter replacement

Payment (monthly)Interest (portion of payment)

Net Benefits Received (put towards paying down the next year's principal)

Annual Electric Bill without Solar (including Lifestyle changes, but not Energy Efficiency)

Tax Deduction Benefit (monthly)

Payment (monthly)

ACCUMULATED FINANCING CASH FLOW:

Net Monthly Financing Cost

Net Benefits Received (put towards paying down the next year's principal)


Effective Resale Value (lesser of 20x annual or remaining 25yr savings)

Interest (portion of payment)

Cash Flow (annual) (Old less New Net Costs)Cash Flow (monthly)

Tax Deduction Benefit (monthly)

Annual Electric Bill without Solar (including Lifestyle changes, but not Energy Efficiency)New Net Annual Energy Cost (including new electric bill with tax effects, maintenance, inverter replacement

Harry and CJ Fair, Ichiban Hibachi


Harry and CJ Fair

Yaz's Solar Company is privileged to present

A personalized solar electric analysis for:

Ichiban Hibachi(408) 111 1111H, (408) 222 [email protected], www.buyer.com

Site Address:149 Elderwood Ave, #1

Pelham, CA 10803

of a

Yaz's Solar Company

11.0 kW Residential PV System

prepared by:Carl Yastrzemski

April 8, 2010

Voice (989) 332 1332Fax (989) 332 [email protected]

OnGrid Tool v4.03



Notice

California Solar Initiative - Solar 101: http://www.gosolarcalifornia.org/solar101/index.html

The DSIRE Database of Incentives: http://www.dsireusa.org/solar

Carl Yastrzemski

This information is provided as an illustration of potential financial benefits stemming from ownership of a renewable energy power system. This is not a production guarantee. A professional accountant or tax advisor should confirm these estimates. Neither OnGrid Solar nor any authorized user of the tool used to produce these results warrants the applicability of these estimates for particular business cases, and both disclaim all liability.The estimates of production and other results can be independently validated at the following websites:

California Energy Commission: http://www.consumerenergycenter.org/renewables/estimator/index.html

PV Watts Solar Performance Estimator: http://www.nrel.gov/rredc/pvwatts

Sincerely,I would be pleased to answer any questions. I will also follow up with you shortly.

Carl YastrzemskiYaz's Solar CompanyVoice (989) 332 1332Fax (989) 332 [email protected]

• A cost analysis, including incentive programs, tax credits and other critical information leading to the economic bottom line.

Please contact me at:

> If you finance the system, how much it will cost or save you on a monthly basis, both initially, and over time.

> As an investment, what its long-term Compound Annual Rate of Return will be (comparable to stocks, bonds, savings, etc).> An environmental analysis, showing how much benefit you'll be creating on top of the savings you'll enjoy.

Thank you for the opportunity to present you with a proposal for a solar electric system. Yaz's Solar Company is delighted to be working with you.

This proposal covers the following areas:

• How solar electric systems work

• A summary of your site conditions

• Our recommendation of a solar system to fit your needs



> How much the solar system will save on your electric bill> How much the system will increase your property's value

• Your current usage profile and economic assumptions included in your customized analysis

• Opportunities to save energy

• A financial analysis of what the solar system will do for you economically, including:



The Tier pricing system is a progressive pricing system whereby the more you consume, the higher the rate becomes. The top of Tier 2 represents the 'average' user in your geography who uses 130% of 'baseline'. Baseline for your geography is 16.5 kWh per day in the summer, and 12.7 kWh per day in the winter. In a 30-day month, this translates to 495 kWh per month in the summer, and 381 kWh per month in the winter.

This home is above average usage, with top usage in Tier 5. The top rate you pay for electricity is 49.9¢ per kWh. The average rate was 34.3¢ per kWh. Solar will save electricity in the top tiers first.

