on the new high school roof - high school building project€¦ · photovoltaic cells are made from...

Exploringapoten.al

PhotoVoltaicSystemonthenew

HighSchoolRoof

WhatarePhotovoltaics?

Photovoltaiccellsaremadefromthinlayersofslightlydifferentsemiconductormaterial,usuallycrystallinesilicon.

ThePVcellsarethebuildingblocksofaPVarray

HowdoPhotovoltaicswork?

Photons,orparAclesoflight,knockelectronsfreefromatomsinthesilicon,generaAngaflowofelectronsfromthetoplayertotheboComlayerofthecell.Eachcellcangenerateabout½voltDC.

PhotovoltaicsSystems

SolarPVsystemscollecttheDCelectricitygeneratedandconvertitintotheACelectricityweneedinbuildings.

WhyConsiderPV?

• ReducedEnergyCosts

• PredictableEnergyCosts

• EnergyIndependence

• ReducedCarbonFootprint

• ROI<5years

• GreenCommunity

• LEEDPoints

TheCurrentCostofElectricity

AveragecostperkWhinUS:$0.12perkWh*AveragecostperkWhinMassachuseCs:$0.15*UniAlcostperkWh:$0.199

*hCp://www.npr.org/secAons/money/2011/10/27/141766341/the-price-of-electricity-in-your-state

0

10

20

30

U.S.Ave.MAAve. UNITIL

CurrentCentsperkWh

CurrentPoweruseattheOldHighSchool775,586kWh/year*

BlendedUAlityEnergyRate:$0.199/kWh*

ElectricityCosts:$154,340/year*

*5yearaverage

0

500000

1000000

1500000

CurrentAve.

kWh/Ye

ar

ProjectedPoweruseattheNewHighSchool

1,374,061kWh/year

BlendedUAlityEnergyRate:$0.199/kWh

ProjectedElectricityCosts:$273,440/year*

0

500000

1000000

1500000

Current Projected WithPV?

kWh/Ye

ar

*FromGGD

0

10

20

30

40

50

60

Current +10Years +20Years +30Years

Centsp

erkWh

ExpectedUni.lEnergyPriceIncreases

TheFutureCostofElectricity

Thecostofelectricityhistoricallyrisesanaverageof3.5%peryear

In10years,wecanexpecttheUniAlratetobe$0.27perkWh



$0$100,000$200,000$300,000$400,000$500,000$600,000$700,000$800,000


CostperYear

ExpectedAnnualElectricityCostattheNewHighSchool

TheFutureCostofElectricityattheNewHighSchool

AssumpAon:thecostofelectricitywillriseby3.0%peryear

In10years,wecanexpecttheannualcosttobe$371,000



HowwouldaPVSystemimpacttheFutureCost?

AssumpAon:thePVsystemwillprovide20%oftheHighSchool’selectricityeachyear

$0$100,000$200,000$300,000$400,000$500,000$600,000$700,000$800,000


CostperYear

Poten.alElectricalCostoffsetbyPV

District$PV

WhatsizewouldaPVsystembe?

~MainSt.-Rte.119~

Ifitcoveredtheseareas,~220kWDC

WhatwouldtheArrayslooklike?

•  2MajorTypesofArrayConfiguraAon:

StandardConfiguraAon East-WestConfiguraAon-Southfacingpanels -East&Westfacingpanels-TiltedSouthat~42° -TiltedEast&Westat~12°-Ballastedframes -Ballastedframes(lessballast)-RoofSpacelostduetoshading -LiClespacelostduetoshading-Standardpaneldensity -Higherpaneldensity-StandarddailypanelproducAon -HigherdailypanelproducAon-StandardpowerproducAon -MorepowerproducAon

WhatisthedifferenceinproducAon?

StandardSouthConfiguraAon West-EastConfiguraAon-StandardCurve -EarlierRise,LaterDrop-Higher,shorterpeakproducAon -Lower,longerpeakproducAon-Somepowerisclippedatpeak -Nopowerisclipped-StandardpowerproducAon -MorepowerproducAon

PowerClipped

HowmuchpowerwouldaPVsystemproduce?

-  ThesizeofaPVSystemwillvarydependingonthefinalArrayconfiguraAon

-  IE,ahypotheAcalWest-EastarrayconfiguraAonwouldconsistofabout835modules,whichwouldproduceroughly:

~222,000waCsDC(A222kWdcsystem)atmaxcapacity~273,300kWhAC/yearProjectedAnnualEnergy~20%ofProjectedAnnualElectricalUseatnewHighSchool

SolarIncenAves

-FederalGovernmentTaxincenAvesintheformof:

-A30%IncomeTaxCreditofthesystempricefornewlydeployedsolarPVsystemsthrough2019,whichwilldeclineinvalueincrementallyfrom2020-2022

-AcceleratedDeprecia.onincenAve(MACRS)tohelpfurtherbusinessinvestment

- StatefinancialincenAvesintheformofSRECs(SolarRenewableEnergyCerAficates)

- 1000kilowaChours(kWh)ofelectricityproducedgenerates~.72SRECII.

