solar panels

What is a Value-of-Solar Tariff?

A value-of-solar tariff, or VOST, is a rate design policy that gives customers with solar panels credit for the electricity they generate at a specific price. The credit is then applied to the customer’s utility bill. A VOST usually clarifies how much energy is sold from the customer to utility company and from the utility company to customer; it also determines at what rate the energy is valued. Value-of-solar tariffs are generally viewed as unfair and for two main reasons: the value of the tariff is lower than market rate in most areas and the benefits of VOSTs aren’t broadly advertised. But VOSTs don’t HAVE to be unfair.

As of right now, there aren’t many markets that have fair compensation for solar in the form of VOSTs. The two main places that are under the current implementation of value-of-solar tariffs, Minnesota and Austin, Texas, purchase all of their energy at the utility’s retail rate and pay out a separate VOS rate in dollars per kilowatt hour. In Minnesota, the VOST rate is about $0.145 per kilowatt-hour which is above the residential retail electricity rate of $0.115 per kilowatt-hour. This rate means that for every kilowatt-hour a solar user produces, the user doesn’t have to pay for a kilowatt-hour and they save a little on the electricity they don’t produce but still use. Why would a state or utility pay higher than retail? Because through a VOST process, IF the total value of solar energy is taken into account, there may be cases where it is in fact worth more than retail.  This type of VOST is very customer friendly to encourage the residents of Minnesota to begin producing solar energy themselves; unfortunately, outside of Austin, Texas, the same cannot be said for other states. One of the reasons for less than market rate compensation is the cost of providing the VOST in the first place or other services that utilities must provide for you to sell to them.

What is the unseen value of a VOST?

An end financial value of a VOST is made up of many subparts. For example, some value components include: avoided cost (money saved by the utility from not having to buy additional fuel for the power plant), environmental (the value of reducing harm to the environment and its subsequent cleanup), and transmission system impact (less strain on power lines due to generation being located closer to where it is being used), among others.

For a user to successfully produce and sell back solar energy to a utility company, they have to use the grid. Even if a customer produces the same amount of energy as they use, there are still costs to selling the energy back and for energy used from the grid when solar is not producing. When paying out for solar, utilities have to consider the cost of business (grid maintenance, labor, parts, etc.), which takes a portion out of the amount the customer receives. The need utilities to receive compensation for their services in a VOST to maintain the grid cannot be overlooked.

The second reason value-of-solar tariffs can get a bad reputation is customer lack of knowledge about its benefits. Utilities can better understand customer load, timing, and volume because a VOST separates electricity generated by the consumer from electricity consumed. This is valuable information that utilities can use to better predict when peak times might occur and how much electricity they’re actually using. However, customers may not understand all the variables that make up a VOST or why they are there.

Another reason is how customers receive compensation based on utility-specific benefits and costs of their electricity generation, instead of fixed retail rates that may span many regions. Customers are able to select what VOST is most beneficial to them depending on their energy production and use, as opposed to going with the rate of their region no matter the circumstances.

Value-of-solar tariffs are one of several viable options for solar users to sell back their solar energy, and there are both good (Minnesota and Austin, Texas) and bad (almost everywhere else) ways of providing it to customers. One important aspect that cannot be overlooked is how a VOST is beneficial to the energy system (e.g. the grid) as a whole. With a true integrated value, a VOST can provide the grid with much needed support and gives utilities valuable information; but as it becomes more widespread, concrete worth needs to be given to the value provided from things like environmental and avoided energy costs. VOST has a bright future if implemented correctly, and as more states follow Minnesota’s example, solar will continue to grow more valuable.

Solar Shingles, Are They Really Worth It?

Photo courtesy of Tesla

Tesla has done it again. The sexy, cutting-edge, tech company has come out with a product called Solar Tiles, also known as Solar Shingles. This revolutionary product will pave the way for sustainable energy to become the next home-design trend. The 8.65”x14” tiles currently come in two different styles, textured and smooth; the website also shows the two new designs being released next year. How does it work? Glad you asked… The solar tiles are strategically placed all over a home’s roof to maximize sun exposure. The light from the sun is converted into power that is then transported into a Powerwall, or assumedly any other battery system, where the surplus energy is stored. The energy is stored in the Powerwall to guarantee uninterrupted electricity even during bad weather.

