There are so many high quality solar modules/panels to choose from today that it’s hard to go wrong in your selection.  The gold standard for warranties is a 25 year power warranty broken out in year 10 and the year 25, or a linear power warranty guaranteeing  power percentages over 25 years.  On top of these power warranties  are workmanship warranties typically for 5 years.  Now we are seeing module/panel manufacturers upping the warranty ante.  As an example, Chinese solar module manufacturer Jinko Solar Holding Company has their Quantum 1 module workmanship warranty listed now for 10 years and the power performance warranty is 90% performance for the first 12 years and 80% performance for the remaining 13 years.  Canadian Solar, REC, and First Solar have all made similar extensions to their warranties.  I expect other solar equipment manufacturers to follow suit.

These long and extended mechanical warranties and power warranties are a clear demonstration of the proven performance of the solar equipment and the manufacturers’ confidence in their robust power producing longevity.  There are few products, and especially those that are electrical, where the purchaser/consumer  is backed so solidly by the maker of the product.  One more reason why solar is a good investment.

The researchers utilized metal and silicon oxide, which on their own do not absorb light but when combined on the nanoscale trap a wide range of light.  Thin, trapezoid shaped  gratings were created which cause the light to be held longer within the material so more light is absorbed.  Another positive feature is that light is collected from many angles.  Thus, making the material more efficient throughout the day as the sun moves from east to west.

The drawback at this time is that the material only collects heat, but does not convert light into electricity.  However, the technology and unique shape may be applied utilizing semiconducting materials to develop more efficient, lighter weight, and lower-cost solar electric cells.

For more information visit:  http://www.mccormick.northwestern.edu/news/articles/article_999.html

Should Solar Stand on Its Own in the 21st Century

Solar has taken a hit lately in the media, and the opinion of some newspaper columnists is that solar technology deserves a stern dressing down.  The negative stories written about Solyndra have put a smear on the entire solar industry.  Solar, before the Solyndra debacle, enjoyed extremely positive press for its reliable and clean energy generation delivered amazingly by the sun every day.  Solar enjoyed a rebirth at exactly the right time as a strong growth industry that provides good quality jobs and careers across the country.  But then Solyndra collapsed and the solar goodwill suddenly was in flames.  The columnists could have chosen to reveal that Solyndra, through no fault of its own, competed in a market  that was about to be flooded  by Chinese solar manufacturers, and we all know what that means – equipment becomes a commodity and  commodity product pricing forces a rapid price decline.

In the solar module market equipment is priced by the watt.  In 2009, when the Chinese made modules began flooding the market, Solyndra priced at over six dollars per watt for itsmodules. That’s expensive.  They competed against modules being sold as low as almost two dollars per watt at that time. Solyndra’s challenge was to take their highly innovative and excellent technology and reduce its very expensive manufacturing costs to a price per watt that competed against the Chinese.  It couldn’t be done.  Their target price was  to be under two dollars per watt before 2012. Even at this price per watt, Solyndra was still not competitive because the pricing of competing technologies continued to fall.  Unfortunately, it appears there was mismanagement within Solyndra, but mismanagement does not over ride the market conditions in which they were forced to work.

This brings me to the columnists’ outrage of the $535 million government loan guarantee Solyndra received two years ago.  Columnists and commentators have suggested that solar should not be propped up and that it should stand on its own merits.  Well, how about all the other industries and Fortune 500 companies that receive government hand outs?  In the early 1900s oil subsidies found their way into special government assistance and have never left.  There are so many government subsidies extended to the oil industry you need to be a forensic accountant to be able to pull them out and understand them.  A short list would be:  tax incentives, tax credits, special deductions, exemptions, grants, loans, special below market royalties, R&D, and foreign competition protections. In one year alone, oil and gas will receive over $3.5 billion in subsidies and special treatment.