- MassachuseCsrequiresuAliAesinthestatetogenerateatleast15%ofelectricityfromrenewablesourcesby2020.OnewaytheycanmeetthisrequirementisthroughthepurchaseofSRECsfromPVsystemowners.TheMassachuseCsSRECmarketprovidesannualrevenuestreamstosolarowners,ofabout$240perSREC.

- 270,000kWhsACproducedannually=194SRECIIs

- 194SRECswouldgenerateroughly$46,000inannualrevenue,for10years

- MSBA-increasedLEEDpoints?

- Uni.l-Commercial&Industrial(C&I)NewEquipment&ConstrucAonProgram?

- GreenCommuni.es-grantfromMADepartmentofEnergy?

HowmuchwouldaPVsystemcost?

-  IE,thishypotheAcalWest-East222kWdcsystemwouldcost~$390,000- 30YearEsAmatedusefullifespan

HowmuchwouldaPVsystemsave?

-  EsAmatedEnergyProduc.on:270,000kWh=~$54,000ofpowerperyear-  FederalInvestmentTaxCredit,30%:~$116,000*- AcceleratedDeprecia.onTaxBenefit:~$108,000*over5yearsat33%taxrate-  SRECs–thisPVsystemwouldearn~194peryear,soldatSRECMarketvalueof~$240,wouldgenerate~$46,000/year

- Break-evenROI–4years*

*ifwecanfindawaytocapturetheseincenAves

ThePVSystempaysforitself

AssumpAons: -a220kWdcsystem -$390,000installed

FirstYear-

30%IncomeTaxCredit $116,000*

AcceleratedDepreciaAon1styear $65,000* _________________________________________

FederalTaxIncenAves $181,000*ElectricityProduced $54,000O&M–costofownership–servicecontract -$3,000 _________________________________________

AddiAonalBenefit $51,000

1styearBenefitsTotal,beforegrants$232,000(or59%ofcost)

*ifwecanfindawaytocaptureit

ThePVSystempaysforitself


SecondYear-

AcceleratedDepreciaAon2ndyear $17,000*

SRECpaymentforpreviousyear’sproducAon $32,000 _________________________________________

$49,000ElectricityProduced $56,000(inflaAon)O&M–costofownership–servicecontract -$3,000 _________________________________________

BenefittoDistrict $53,000

2ndyearBenefitsTotal,beforegrants$102,000Auer2yearsinservice,Totalbenefitsderived$334,000(or85%ofcost)


TheSystempaysforitself


ThirdYear-

AcceleratedDepreciaAon3rdyear $10,000*

SRECpaymentforpreviousyear’sproducAon $46,000 _________________________________________

$56,000ElectricityProduced $58,000(inflaAon)O&M–costofownership–servicecontract -$3,000 _________________________________________

BenefittoDistrict $55,000

3rdyearBenefitsTotal,beforegrants$111,000Auer3yearsinservice,Totalbenefitsderived$445,000(or114%ofcost)


TheSystemreducestheDistrict’scarbonfootprint

Overits30-yearlifespan,ahypotheAcal220kWdcsystemwouldproducetheequivalentof:

ConsideraAonsforTax-ExemptEnAAes

-  Atax-exemptenAtycancapturethefederalPVtaxbenefitsbyenteringintoathirdpartyownership(TPO)arrangement.

-  IE,atax-exemptenAtycanagreetopurchasetheelectricityproducedbyasolarPVsystemownedandinstalledbyasolarcompanyorinvestor(whoclaimstheassociatedfederaltaxbenefits)foranagreeduponnumberofyearsatasetprice.

-  ThistypeofTPOarrangementiscalledaPowerPurchaseAgreement(PPA).

-  TheITCcannotbeclaimedifatax-exemptenAtysimplyleasesthesolarequipment

SolarFinancingSoluAonsforSchools

PowerPurchaseAgreement–- UnderaPPA,athirdpartyowner(TPO)purchasesandinstallsasolarsystematnocosttotheschool

- Thethirdpartyownsandmaintainsthesystem,andsellsthesolarelectricitygeneratedbacktotheschoolatareducedrate.