Photo courtesy of Tesla

The nice thing about Tesla is that their website allows you to input your address, square-footage, and current electricity bill amount. They use all that information to calculate the percentage of solar tiles you would need, how much it will cost (whether you pay for it all upfront or you finance it), and how much it will save you per month and over the period of 30 years. Now, you may be wondering, “if I only need 40% of my roof covered in solar tiles won’t you be able to notice a difference in tiles?” Tesla has already thought of that. The roof will be made with the same style as whatever tile you select and the remaining 60% of the roof would be covered in tempered glass tiles. Now you’re also probably thinking, “glass tiles don’t sound like they have a long lifespan”. Once again, Tesla is one step ahead of us. These tiles come with a lifetime warranty, and they have proven to be 3 times stronger than standard glass tiles. Tesla’s website has a video of a 2-inch hailstone being thrown at the tiles at 100mph, the other tiles break instantly and the Solar Tile is completely unharmed.

Photo courtesy of Tesla

Now, as all Tesla products are pricey, this one is no different. I can use my home as an example. It’s 2 stories, 3,500 square feet, 5,000 roof square footage, and has an average electricity bill of $280. The overall price for my home would be $132,500, which includes 3 Powerwalls installed in my home and 50% of my roof covered in solar tiles. However, Tesla has it set up to where, not only do you receive a tax credit, but you can finance through your monthly home mortgage payment. For my house, I would receive a $36,900 tax credit and $490 monthly loan payment. If you’re depressed because of the sticker price, I’ll share with you the calculator’s savings estimation. I would save $259 a month over 30 years and $93,300 total for 30 years. Overall, I would most likely break even, considering the cost and the savings put together.

Compare that to a standard solar array, to completely offset my usage it would likely cost around $40,000 before tax incentives. Also keep in mind that because my usage is a little higher than average, I’m having to install a system that is a good bit larger than the average installation in North Alabama.

So, are Solar Tiles worth it? We’re voting no. But only for now. And only because of the price. If Tesla’s performance from the introduction of the Model S to the Model 3 is any indication, Solar Tiles could be a harbinger for much cheaper, mass market products.

Media Fusion uses solar power to brighten bottom line

In May, Media Fusion added solar energy panels to its building to help supplement its power supply. The company “sells kilowatts back to the grid” and the company is credited a certain portion back from the utility company each month.

“I think the environmental part is a very big part, but let’s just set that aside. Let’s look at this from a business standpoint. This is a no-brainer from a business standpoint,” said Media Fusion Inc. President Richard Williams said. “My job as president of the company is to help us be efficient in operations and as a government contractor the government looks to us and we are graded on the efficiency of our business.”

Energy Alabama analyzed the Media Fusion building for energy saving possibilities and recommended solar panels for its flat roof.

To read the full article, please visit: http://www.al.com/business/index.ssf/2017/06/media_fusion_uses_solar_power.html

Huntsville Business Installs Solar Panels to Reduce Energy Consumption

HUNTSVILLE, Ala. – A Huntsville business is taking advantage of sunlight to save some serious cash.

Media Fusion, Inc. is a Huntsville business and the latest to join the North Alabama Buildings Performance Challenge and install solar panels.

“Energy Alabama was the key for us,” said McElyea. “If it weren’t for Energy Alabama, we wouldn’t have flipped the switch.”

To read the full article, please visit: http://whnt.com/2017/06/02/huntsville-business-installs-solar-panels-to-reduce-energy-consumption/

To view the installation under construction (time-lapse), please visit:  https://www.youtube.com/watch?v=_rdwglsBF0g

How to Go Solar in North Alabama

Be like her. Go solar!

Ever thought about going solar at your home or business? I often walk outside on a really sunny day and think to myself, “Man, I wish I had solar panels installed already.” So here’s the thing: It really isn’t that hard and the economics are better than they’ve ever been before. Today, let’s learn how to go solar in North Alabama.

In this post we’ll explain all the steps you need to take to install solar at home or where you work. Even though your contractor will probably be the one completing some of these items, it’s always good to know what should be happening.

This post may be a little lengthy but we wanted to make sure you have all the information you would need to make solar a success at your home or business.