1,500 kWh in the winter months (Oct thru Apr) and

This describes the historical usage of energy, a major factor in sizing a solar system


The total annual usage has been: 21,000 kWh

Based on our discussions, it looks like your usage will be about 98% of historic due to lifestyle changes. We anticipate your bill will adjust to $558.65 per month when accounting for these lifestyle changes.We are not anticipating that you will improve your building's efficiency. However, Energy Efficiency is a cost effective way to improve the return on your solar investment, and do the right thing environmentally. There are federal tax credits that can make energy efficiency even more attractive. More on this later.



Energy Usage Profile

2,000 kWh in the summer months (May thru Oct)

Your property has used, on average:

Residential Tiered Usage Before Solar

0¢5¢

10¢15¢20¢25¢30¢35¢40¢45¢50¢55¢

444,

Tie

r 1

577,

Tie

r 2

932,

Tie

r 3

1376

, Tie

r

Tier

5


Cen

ts p

er k

Wh

Usage



Rate escalation plays a big factor in future energy costs, and magnifies the amount a solar system will save you. Historically, escalation has been around 6.7% on average over 30 years from 1970-2001, much higher than the CPI. In this analysis, electric rate escalation of 4.0% has been factored in over the long term. The CPI-U (Urban Consumer Price Index) has increased about 3.1% annually since 1982. In this analysis, general inflation on maintenance, etc. is assumed to be 3.0%.


Site Conditions & System Efficiency FactorsThe anticipated orientation of your PV Array is 22° up from horizontal, and facing S. It will be mounted on your Foam roof.





Tax Assumptions:


Rate Escalation Factors

CA Electric Rates, 30 YearsRates have risen on average,

6.7% per year since 1970

0

2

4

6

8

10

12

14

16

1970 1975 1980 1985 1990 1995 2000

Cen

ts p

er k

Wh

Residential Small Business



The American Council for an Energy Efficient Economy produces excellent guides for home and building energy efficiency and savings. More information is available at: http://www.aceee.org/consumer/consumer.htm

An energy efficiency audit can identify other ways to use less, and sometimes be even more comfortable.

Solar Electric System:

Opportunities For Saving Energy

Getting the same benefits and enjoyment, but in ways that require less input energy. These are often very cost effective, but less in vogue than solar electricity. They include lighting upgrades and replacing refrigerator and other equipment or appliances with more modern and efficient products.

Energy Efficiency:

Solar Electricity, or 'PV', is the most interesting, hottest new technology. Strongly supported by the state & federal governments. Solar Electricity is one of the fastest growing energy technologies worldwide, growing over 35% each year for the last 8 years. Not actually a 'new' technology, the first solar panel was put into use in 1954. Most of the bigger solar manufacturers have over 20 years experience in producing and refining their products. Some have over 40 years experience.

Conservation - simply using or doing with less. This is always the most cost effective, but not always doable. Can you turn off or unplug an extra refrigerator in the garage, and only use it when it's really needed? Are there other things that are rarely used that can be shut off without impacting your lifestyle?




When the solar system can put out power, it goes to reducing your usage at the time, or, if there is excess, to spinning the meter backwards, counting down your electric use and bill. Special metering, such as Time-of-Use metering and billing arrangements can help you take advantage of higher daytime rates, allowing you to sell power at a high rate, and buy it back at night at a lower rate. This helps reduce the necessary size of your solar system, while still cutting your bill by the same amount.

At night and during cloudy weather, the solar system's output is reduced or stopped; however, your home then gets electricity directly from the utility grid. You're always connected to the grid, so you can have as much power as you need, any time you need it, regardless of whether the solar system is able to put out any power.

Solar Electric systems generate electricity silently and without any moving parts. Sunlight falls on the solar array (blue, on the roof), generating DC electricity. That DC electricity is converted into household 120V AC electricity by the inverter (blue & grey, on the wall). The AC electricity is fed into your electric meter and circuit breaker panel (grey, on the wall). The electricity either goes to your appliances and lights, or to the grid, or some to each. This all happens silently and automatically every day.

How Solar Electric Systems work


.