- Theschoolprovidesaviableroof(s)orlandto“host”thesolarsystem

- TheschoolagreestopurchasethePVpowergeneratedatanagreed-upon,discountedandpredictableelectricrate

- TheTPOmustownthePVsystemfor6years,orpaybacksomeofthe30%federalrebate

- AuerallofthefederalincenAveshavebeencaptured,thesystemhaspaidforitself,andtheTPOhasearnedareasonableROI,ownershipofthePVsystemistransferredtotheschooldistrict

- Thereauer,theschooldistrictreceivesalloftheenergysavingsandanyremainingSRECincome

SolarFinancingSoluAonsforSchoolsTaxEquityFinancing-Whenabusinessdevelopingasolarprojectdoesnothavealargetaxliability,taxequityfinancingisanopAontotakefulladvantageoffederaltaxbenefits.ThebusinesscanpartnerwithataxequityinvestorwhohasarelaAvelylargetaxappeAteandcanmakeuseofthetaxbenefits.Threecommonlyusedmodelsare:

- Sale-Leasebacks:Thedevelopersellsthesolarsystemtoataxequityinvestorwholeasesthesystembacktothedeveloper.

- Partnershipflips:Apartnershipisformedbetweenthedeveloperandinvestorandtheeconomicreturns“flip”fromtheinvestortothedeveloperauertheinvestormakesuseofthetaxbenefits.

-  Invertedleases:Thedeveloperleasesthesystemtotheinvestor,structuringtheagreementinawaythatallowstheinvestortousethetaxbenefits.

ReturnonInvestmentOverview

TheapproximateROIonahypotheAcal220kWdcsystemwouldbe:

OperaAon&MaintenanceCosts

-AnnualServiceContract

AnnualCost$900/year$2,200/year

-At15yearsBudgetforInverterReplacement

NextSteps

-SubCommiCee?

-AssembleneededexperAse

-ExploresystemopAons,size,locaAon,visibility,typeofarray

-ExplorePPA,Lease,Financing,Ownership,Flip,GrantopportuniAes

-QuanAfyOpAons

-ConductFeasibilityAssessment

-EvaluateopAons,makerecommendaAon(s)toBuildingCommiCee-BuildingCommiCeeVoteswhetherornottorecommendtoSchoolCommiCeeto

pursueaNMRHSPVProject

-SchoolCommiCeeVoteswhetherornottopursueaNMRHSPVProject

SomeDefiniAons

AC–AlternaAngCurrent,thetypeofelectricityonthegrid,whatappliancesuse

DC–DirectCurrent,thetypeofelectricitybaCeriesprovide,andPVpanelsproduce

DerateFactor–thetotallossesencounteredwhenconverAngtheDCproducedatthepanelstotheACrequiredforuseinthebuildingorsendingtothegrid;about20%

Ie:anarrayratedfor100kWDCwillprovideabout80kWAC

Inverter–adevicethatconvertsDCtoAC

kW–KilowaCs,ameasureofPoweruseorproducAonatanygivenmoment

kWh–KilowaChours,ameasureofEnergy,orpowerconsumedorgeneratedoverAme

LCOE–LevelizedCostofEnergy,theeffecAveenergycostofsolar,includingupfrontinvestmentandoperaAngcosts.TheLCOEforPVenergyisfixed,at~$0.037/kWh

PV–Photovoltaics,orconversionofsunlighttoDCelectricity

SRECs-SolarRenewableEnergyCerAficates;eachyear,ownersearn1SRECforeachkWhACproduced.CanbesoldontheSRECMarkettogenerateanaddiAonalrevenuestreamforthepropertyowner.Currentmarketvalueis~$240/SREC.

ITC-IncomeTaxCreditTheFederalITC,acriAcalrenewableenergyincenAve,awardsa30%taxcredittowardsthepurchaseofsolarrenewableenergysystems,includingsolarphotovoltaics(PV).

TheInvestmentTaxCredit(ITC)iscurrentlya30%federaltaxcreditclaimedagainstthetaxliabilityofcommercialanduAlity(SecAon48)investorsinsolarenergyproperty.Thebusinessthatinstalls,developsand/orfinancestheprojectclaimsthecredit.TheITCisbasedontheamountofinvestmentinsolarproperty.ThecommercialITCisequalto30%ofthebasisthatisinvestedineligiblepropertywhichhascommencedconstrucAonthrough2019.TheITCthenstepsdownto26%in2020,and22%in2021.StarAngin2022,thecommercialanduAlitycreditwilldroptoapermanent10%.

WhiletheITCcanbeclaimedinfullfortheyearinwhichthesolarPVsystemisplacedinservice,thebusinessclaimingtheITCmustretainownershipofthesystemunAlthesixthyearofthesystem’soperaAonorthebusinesswillberequiredtopaybackaporAonofthetaxcredit.SincetheITC“vests”atarateof20%peryearoverfiveyears,any“unvested”porAonisrecaptured(i.e.,repaidtotheIRS)ifsomethinghappensduringthefiveyearsthatwouldhavemadetheprojectineligiblefortheITCinthefirstplace.Forexample,ifthebusinessclaimstheITCandthensellsthesystemayearlaterauerithasonlyvested20%,itwillhavetorepay80%oftheamountitclaimedfromtheITCtotheIRS.

on the new high school roof - high school building project€¦ · photovoltaic cells are made from...

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