The agriculture industry benefits from government subsidies that  are older still, dating back to the 1800s. This sector, for decades, receives as much as a whopping $30 billion every year not to mention $5 billion dollars per year in cash.  Timber, another government subsidies old timer, is also in the billions of dollars per year.  Even our biggest department store received $1 billion in special government favors.  Coal, oil, gas, nuclear and ethanol receive over $12 billion a year in special government assistance.  I would have expected that by the 21st century these industries wouldn’t need to be propped up by special government help.  By comparison, what solar gets is a pittance.  Run your finger down the Fortune 500 list and see for yourself who either always gets special government favors or who has at some time received government help.  It’s a long list of hand outs received.

We, Americans, are very quick to dismiss what other countries achieve especially when it comes to science.  This ivory tower position today shows we have our heads firmly stuck in the sand.  While Europe, China, and Japan are competing against each other in the big race to transform their energy sectors, the USA may not even qualify for the event.  Europe is on track to produce 20% of its energy from renewable sources and be carbon free by 2050 under its 20-20-20 plan – reduce 20% of its greenhouse emissions, reduce energy consumption by 20% and increase renewable energy by 20%.  The USA, by comparison, is all about drill, baby drill, and dig, baby, dig. The USA’s backward attitude will guarantee that we will lose technological and production leadership to Europe, China, and Japan.  China is easily the world’s leader in investing in renewable energy.  Last year China invested $54 billion in private  sector investments alone in renewable energy.  Germany invested $41 billion in private sector renewable energy investments.  The USA’s backward thinking has held us back and it will be one more race for which we fail to qualify.  Solar was once the technological and manufacturing domain of the USA.

Without question solar technology has proved itself.  Solar reliably produces power and the systems are engineered to last for decades.  The power produced is clean and the systems require very little in operation and maintenance in comparison to most other forms of energy generation.  The USA has an excellent solar resource that should be exploited to the maximum.  Solar contributes to job growth, energy independence, and environmental sustainability.  Solar has earned its place in the mix of renewable energy generation.  The political  hostility against the development of solar must stop.  Solar has earned a national commitment to its growth. Today is the time for the USA to ramp up for the energy race and be the leader we should be.

Given the weather around most of the country (and the East Coast in particular), you may not be surprised to learn that solar energy is still pretty popular among Americans.

Just how popular may surprise you.

For the fourth consecutive year, the annual SCHOTT Solar Barometer survey showed that overwhelming majorities of Americans support greater development of solar energy in the United States. The key results from the poll are below:

•    Nine out of ten respondents (89%) think it is important for the U.S. to develop and use solar power.

•    Solar energy is non-partisan: Independents (90%), Republicans (80%) and Democrats (94%) all agree that developing solar energy is important.

•    Eight out of ten Americans (82%) believe that solar energy should receive the same level and type of support as fossil fuel industries have enjoyed for decades, and that the government should support solar manufacturing.

•    A plurality (39%) would choose to prioritize solar if they were in charge of U.S. energy policy, more than natural gas (21%), wind (12%), nuclear (9%) or coal (3%).

•    More than half of Americans (51%) would be more likely to buy a product if they knew it was made using solar energy.

Let’s be clear: it takes more than some dreary weather and a little early snow to make the sun this popular. These survey results show that Americans believe in the power of solar to provide a meaningful shift towards a clean energy future.

The U.S. is on the fast-track to becoming the largest solar energy market in the world with thousands of new jobs, tremendous potential energy savings for consumers and billions of dollars in new private investment. As you’ve surely seen, there has been plenty of consternation in the 24-hour news cycle about the fate of renewable energy – these results show that Americans aren’t buying it.

Given these numbers – which are consistent with the polls conducted the past three years – you might wonder why you don’t see more pro-solar policies coming out of Washington.

The short answer is: on solar energy issues, the public is way ahead of Washington and we need passionate advocates like you to help us get this message through

Click
here to read the SEIA release on the SCHOTT Solar Barometer or hereo read the full results (PDF) and help us spread the good solar word!

The challenge now is to decide which financial strategy to use to purchase your solar system.   You could do an Outright Purchase, but that might deplete needed cash reserves and requires a substantial up front capital expenditure.  A Loan is a viable method and works very well if the controller is willing to put the purchase on the books as debt, and if additional credit lines are not risked.  The generous solar tax credits of 35% Federal and 30% state (NC) make an Outright Purchase and a Loan viable options.