Another method is using the nameplate rating system, also known as STC (Standard Test Conditions) or DC rating of the system. This rating system assumes standard, ideal factory conditions. Using this rating system, the modules have a rating of 215 watts. The nameplate rating (STC) of this system is: 12.545 kW DC. These ratings are useful in comparing systems side-by-side.


It will be mounted on your Foam roof.




Recommended Solar Electric SystemBased on the above usage, site conditions and system factors, we recommend a 10.977 kW (CEC rating) system comprising 43 Sanyo Electric HIT-N215A01 modules and 3 SMA America SB3000US (240V) inverters in the primary array, and a secondary array comprising 15 BP Solar BP3220N modules and 1 SMA America SB7000US (240V) inverter. This system will offset about 97% of your electric bill.

Note: There are several ways of rating solar systems. One way is using the CEC AC rating system. The CEC AC rating system takes account of system performance reductions due to inverter efficiency and module heating effects. Using this rating system, the primary modules have a rating of 199.6 watts, and the inverters have an efficiency rating of 95.5%. The total system has a CEC AC rating of: 10.977 kW.



Your new tier is now Tier 1. Your new marginal cost of electricity is 12.0¢ per kWh (that is, the new cost to switch on the lights. Your old cost to do so was 49.9¢ per kWh). Note: it is not necessary to produce all the electricity you use, because you are taking advantage of selling at higher rates, and buying at lower rates.


Your net energy use will be substantially lower because of the production from the solar system. The total area in the chart below shows your total usage, and matches the usage in the previous chart above. However, the area in green is the fraction that will now come from solar.




Residential Tiered Usage With Solar

0¢5¢

10¢15¢20¢25¢30¢35¢40¢45¢50¢55¢

444,

Tie

r 1

577,

Tie

r 2

932,

Tie

r 3

1376

, Tie

r

Tier

5


Cen

ts p

er k

Wh

Net Usage Production



121,857$ 400$ 500$ 600$ 700$

(3,722)$ 120,336$ (13,768)$ 108,567$

100$ 200$ 300$

107,167$ -$

107,167$ 560$

(3,600)$ (32,750)$

-$ 71,377$

(16,768)$ 61,945$


64,745$
























New average monthly electric bill:Monthly savings:Annual savings: 6,534$

Home resale/appraisal value increaseCurrent and future cash flow if financed

The Total Lifecycle savings is $231,717, including bill savings, sRECs, maintenance, & inverter replacement (net after-tax values) over 25 years compared to a system cost of $61,945. This yields a Total Lifecycle Payback of 3.7x. Payback occurs at Year 8.7.

Total Lifecycle Payback Payback is often looked at as a measure of financial soundness of an investment. However, for long-term investments such as stocks, bonds, homes, and solar systems, payback isn't easily found or comparable to other investments to determine which investments form the best options for a diversified portfolio. 'Payback' has several other drawbacks as well, including the difficulty in accounting for escalation and inflation, time-value-of-money, one-time expenses such as inverter replacement cost, or the savings available after 'payback' has been achieved.

Compound Annual Rate of Return (comparable to stocks, bonds, savings, etc)

The savings will increase over time due to escalation, which we've agreed to anticipate being 4.0% for electricity over the long term. Historically, electric escalation has been 6.7% in California for the 30 years from 1970-2001, even though the CPI has only been 3.1% since 1982.

544$ 14$

Direct, Immediate & Future Savings

Other ways of looking at Payback include analysis of the Total Lifecycle Payback over the 25-year warranted life of the solar modules. In the graphic below, the steadily increasing steps reflect each year's savings from the solar system affected by 4.0% escalation. The red area in the graphic below shows the needed accumulation of savings before payback. The green area shows additional savings received after payback. As you can see, savings after payback are substantial.

These immediate and future savings will immediately reduce the operating expenses of your home and improve your cash flow:


Financial Analysis & PaybackYour solar system will generate substantial savings on your electric bill. These savings can provide a variety of direct and future economic benefits. Some of the ways these economic benefits are measured include:

Direct, immediate & future savings on your electric bill creating improved cash flowTotal Lifecycle Payback

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The maximum resale value of $158,382 based on estimated remaining savings to 25 years occurs at year 10.

