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Solar Services Agreements (SSA)

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Solar Growth Trends

Regulation of Solar Services Agreements (SSAs) has emerged as an important issue in supporting solar growth.

Confusingly, Power Purchase Agreement "PPA" is often used in reference to SSAs, however, PPA has long been the term for an wholesale sales agreement between a generator and a utility, but a SSA is actually a retail sales agreement between a solar array owner and the utility customer hosting a solar array.

This arrangement has become the norm, as SSA providers are able to use the available federal tax credits and depreciation, and free the host from tying up capital and taking on the risks of ownership.

By overcoming a number of barriers to customer uptake of solar, SSAs have become the preferred means for the financing solar by commercial customers and the use of solar SSAs is beginning to be seen in residential markets.

Because the use of solar SSAs is so beneficial to the growth of solar markets, IREC has been actively involved in state proceedings addressing participation of solar SSA providers in net metering and regulation of solar SSA providers as public utilities.

State Policies for SSAs

Over the past year, IREC has participated in proceedings in Colorado, Nevada, Arizona, New Mexico, Massachusetts and Michigan that addressed the legal and policy issues surrounding regulation of solar SSAs. 

As part of Michigan's adoption of net metering rules, the Michigan PSC clarified the definition of customer-generator to ensure that SSA providers would be allowed to participate in net metering.

Likewise, Massachusetts clarified in its net metering regulations that net metered systems may be owned by third-parties.

IREC continues to be involved in Arizona and New Mexico's consideration of the matter and anticipates being active in Washington as well.

Solar in Renewable Portfolio Standards (RPS)

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The IREC declared that the most significant trend during the September 2008 - September 2009 period is a continued emphasis on solar energy in recent RPS adoptions and changes. Eleven states enacted or significantly modified standards; of those, seven states and DC included new provisions specific to solar energy.

In addition, five states made minor adjustments to their policies, of which two involved solar provisions.
  • Missouri replaced (via ballot initiative) an existing renewables goal of 11% by 2020 with a standard of 15% by 2021, and included a provision mandating that at least 2% of the requirement come from solar energy (equivalent to 0.3% of retail sales in 2021).
  • Illinois expanded its RPS to cover competitive sales and adopted a solar carve-out of 6% of the annual requirement from 2015 - 2025.
  • And, in September 2009, California extended its RPS to 33% by 2020, via executive order.
  • Both Oregon and Rhode Island adopted provisions relating to long-term contracts for solar energy resources, coupled with targets for solar that are outside the scope of each state's existing RPS.
  • New Jersey approved long-awaited utility-administered solar renewable energy credit (SREC) contracting programs in connection with its existing solar carve-out.
SOURCE:  2009 IREC Annual Report
THE CLEAN ENERGY ECONOMY: All State Fact Sheets (2009)

A companion piece to the Clean Energy Economy report, individual fact sheets that quantify and describe each state's jobs, businesses and investments in the clean energy economy.

For example:

ALABAMA:  Alabama has a small but growing piece of America's clean energy economy. The state's number of jobs in the clean energy economy in 2007 was less than the national average of more than 15,000 jobs, but it increased slightly between 1998 and 2007 despite a lack of venture capital investments and few clean technology patents, and it exceeded the growth rate for overall jobs in Alabama during the same period.
 

FLORIDA: The Sunshine State has a large and growing piece of America's clean energy economy. Florida ranks in the top 10 states for jobs in the clean energy economy in 2007, with more than 30,000, and it attracted nearly $117 million in venture capital in the past three years, half of which has supported clean energy generation. The state created an Energy Systems Consortium among state universities to leverage the expertise of its research community to boost its clean technology industry.

The solar panels on top of the community center at Colonia San Martin, in Sacramento, CA is the newest project of the housing nonprofit Mercy Housing California, will produce six times more power than the average residential solar electric system. This is the first solar-power system on an affordable housing complex in Sacramento, and the housing complex was built in a partnership with the AIDS Housing Alliance.

An essential part of a total energy solution is to back up solar installations with energy efficiency so that the total amount of energy required for heating, cooling, and water service is optimized...before determining the size of the PV installation required or effective.

Each low income housing unit in this exemplary solar and efficiency project, has high-efficiency water heaters and heating, ventilation and air conditioning systems. The units  also have windows, insulation and radiant heat barriers rated to reduce energy use. The energy efficiency measures exceed California's Title 24 building codes for energy efficiency by at least 25%.  And that's significant because the Title 24 requirements include a 25% savings over conventional construction!

The 12-kilowatt solar PV system will generate an estimated 18,700 kilowatt-hours per year, cutting electric bills at the complex by an estimated $2,000 per year.

The photovoltaic solar system qualified for California state rebates, and SMUD (Sacramento Municipal Utility Department) negotiated a rebate package that helped the developer install the energy-efficient equipment.


Aids Housing Alliance

2709 Walnut Ave
Carmichael, CA 95608-4264
(916) 979-0925
www.aidshousingalliance.org

According to new employment and business forecast figures released by the Associated General Contractors of America, about two thirds of the nation's non-residential construction companies are planning to cut their payrolls.

The organization reported that AGC member companies have seen, or are planning for, declining activity in every type of construction. However, the forecast did find that planned investments in infrastructure projects, as part of the federal stimulus package, are likely to dramatically improve the employment and business outlook in 2009.

President-elect Obama has outlined his proposed plan to build a sustainable renewable energy industry that includes wind, solar and biofuels and related renewable energy technologies.