The Process

  1. Determine property feasibility
  2. Determine your objectives
  3. Confirm utility participation in Green Power Providers
  4. Understand pricing
  5. Determine how to pay for your system
  6. Get analysis from Energy Alabama
  7. Submit Customer Reservation Request (CRR) to TVA
  8. Submit Participation Agreement Request (PAR) to TVA
  9. Get your application(s) approved by TVA and your local utility company
  10. Buy and install your solar power system
  11. Complete system tests and submit results to TVA
  12. Get money!

Determine Feasibility

This is pretty simple. Ask yourself these four questions. If the answers are yes to all of them, you’re probably a good candidate for solar in North Alabama.

1. Is the property free and clear of trees and other items that would obstruct the sun?

2. Does the property have a south-facing roof space or open area(s) where a solar system could be installed on the ground?

3. Does the property have a relatively new roof that is expected to last for at least another 25-30 years?

4. Do I expect to own the property for at least another 8 years?

Determine Objectives

If your property is feasible, now you need to figure out what exactly you want to do. Your objectives will be limited by your property, your personal desires, and your budget. The two biggest things you need to determine are:

  1. Do you want to go off the grid or connect to the grid?
  2. Either way, how far do you want to go? Do you want to take your whole home off the grid or just a small room for emergency backup? Do you want to offset 50% of your usage or maybe all of it?

Here are some things to consider to help you make your decision.

  1. Do you have lots of roof space or open area? If you’re trying to go completely off the grid or offset all your usage, you’ll probably need a decent amount of space to go solar.
  2. Have you already invested in energy conservation and efficiency? Solar is much cheaper than it used to be but nothing can compete with just using less energy. Also, the more efficient you are, the less solar you need to buy. Most homes can’t go completely off the grid or offset 100% of their usage without reducing their usage first.

Green Power Providers

If you’re trying to go solar in North Alabama on a home AND you want to connect to the grid, you’ll need to participate in the Green Power Providers program from the Tennessee Valley Authority (TVA). This program gives structure to how you connect to the grid and sell your electricity.

More on that later. For now, you’ll need to confirm that your local power company participates in the program.

If they don’t participate, it isn’t the end of the world! Perhaps they’ve never had anyone ask. We’ve seen utilities join the program just because someone asked them to. Ask to speak the to the general manager and respectfully ask them about participating in the program.

Before you do this, you’ll want to continue the process so you can talk more intelligently to them about exactly what you want to do on your home such as how your return on investment is affected by their lack of participation and the local economic impact of your solar installation.

Understanding Pricing

There are a lot of moving parts to understand. Let’s break them down.

Residential solar in North Alabama is selling for about $3.00 per watt before tax incentives. For example, the average home in North Alabama installs 5 kilowatts (kW) of grid-connected solar. This would cost about $15,000 before tax incentives.

A homeowner can expect a 30% federal tax credit if you have the taxable income to take the credit against. If you’re able to use the 30% federal tax credit, this would bring the total cost down to $10,500.

We recommend that you consult a tax professional before making this decision.

Additional incentives, such as accelerated depreciation, are available to businesses and can shave 2-3 years off the payback time. Also, businesses can expect lower costs per watt since they typically install larger systems and can take advantage of an economy of scale that homes cannot.

Now on to budgeting!Going solar in North Alabama

As you’ve seen, solar in North Alabama does cost a good bit of money, and you may not have that kind of cash sitting around. Today we’ll talk about financing home systems. (Financing business systems and innovative financing mechanisms will be the subject of future posts.)

Basically you have two and a half options to pay for home solar in North Alabama.

  1. Pay cash.
  2. Use traditional financing. This can take many forms, but the idea is the same. The cheapest form of financing is likely to be a home equity loan, but you can also get unsecured loans for the system. But if you do this, you’ll still likely need to put some money down.

Well, there is one more option… But that’s another post for another day. Long story short, you CAN add it to your mortgage at the time of purchase of a new, or a new to you, home. On 30 year mortgages, this is cash flow positive… you make money starting in month one! We’ll explain more later.

Last note on budgeting: If you decide to go with battery storage, even for a small system, you should know what kind of pricing to expect. Most battery storage systems add about 60-70% additional cost. So if your solar system is expected to cost $10,000 and you want to add battery backup, you should expect to add $6000-7000 to the total project cost.

