SOME HOPEFULLY PROVOCATIVE
OBSERVATIONS AND PREDICTIONS
AFTER INSTALLING FOUR
PHOTOVOLTAIC AND FIVE SOLAR HOT
WATER SYSTEMS IN THE LAST
QUARTER CENTURY
Andy Kerr
The Larch Company
Offices in Ashland, OR and Washington, DC
OBSERVATIONS AND PREDICTIONS
1. Photovoltaic Electricity
A. Leasing is the Future
B. SREC’s are In; State Subsidies are Out
C. Industry Consolidation
D. Better Equipment at Lower Cost
E. Crossover Point Coming Soon
2. Solar Hot Water
A. In Oregon, Subsidies Are Excessive
B. Permitting Costs: Deadweight Drag on SHV
C. Game-Changing Technology: Sunnovation Geyser
Pump
PV: A. LEASING IS THE FUTURE
18 230-Watt Panels (4,140
nameplate watts), 20 Year Lease
Versus 20-Year Ownership
Purchase Lease: 0%
Down Plan
Net System Cost (after Subsidies for
Purchase Option or Initial System
Cost for Lease Option
$13,750
$0
$3,639
$7,278
3.11%
#DIV/0!
9.20%
10.83%
$470
($2,432)
($1,922)
$1906
Internal Rate of Return (IRR)
Net Present Value (at 5% savings
investment rate)
Lease:
Initial
Payment
Plan
Lease:
Pre-Pay
Plan
(To calculate IRR, there must be at least one positive and one negative annual
cash flow value. In this case there is not a positive one, hence Microsoft Excel
says "#DIV/0” [attempted division by zero]. One should assume a negative
IRR.)
PV: B. SREC’S ARE IN; STATE SUBSIDIES ARE
OUT
• SRECs are more
efficient than state
subsidies (grants, tax
credits, etc.)
• State subsidies cost
taxpayers.
• SRECs cost ratepayers.
• Most states are broke.
• Voters vote more as
taxpayers than
ratepayers.
SOLAR RENEWABLE
ENERGY CREDIT (SREC):
“tradable commodities
that represent the green
attributes associated
with energy generated
from [sunlight]”
PV: C. INDUSTRY CONSOLIDATION
Economies of Scale:
• Equipment;
• Marketing;
• Installation;
• Service
PV: D. BETTER EQUIPMENT AT LOWER COST
• More efficient panels,
inverters and balance of
system (BOS), including
inverters, connectors,
etc.
• Lower cost equipment
with longer (up to 25year) warrantees.
PV: E. CROSSOVER POINT COMING SOON


“Solar power may be
cheaper than electricity
generated by fossil fuels
and nuclear reactors
within three to five years
because of innovations,
said Mark M. Little, the
global research director
for General Electric Co.”
(Bloomberg.com, May
26, 2011.
SHW: A. IN OREGON, SUBSIDIES EXCESSIVE
Sunny Oaks 2006:
• SHW cost: $3,150.
• Minus Federal Income Tax Credit: $945
• Minus State Income Tax Credit: $1,500.
• Minus Energy Trust of Oregon grant: $1,000.
• $295 richer before turning on the savings from the
sun.
•$2,255 richer if consider that I was going to have to
buy a water heater anyway ($1,190).
SHW: B. PERMITTING COSTS: DEADWEIGHT
DRAG ON SHW
•The cost of pulling a permit (including drawings, engineer
review [red stamp]), going to the permit office several
times (separate building, electrical and plumbing
permits), etc. is estimated to be ~$1,600 in Washington,
DC.
• In contrast, the cost in Howard County, MD is ~$250
(one-stop permitting, minimal drawing requirements,
etc.).
• A SHW system costs between $8,500 and $10,500 in
Washington DC, so permitting can be 14-18% of the cost.
• US DOE throwing $12.5 million to move address this
estimated $1 billion annual cost.
SHW: B. GAME-CHANGING TECHNOLOGY:
SUNNOVATION GEYSER PUMP
• No pumps, motors or sensors
to fail (no moving parts).
• Pex, not copper, piping for
easier installation.
• Overheating prevention makes
thermal transfer fluid last
longer.
• Think a dis-integrated and
improved Copper Cricket.
• Could reduce SHW by ~$2,000
per installation.
• OG 300 certification pending.
• www.sunnovations.com