However, your company determines that they are not able to take advantage of the solar tax credits.   Your company may have completed a year with little tax liability, or your business, due to its structure, may not be subject to state taxes and, once again, can’t use the solar tax credits.  So, another option is a True Lease sometimes called a Tax Lease or a Fair Market Value Lease.  The True Lease, in these two scenarios, grabs back the value of the solar tax credits and puts them to work for the business.  Those solar tax credits are very desirable benefits to the bank offering the True Lease and will be included to your benefit in the lease terms. The True Lease option meets your economic value add model, and this is why:

1. No upfront large capital expenditure. Hold onto the company’s cash reserves for possible or known other needs or investments.
2. Finance 100% of the solar system costs.  Helpful with budgeting as it spreads the lease payment out evenly over time.  Protects the company’s credit lines for other uses as needed.
3. Lease payments are 100% deductible as an operating expense.  In addition, to 100% tax deduction, depreciation of the equipment can also be claimed.
4. Off Balance Sheet Financing. The lease is not required to be entered into the balance sheet as debt or liability.
5. Purchase the solar system for a fraction of the original cost.  At year 6 in the lease, buy the system at a dramatically reduced price.  The fair market value price of the solar system at year 6 may be only one-fourth the original cost, while the system itself still has over three-fourths of its useful life to continue to generate power.   A solar electric system reliably generates electricity for decades and retains its technological value.  As utility rates rise, these robust power generators will still be making power for over 25 years.

Note:  Depending on the lease, there are options to not purchase the equipment at the end of the lease allowing the business to return the equipment.  Even though under some leases this is allowable, for a solar system engineered to reliably generate power for decades of production, returning the equipment may not be a sensible strategy especially when the system will be available for purchase at a drastically reduced price.

What else?

1. Tax credits.  These credits have value but not directly to your business tax spread sheet.  The business will use these credits to secure the lease and win favorable leasing terms by turning those tax credits to the bank.
2. Value of the solar generated electricity.  This value will vary depending on the size of the solar system and the power it produces.  The solar system will generate solar renewable energy credits (SRECs) redeemable for a cash value and also power that will generate credit from your utility or cash value depending on your utility’s solar program.

Bottom Line.

The financial equation will be an IRR that beats a 13% return.  Unlike most investments that often are accompanied by significant risk, the expected IRR from leasing a solar system is known up front and is not a gamble but a wise business decision.

Very different.  A solar electric system, by comparison, is engineered for a very long working life with few service interruptions over several decades of seamless, quiet,  and automatic power generation.  To back this up, there are of course warranties.  Most warranties for solar panels are for 25 years.  Solar panels must be capable of handling a wide spectrum of extreme environmental conditions.  If we use North Carolina as an example, a solar system is likely to be exposed to year after year temperature ranges from as cold as <19°F to as hot as >145°F.  The same solar equipment must  be able to handle even more extreme conditions than presented in NC.  Solar panels have some power degradation over time and manufacturers have done well to lower the power degradation levels and keep performance high.  This power performance is backed up and spelled out in the warranties.  The typical power warranty is split into two numbers such as 10/25 or 12/25. The first number, 10 is years and means the panel is warranted to generate 90% of its rated power at year 10.  The second number, 25 means the panel is warranted to generate 80% of its rated power after the remaining 15 years.

The other major piece of equipment in a solar electric system is the inverter, which converts the solar module generated power from DC (direct current) to AC (alternating current) electricity.  Warranties for this equipment are typically for ten years.  However, the trend is now to extend the inverter  warranties beyond 10 years.  In fact, some inverters now have warranties that match panel/module warranties of 25 years.

The bottom line is solar equipment is made well and designed to operate for a great many years. Considering the extreme environmental conditions solar equipment must operate under, the quality and performance of solar equipment might just be unmatched in the electrical and electronics equipment world.

