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The Coming Land Rush in Local Solar. Will it Benefit You?

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sunsetmulhollandcropblue2

Is Solar PV finally here?

Yes.  As I pointed out in my December RS report, Solar PV technology is now ready for prime time (particularly for DIYers in the right areas!).  As a result, we’re going to see solar panels pop up everywhere in next decade.  However, contrary to expectations, almost all of that will be produced locally rather than in large, remote, sunny locations.  The reason for this rapid residential roll-out is largely due to the particular problems big power companies are facing.  These include:

  • The average power plant was built in the 1960s.  They were only designed to last 40 years or so.  These need to be replaced, but how?
  • They can’t do anything to improve the electricity grid.  It’s too expensive to upgrade to a smart grid.  Further, they can’t put any new high voltage lines in due to NIMBY (not in my back yard) opposition.
  • Peak demand for electricity is hitting new highs in built up areas (hot summers plays a big role in that).

 

Local Power to the rescue

To solve this problem, many of the big power companies are going to move into local, rooftop solar power.   How?  By leasing and financing rooftop solar power systems to their customers.   The reasons for this are:

  • Solar PV energy reduces peak demand stress since peak production on these system occurs at the same time.
  • Local solar doesn’t stress the grid.  It is used as it is produced, eliminating transmission costs/losses.  Nothing new needs to be built and it offers and opportunity for smart metering upgrades.
  • They will make a mint on these leasing programs, producing low cost power and selling it peak demand rates (most of these companies actually want to be like Goldman Sachs instead of utilities — see Enron as an example).

 

Who Profits?  I hope it’s You and Your Community

Of course, if you do lease these systems from a financing company, all you will get is a fixed rate.  The power company will take all of the rest, and it is a substantial amount (4/5 of the value).   I think that would be a BIG mistake. What are the alternatives?

  • DIY it.  Put it in at cost.  Recoup most of the benefit for yourself.   That benefit can be a significant investment income that will support you long term.
  • Install it as a community.   A small team that rips through multiple installs quickly to allow the community to reap the benefit.  That benefit could be large enough to substantially underwrite a town’s cost structures.  Also, if there is a high enough participation rate in a local program, it will gut the value of the local loop to the Power Company, which may make it easier for the community to buy its local grid (and convert it into a microgrid), in the future.
  • Join with multiple communities to negotiate as a single group.  This group has the potential to get dynamic pricing on the electricity that is produced (in short, to get what power company pays peak producers, which is quite high).

 

Resiliently Yours,

 

JOHN ROBB

 

PS:   While doing research for my upcoming Resilient Strategies report on DIY solar, I found more evidence that resilient homes are ALREADY much more valuable than non-productive homes.  A comparison of the appraisals of homes before and after the installation of solar panels shows that for one dollar per year a solar energy system saves a home owner in utility expenses, the market value of the home increases by twenty to thirty dollars.

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  • How would installing as a community work? A group of people start an LLC, recruit a local investor network, advertise to local customers that they’ll install solar PV on rooftops for a fraction of the price of larger companies? Are there ways of getting local government to partner up?

    I’m trying to build the social entrepreneur muscles in my brain, but I’m a bit slow.

    • John Robb

      Cameron,

      There are quite a few ways to get this done. DIY classes are the easiest. Coop paperwork support and volume purchasing. Etc. One of the best ways to leverage community involvement is the ability of the town to borrow at low cost (relative to individuals).

      JR

    • Community solar electricity can happen through buying clubs and coops, revolving loan funds and other financial instruments. There are weatherization and solar barnraisings happening all around the country. Check out Coop Power (http://www.cooppower.coop) and Home Energy Efficiency Team (http://www.heetma.com).

      Here’s some information on the work of Richard Komp who has been doing solar as a cottage industry around the world for at least three decades with a link to his basic PV course: http://solarray.blogspot.com/2012/01/richard-komp-sunwattjuno.html

  • Sean Prendiville

    Thought you’d be interested in this morning’s article about how public utilities in California are reacting to the “land rush” in solar power: http://www.sfgate.com/business/article/Solar-power-adds-to-nonusers-costs-4124277.php#photo-3906466

    • John Robb

      Sean,

      Thanks. That article was very poorly written, partly since this is a confusing story planted by a PR firm working for a power company. Despite that, it works nicely to prove the points made above.

      In short, these monopolies are saying they need to charge more ($1.3 billion annually) for grid use due to solar installs.

      They start by blaming net metering for the price hike. Net metering only represents ~1% of peak loads. Very little flows back into the grid. Also, they currently pay premium prices for power generated at peak loads to other providers (turbines, etc.), prices that they don’t charge consumers directly for (customers get a blended rate). As it stands, they don’t lose money on net metered PV, they make LOTS of money on it. This is a red herring. They actually want to pay nothing for the power that flows in.

      They then blame non-use for the price hike? IN short, they say that because people aren’t buying what they are selling, they want to charge more for the monopoly. However, I think this is actually proving something quite the opposite: they are proving they don’t have the capacity to serve as the custodians of a public monopoly. (HINT: There are ton of smart microgrid services that enhance resilience that people will actually pay for, but the don’t offer them) As such, their monopoly status should be condemned and their systems put up for sale, with the community getting the first right of refusal.