Because savings increase over time due to electric rate escalation, the increase in resale value will increase as well. However, the limit to this increase will be the anticipated remaining savings left in the system before it's 'end of life', which has been conservatively estimated at 25 years (the module warranty life). The actually design life is much longer, but to be conservative, we'll use this shorter time horizon.

This home's annual savings of $6,534 translate to an immediate theoretical increase in resale value of $126,128. This translates to 195% of the system's net cost.


Home Resale/Appraisal Value IncreaseSolar systems increase home values by reducing operating costs. The Appraisal Institute published a study in the Appraisal Journal in 1998 & again in 1999, that stated that if a home's operating costs can be reduced through an energy efficiency measure that reduces its operating costs, those savings have a tangible connection to increasing the home's value. The rationale is, that instead of paying the utility, a future buyer could take a larger mortgage, and instead pay the bank and their operating costs would remain unchanged.

The article established that a homes resale value increases $20 for every $1 saved in operating costs. This is based on a 5% after-tax long-term average for mortgage costs. For more information see www.ongrid.net/AppraisalJournalPVValue10.98.pdf which is from The Appraisal Journal, Oct '98. While this may sound dated, it is based on solid math that doesn't vary with time, only long term averages in mortgage interest rates.

Resale Value Over Time

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Year 5Solar Cost w/ Smart Financing $2,887Old Electric Bill with inflation $5,438

Cash Flow (Annual) $2,551$2,632

$2,700$4,977$2,277

$3,272$6,304$3,033

Year 1 Year 10Year 2$2,200$4,832

Proposal for: Jeff Sun

Option 2: Fully amortized 'Optimistic Loan' of the above interest rate and term; the initial principal is the net system cost after all near-term incentives (rebates, grants, tax credits, tax deductions, PBI's, and depreciation) except SRECs if any (SRECs are excluded because their value is usually uncertain) are received. This loan is optimistic (for the salesperson) because it has the lowest payments, but requires the customer to get a bridge loan or provide their own cash until some of the near-term incentives are received (tax credits, tax deductions, PBIs, depreciation).


Current and Future Cash Flows if Financed

If the system is financed, a cash flow analysis compares the cost of the loan (principal, interest and tax effects) to the savings on the electric bill (minus maintenance and other costs). For this analysis, we've assumed a financing interest rate of 7.5%, and a term of 30 years. Here we present 3 options for financing the system; what we'll call the 'Inefficient Loan', the 'Optimistic Loan', and 'Smart Financing' using a Line of Credit:

Option 1: Fully amortized 'Inefficient Loan' of the above interest rate and term; the initial principal is the net system cost after up-front incentives (such as rebates and grants) are received. This requires no out-of-pocket costs to the consumer to acquire the solar system, but as other incentives and benefits are received (such as tax credits, tax deductions, PBI's, and depreciation, each as applicable), the consumer ends up with cash on hand which they also are paying loan interest on, so this loan ends up costing unnecesary interest, making it inefficient and expensive.

Option 3: Fully amortized 'Smart Financing' of the above interest rate and term, usually using a line of credit; the initial principal is the net system cost after up-front incentives (such as rebates and grants) are received. This financing method is both Efficient and Realistic in terms of true consumer cost because it borrows exactly the amount needed so that the consumer never needs a bridge loan, but also pays no unnecessary interest because it applies any near-term incentives received towards the principal owed.

The calculation is complex, but the Smart Financing with a Line Of Credit cost falls between the Optimistic and Inefficient loan costs. It requires the customer to be disciplined to apply any depreciation, tax credits, PBIs and other near-term incentives to pay down the principal owed as taxes are filed and benefits are received. Note: in the first year, the principal and therefore the interest is large, so the interest tax deduction is large; sometimes the interest exceeds the payment, allowing for a large tax benefit but also temporarily increasing the principal amount. This situation is temporary as long as any tax credits and depreciation are applied to reducing principal as they are received.