This extra cost isn’t without benefit though. With an extra investment you’ll be able to completely disconnect from the grid and rely wholly on yourself. Of course battery technology continues to fall in price. Dramatically. This will only become a better and better decision over time.

Getting a Preliminary Analysis

So you know that your property is feasible, and you know what you want to do and have a good idea of how to fund the project. Now it’s time to really get started. And here’s where we come in.

If you’re in North Alabama, we can provide a free preliminary analysis for you. The point of this analysis is to let you know exactly how much energy you can produce on your property, how much it is expected to cost based on current market pricing, and an estimated return on investment.

Is Solar Right for You?

Schedule Your Analysis

After the Preliminary Analysis – Dealing with TVA

Once you’ve seen the results and are happy, you’re ready to move on. The next step is reserving your spot in TVA’s Green Power Providers (or convincing your local utility to join if they’re not already participating). Concurrent with that you’ll begin working on the engineering drawings of your system.

*Note: If you are installing an off-grid or behind-the-meter system, you do not need TVA’s approval. You are only required to get their approval when energy will be sent to the grid.

First you’ll file what is called a capacity reservation request (CRR) with TVA. This essentially reserves your spot in line while your application is reviewed and your engineering drawings are finished. We should note that while this reserves a spot in line, there really isn’t a line. At least right now… CRRs are usually approved in just a few business days.

We can help you find a company to build your solar power system drawings, or you can work with a North American Board of Certified Energy Professionals (NABCEP) company on your own. You’ll need a NABCEP professional in order to connect to the grid. At this point in the process you should expect to pay a professional. Engineering drawings typically cost between 10-15% of your total project cost. If your project is expected to cost $15,000, you should expect drawings to cost $1,500 to $2,250.Going solar in North Alabama

Once your CRR is approved by TVA, they will send you a contract called a Participation Agreement Request (PAR). This contract details the terms of what TVA will pay you for the electricity you generate. PARs are usually approved quickly as well but you should expect about one to two weeks depending on their workload.

As of June 15, 2016, TVA pays retail rate for 20 years. Currently, retail rate for much of North Alabama is about $.10/kWh. If in 5 years the retail rate you pay is $.12/kWh, TVA will then be paying you $.12/kWh. This will go on for the 20 year length of the contract.

TVA gives a great rundown of how their portion of the process works.

Once you fill out and sign the PAR, it goes to the local power company (someone like Huntsville Utilities, Joe Wheeler EMC, or Athens Utilities) to be approved. After the local power company approves the application, TVA will review and approve the application.

During the CRR and PAR process, someone can act on your behalf, such as the solar company you are working with. Of course you are kept in the loop, but you don’t have to get involved in every small item unless you really want to. This helps keep the project moving.

Ready to Install

When TVA notifies you that the PAR has been approved, you are able to purchase and install your system. You have 180 days from the date of notification to finish the installation of your system.

TVA requires a NABCEP certified installer and a licensed electrician to complete the install. Even if it weren’t required, you want it! That’s the only way to know you have a company that knows what they’re doing.

Note: Some municipalities, like Huntsville, may require you to pull a building permit. Make sure to check with your local government prior to beginning construction!

The solar company you are working with will also receive the PAR approval notification. Upon completion of the installation, the local power company will test the system to make sure it is operating safely. The local power company will notify TVA when the testing has been satisfactorily completed.

Almost done… Receiving your credits

Well, the hard work is done, but you still have one more major item to complete. Every local power company is different, but most will credit the amount of your generation on your bill.

You will have two meters. One for consumption (your existing meter) and one for generation. If you consume 1000 kWh in a month and produce 800 kWh of solar that month, you will owe the utility company for 200 kWh of energy. If you produce 1000 kWh and consume 800 kWh, they will owe you for 200 kWh of energy.Going solar in North Alabama

Some utilities will credit your bill and carry over your credit whereas some will pay you out monthly or regularly. You’ll need to verify this with your local power company.

The key point here is to verify that you are receiving your credits and that they are accurate. Almost all solar systems also come with remote monitoring, not to mention you have a second meter. Remember, many local power companies have not dealt with very many solar projects, and as such, may not have all their internal processes in place. It is your responsibility for making sure you are appropriately credited!

All done! Enjoy your clean, renewable solar energy system! 🙂

Have more questions? Feel free to contact me via email at dtait@alcse.org