About 85 percent of nonresidential construction companies would either cancel layoffs or add new employees if states embarked on stimulus-funded infrastructure projects, according to AGC's survey. And construction companies would increase their payrolls by 25 percent if the stimulus included new infrastructure investments.

Stephen Sandherr, chief executive officer of AGC, said builders across the country are urging Congress to include infrastructure investments in the stimulus. AGC is calling for $2.2 billion to help renovate hundreds of federal facilities and for additional funds to repair crumbling schools.

Indications are that new tax incentives are being planned to encourage conversions to energy-efficient buildings, construction of renewable energy facilities, remediation of Brownfields projects and construction of new airport and commercial projects.





An Australian company, Solar24 Inc., has developed a solar thermal system that holds heat for 14 hours, long enough to sustain through a cloudy winter night.  One big problem with solar has always been the retention of the heat overnight.

While sunshine is only available during daylight hours, and no renewable energy source is without drawbacks, all forms of renewable energy can be a useful addition to the general power supply that would eventually stabilize and lower costs.

Wind farms do create a cost issue with transmission, and large commercial size solar installations can have that same drawback -- but so did natural gas and crude oil before the pipelines were built to handle distribution. Transmission solutions are just part of the challenge of energy business.

According to the American Wind Energy Association, the United States added more wind energy to its grid in recent years than any other country, and U.S. wind power capacity grew by 45 percent to 16.8 gigawatts in 2007.

Solar Energy in Obama's Energy Plan (slideshow)

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Renewable energy is a high priority for President Elect Obama.  His jobs program emphasizes rebuilding the infrastructure, including roads and bridges, schools and weatherizing homes.  This slideshow synthesizes the energy priorities established by Obama during his campaign and in the days of the transition. Renewable energies, including solar figure prominently in his energy plan.


Obama Energy
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"This is the breakout growth sector of the next generation," said the author of Next 10's report, "Energy Efficiency, Innovation, and Job Creation in California".

David Roland-Holst, a professor of agriculture and resource economics at UC Berkeley. "We cannot afford to miss this market opportunity."

California's per-capita electricity use is about 40% less than the national average, Roland-Holst said, largely because of government-mandated energy efficiency standards for utilities, buildings and appliances put into effect over the last four decades.

Roland-Holst found that the lower use has enabled Californians to save $56 billion on energy since 1972. That money was spent in the local economy, he said, instead of on imported oil, out-of-state electricity or building new power plants. The result: 1.5 million additional California jobs with a total payroll exceeding $45 billion.

Programs like AB 32 will have a multiplier effect

Next 10's report calculates that energy innovation required by AB 32 will create 403,000 green-collar jobs over the next 12 years as companies spend big on renewables and energy efficiency. Roland-Holst said that would increase household income in California by as much as $48 billion by 2020 and boost the state domestic product by $76 billion.

California's Environmental Innovation Advantage

Some of California's leading companies agree with Roland-Holst's assessment that environmental innovation could become a pillar of the California economy.

Read more about the report: Energy Efficiency, Innovation, and Job Creation in California (by David Roland-Holst, UC Berkeley, Oct. 2008)

Solar Energy
Solar energy is one of the most abundant and visible renewable resources on Earth. Many national, state, and local governments are engaged in programs to expand programs that enable homes, businesses, and large-scale project developers to make use of this clean energy resource.

Solar power technologies convert radiant light energy to into more usable forms of energy such as electricity or hot water. Photovoltaic cells made from silicon are the most well know, and can leverage mature silicon electronics manufacturing technology to lower their manufacturing cost in order to expand their market reach. Other solar technologies concentrate the sunlight into a small area to heat a working fluid such as water to generate electric power or provide useful hot water for space conditioning.

Ardour Global Alternative Energy Indexes provide investment fund information.

sce_solar_roof.jpg

Southern California Edison will install 250 megawatts of solar panels on 65 million square feet of roofs - that’s two square miles - of Southern California commercial buildings at a cost of $875 million. That project will be the nation’s largest solar cell installation.

Enough solar to power 162,000 homes.

In the initial phase of the program, SoCal Edison will lease 607,000 square feet of roof space at ProLogis’ Kaiser Distribution Park in Fontana, California. The area will be used to install and maintain solar panels with the potential to generate enough electricity to power 1,426 households for one year.

At the conclusion of the start-up phase, which will include five to 10 additional installations and is expected to be completed by the end of 2008, the utility will launch its full renewable energy project, aiming to complete 50 megawatts of solar panel installations each year for a total of 250 MW. Each individual installation is expected to comprise one to two megawatts.

“I urge others to follow in their footsteps,” said Governor Schwarzenegger. “If commercial buildings statewide partnered with utilities to put this solar technology on their rooftops, it would set off a huge wave of renewable energy growth.”

SCE hopes to have the first solar rooftops in service by August. The company says it will install at the rate of one megawatt a week.

The program would give a big boost to California’s Million Solar Roofs program and help SCE meet a state requirement to get 20 percent of its energy from renewables by 2010.


Financing Solar Installations

Environmental Leader reported that solar companies are becoming financial intermediaries, leading companies to install solar power that wouldn’t otherwise be able to afford it.

Using a “power-purchase agreement” model, many solar power companies take on the cost of installing solar panels on customers’ roofs. In return, customers pay the solar power company for the panels’ output, generally at a lower rate than they would otherwise pay.

The power purchase model is also attracting bankers - Morgan Stanley, G.E. Energy Financial Services, Goldman Sachs, Wells Fargo, and MMA Renewable Ventures have all arranged financing for recent solar energy projects.

Besides the financing, state incentives and a federal investment tax credit (worth up to 30 cents on the dollar) are also driving adoption.