      In contrast to these CA companies, power companies in other areas are getting ready for this by getting into the leasing business.

      JR

  • I signed up for the charter membership a while back, and got one email and report, but now I can’t access the reports and I’m not signed in as a member anymore. Has something gone awry, or am I just missing a way to log in?

    • John Robb

      Stephanie,

      Will check on that right away. Sorry for the inconvenience.

      JR

  • It takes a LOT of solar panels to make a real dent in your power use in most places of the country. The ‘average’ location ( not Arizona, not Maine ), you’ll need 1000 watts of PV to generate 100kw/hrs of power per month. I’ve built a 6kw (6,000 watt ) system in 3 stages ( self installed ) over the last 3 years, and we average 620kw/hrs/month 0f production here in Tennessee

    The average US house consumes around 900kw/hrs/month according to the last figures I saw…..so that means the average house would need a 9kw ( 9,000 watt ) system to zero out their bill. Even with today’s far lower prices on equipment…..for example, panel prices were $4/watt when I started in 2008, and are now $1/watt……a self installed system is still going to run around $2 to $3 per watt. That puts energy independence at something in the low to mid $20,000 range. Not completely out of reach by any means, but there are few folks I’ve run into with the enough forward vision to “prepay” ( and thus, LOCK IN PRICES ) of their electric bill for the next 25-30 years.

    Another consideration: You’ll also need 500 to 600 square feet of near south facing, shade free, space for the panels. I didn’t have those criteria on my roof, so I chose to mount my system on poles in the back yard. Fortunately, I have 70 acres of “back yard”, so space wasn’t an issue, but it certainly could be for many solar hopefuls.

    It also helps if you have a solar friendly power supplier ( we do ) and self install friendly building code inspector ( we do ). That’s a whole nuther can of worms in many places.

    And finally, in the ‘for what it’s worth’ column: I just last week finished up addition #4 to our system, adding 10 more 255w panels with Enphase micro inverters, giving us a system total now of 8.5kw. Panels, inverters (10), mounting, and internet gateway device ran right at $6,000…..and was the most simple install of my whole system. These new micro inverters make it nearly “plug and play”, and have the advantage of being able to watch your production on your assigned Enphase web page. ( I don’t work for Enphase, by the way )

    • John Robb

      Thanks Andy.

      Here’s a great resources for sunlight estimation by area of the country. http://www.nrel.gov/gis/solar.html

      JR

    • I’d like to second Andy’s response, from the perspective of upper New England.
      My family homesteads in Vermont’s Green Mountains, which have a variety of advantages: maple trees, good amounts of water, engaged communities.
      However, we don’t get much sunlight. We’re too far north, as the map you link to, John, shows. We also have mountains, frequent clouds, and plenty of trees, all of which obscure sunlight.

      What would you recommend for energy independence?

      Folks here are trying various methods, but none has really succeeded:
      a) mix of PV with passive solar (good until winter)
      b) elevating panels on top of frameworks about a roof (very vulnerable to damage)
      c) adding wind (only about 25% of the state actually has enough)
      d) adding hydro (few rivers, mostly already used)

      Should we seriously look into geothermal, or…?

      • John Robb

        Thanks Bryan. A geoexchange system would make extremely efficient interior heat pumps possible. However, you’d probably need to drill wells for the exchange pipes. JR

        • That well-drilling is what worries me. But at least one farmer up here is looking into it.

  • Steve

    I am off grid at a location near Denison TX. My PV system was designed and installed by two companies in the Austin area. One designed , the other installed. This (off grid PV) is all they do. Originally I planned DIY but eventually felt this would be over my head. I was right, it’s too technical and there are plenty of opportunities to get bogged down. I did some of the work such as digging holes. My system has the array, batteries, inverter/controller, backup propane generator. I would only feel comfortable with DIY after MANY classes.

    Steve

    • John Robb

      Thanks Steve. There have been some big improvements in the install process recently that make DIY much easier than in the recent past. JR

  • Residential efficiency is a prerequisite for affordable solar electric. (And solar is not only electric. DIY home and hot water are practical with scrap materials and a few hours of inexpert labor.)

    All I know about simple solar is at
    http://solarray.blogspot.com/2009/09/simple-solar-parts-1-2-and-3.html
    http://solarray.blogspot.com/2009/12/simple-solar-parts-4-through-8.html

    • John Robb

      As always, thanks much gmoke!

  • There is also the potential for a community grid of solar production to sell its surplus peak production to local industry who can use it adaptively (eg saving processing runs for when the sun shines – or the wind blows) to get a lower but mutually beneficial local price than centralised producers or regional grid can offer.

  • Thank you, John for the great post! You said that in the case of leasing solar systems from power companies, they will take 4/5 of the generated power. How do you know that? Anyway it’s a very substantial ammount! It seems investing into such solar system by myself will give me much better ROI. I think it possible to start from a small system and then to grow up. But without doubts, solar energy will be more and more popular.

    • John Robb

      Dave, Thanks. To clarify. It’s 4/5 of the financial return on the investment. JR

  • I am all for solar panels, I hope it’s the most popular form of energy soon, we just need more sun in the uk! Great post, thanks a lot :-)

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