We are home owners in the 21st century and a home expense we can’t defer is our energy consumption cost.  However,  we can be strategic in how to face our month to month energy bills.  Tackling home energy challenges or fixing inefficiencies is a very different home improvement.  A renovated kitchen is a pleasure to cook in and attractive to view.  New attic or subfloor insulation offers something very different.  The pleasure comes each month in reduced energy bills, not in how lovely the attic  foam looks. The Appraisal Journal , October 1998, published an article written by Rick Nevin (who specializes in financial, statistical, and economic analyses) and Gregory Watson (a statistical analyst with ICF Consulting.)  Their article, titled “Evidence of Rational Market Valuations for Home Energy Efficiency”,  was a study that  investigated the investment of home energy efficiency improvements.  The authors’ conclusion was that the selling price of homes increased by $20.73 for every $1 decrease in annual fuel bills. Or, the home value increases about $20,000 for every $1000 saved in annual energy costs.  That’s a substantial win and money well spent.

In April 2011, the Lawrence Berkley National Laboratory published, “An Analysis of the Effects of Residential Photovoltaic Energy Systems on Home Sales Prices in California”.  This study evaluated homes with solar electric systems  to see if they sold for higher prices versus homes without solar electric systems.  The results of this study found strong evidence that homes with solar electric systems sold for a premium over homes without the solar power systems.

The Lawrence Berkley National Laboratory study is not alone in its conclusion.  Several other studies that evaluated the attributes of solar electric systems compared to increased home value, cost recovery and increased speed of home sale, also showed similar outcomes. These studies demonstrate that investing in a solar electric system is quite different from typical home improvements.  With solar electric systems, dollar for dollar cost recovery is a reality.

A commonly asked question to Skyward Solar Power Company is,”What solar panels/modules do you use?”

Skyward is often approached by manufacturers asking us to utilize their product as the choice module for our solar installations.  These manufacturers come from all around the globe from countries such as Germany, China, Canada, Japan, Netherlands, Mexico, Philippines, and of course the USA.  Our challenge is to find what differentiates one manufacturer from another and create a group of favorites to select from.  This is difficult because the once clear differentiating gaps have closed and a great many solar module manufacturers meet the quality and performance bench marks now typically demanded as standard. Ultimately, does this mean that solar modules will become a commodity and are chosen by price?

It may shake out to this and China will be the driver.  Once upon a time, solar modules made in China had a less than best in terms of quality – low cost and cheap reputation.  A pillar of solar is quality – solar systems are designed, engineered, and installed for 30 years of almost automatic and seamless power production. Therefore, panels were selected as German made, US made or Japanese made.  But this is no longer true.

Today, many Chinese manufacturers meet the quality demands expected but at a much lower price.  The past differentiators of watts per square foot, tight power tolerances, efficiency, and mechanical and power warranties are standard expectations and no longer the clear differentiators they once were.   Manufacturers such as SolarWorld known for their consistently high quality and proven top performance world- wide now must compete against manufactures who also can deliver the key differentiators but at a much lower price. This new world is going to be a paradigm shift for industry leaders such as SolarWorld.

Three years ago, I installed Sanyo solar modules on my own house.  I chose Sanyo because of their unique engineering that included layering thin film technology with monocrystalline technology, which was not available from any other manufacturer. The Sanyos work beautifully and I consider them high performance solar modules.   I later installed them on a commercial project and monitor their performance against a month by month benchmark expectation.  Again, their production is excellent.  However,  I have not installed them since. The reason simply is I can confidently choose other manufacturers at a far lower price, meet the power production targets, and satisfy all the necessary key differentiators we automatically expect from a high performance quality made module.

Obviously, solar module manufacturers are keenly aware of the danger of working in a commodity driven market .  This is in our favor because we are getting very high quality technology with excellent pricing that continues to fall.  What we don’t want to see are the Sanyo’s and SolarWorld’s driven out of the solar market because of price.  Module manufacturers like these two have contributed significantly towards solar innovation and set the original high quality standards for others to strive to match.  The question is:  when do we use their product if we can deliver an equal outcome at a much more competitive price?