The monthly payment is $289/mo on $56,845 borrowed. The net annual payments or solar cost with Smart Financing (after tax deduction of interest paid) in the 1st, 2nd, 5th, and 10th years is:


Please see the 25 Year Financing Timeline table for details on the principal, interest, tax benefit, and payment amount, etc for each year in details.


The bottom graphic shows the accumulated savings. Note that this is pure savings, with no out-of-pocket costs. All system costs came from financed sources. This is the accumulation of excess savings above what was needed to pay off the principal and interest for the loan.


As in the Appraisal/Resale calculation above, electric escalation will increase the electric bill savings over time. The Smart Loan's cost is affected by the factors previously mentioned. The top graphic below illustrate the loan cost vs. net bill savings over 25 years. The middle graphic represents their difference and hence the the net cash flow.

Annual Costs: Solar plus Loan vs. No Solar

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Net Annual Savings When Financed

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Annual savings:Pre-Tax value of the annual savings:

Pre-Tax Compound Annual Rate of Return (IRR) over 25 years: 22.3%

Compound Annual Rate of ReturnThe Compound Annual Rate of Return (CARR) is an analysis method that makes the solar investment comparable to other interest-rate-based investments, such as stocks, bonds, CDs, money markets, savings, etc. The goal is to include all the cost and benefit components in a multi-year timeline and look for the effective annual rate of return using Internal Rate of Return analysis (the IRR tool in most spreadsheets).


In residential solar analysis, it's important to treat and view the system properly with respect to taxes. A solar system saves the homeowner after-tax expense. However, most of the other investment opportunities provide pre-tax returns, and are usually thought of in a pre-tax context. Therefore, in order to make a good side-by-side comparison of the two, it is then appropriate to translate one to the other's realm.

When comparing analyses, it is also important to look at the compound annual rate of return (CARR), rather than an annual average, which can also appear misleadingly high. More information on financial analyses for solar systems is available at: http://www.ongrid.net/papers/PaybackOnSolarSERG.pdf

Please see the attached 25-year financial timeline analysis for details of the amounts and timing of items included in the CARR analysis.

Looked at another way, if the system were substantially financed, such that there was no initial outlay, and only a cash positive result, what is the rate of return on that - infinite. While it may be true in this specially created case, it does not produce a useful result for purposes of comparison. Hence, this analysis assumes an all cash transaction.

Loan costs do not get included in this analysis as that muddies the waters and can create excessively optimistic looking results. The CARR analysis should be done in pure form as if the choice were between investing in this opportunity vs. another. It is irrelevant in comparing the two choices what the source of funds might be, and only creates confusion.

10,420$ 6,534$

All relevant cost components must be included to ensure completeness of the analysis. These include; system capital cost, rebate, tax credits, performance based incentives, REC sales, maintenance costs, tax consequences of any incentives and state credits, depreciation and the tax consequences of depreciation, electric bill savings, tax consequences for the loss of deductibility of such savings (commercial analyses only), and inverter replacement cost at an appropriate year in the future.

Because most people think of their investments in pre-tax terms, the attached analysis translates the solar Compound Annual Rate of Return analysis to it's pre-tax equivalent (note, all other analyses in this pro forma are unaffected by this translation). This requires that most amounts be converted based on the purchasers tax bracket. The amounts that do not get converted are the system's net capital costs (top line, rebate values, etc) and any state tax credit amount.



ConclusionThank you again for the opportunity to present you with a proposal for a solar electric system. Yaz's Solar Company is delighted to be working with you. Please let us know what we can do to win your business.

2,020 lbs of S02, which causes acid rain137

Or planting 6.0 acres of trees.

lbs of particulates that cause asthma1,131,338 miles driven in an average car, or 45,254 miles a year


It's like taking 3.7 cars off the road for 25 years.


2,231


lbs of NOx, which creates smog695,310 lbs of CO2, the leading greenhouse gas

Environmental Analysis





a personalized solar electric analysis for: harry and cj...

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