Valuing The Return on Solar Projects
for Businesses and Government Agencies
EXECUTIVE SUMMARY
With rising grid electricity prices and declining solar technology costs, the economic benefits of solar
power are becoming increasingly difficult for leading businesses to ignore. Transitioning to solar can save
money on energy today and hedge against rising utility rates tomorrow. However, before moving forward
with solar, it is important to determine the total energy and savings available over the life of a photovoltaic
(PV) installation.
Understanding the true value of any business decision requires that you weigh the total benefit against
the total cost of that decision, whether you are upgrading machinery, purchasing land, or installing
solar technology. In effect, you must determine which option delivers the greatest possible return
on your investment.
To properly make such an assessment, you need to answer two fundamental questions:
How much electricity will your solar installation generate over the lifetime of the system?
This is a measure of the total benefit.
How does the lifetime cost of the solar electricity produced compare to what you would
pay your current provider over that same period? This is a measure of the total cost.
Given a choice between utility electricity and solar electricity, conventional wisdom suggests that you go
with whichever option or combination of options yields the most energy at the lowest price. This white
paper is designed to help you make that assessment, allowing you to determine whether or not a solar
installation is the right choice for your facility based on the following considerations:
Section 1 Maximizing the Total Energy Output from a Solar Project
2 Calculating the True Cost of a Solar Project
3 Achieving the Greatest Return on a Solar Project
4 The Sunpower Advantage
EXECUTIVE SUMMARY
2
MAXIMIZING THE TOTAL ENERGY OUTPUT
FROM A SOLAR PROJECT
SECTION 1
Which solar technology you choose dramatically impacts the amount of electricity produced using your facility’s
available space. The following topics highlight potential barriers to optimal performance and different ways to
boost the electricity your system generates once installed on your rooftop, parking lot, or unused land. Ideally, you
should implement a solution that produces the most energy from the space and resources available.
Panel Efficiency
Different solar technologies yield different energy
outputs. The higher a solar panel’s efficiency, the more
power generation capacity it has for any given area.
Conventional solar technologies typically convert only
12% to 14% of available sunlight to usable electricity.
By selecting panels that exceed this efficiency average,
you achieve much higher and faster returns. With
conversion rates approaching 20%, SunPower panels
are up to 50% more efficient than conventional solar
and as much as 100% more efficient than thin-film
technologies.
.
®
The table below illustrates the annual electricity you can
produce on a 80,000 ft2 roof in Southern California
for varying technologies using standard installation
techniques.
Light-induced Degradation
up to 3% production capacity within days of being
installed1. The amount of light-induced degradation
has a substantial impact on the total electricity that
a system can produce over its lifetime. By using high
quality silicon with fewer impurities, SunPower cells
eliminate light-induced degradation, allowing your
system’s performance to remain unchanged over time.
Low-light Response
Sensitivity to light is critical to solar electricity
generation. Highly responsive panels capture more
energy since they literally “wake up” earlier in the
morning and “stay up” later in the evening. Every
second of daylight that your panels lay dormant
represents a missed opportunity to generate power.
SunPower’s monocrystalline cell substrate boosts
sensitivity to very low levels of light, ensuring that your
system makes optimal use of precious daylight hours.
Standard solar cells typically experience an oxidation
reaction when first exposed to light, meaning they lose
1,532,685 kWh
933,977 kWh
796,884 kWh
SUNPOWER
1,000 kW DC
SUNPOWER T5 SOLAR ROOF TILE
318W SUNPOWER PANELS
5˚ TILT
CONVENTIONAL
615 kW D C
FIXED TILT RACKING SYSTEM
376 CONVENTIONAL
13.3% PANEL EFFICIENCY
10˚ TILT
THIN FILM
518 kW DC
FLAT MOUNTING SYSTEM
THIN FILM CdTe
10.1% PANEL EFFICIENCY
0˚ TILT
1. A Call for Quality: Power Loss from Crystalline Module Degradation Causes a Big Headache for the Industry,” Photon International, March 2008.
M A X I M I Z I N G T H E T O TA L E N E R G Y O U T P U T F R O M A S O L A R P R O J E C T
SECTION 1
3
ZERO LIGHT-INDUCED DEGRADATION
Most common solar cells — because they use boron-doped p-type silicon — experience an oxid
when the cell is first exposed to light. This means the energy production capacity for the solar pa
these cells will drop by about 3 percent within the first few days after installation1. Not the case
products. We use n-type silicon that contains fewer impurities and uses a phosphorous dopant, e
initial light-induced degradation.
BROADER SPECTRAL RESPONSE
WER CAPTURES
MORE
SECTION 1
T, EVEN
IN LOW LIGHT
Broader Spectral Response
EME Not
HEAT
CONDITIONS.
surprisingly,
solar technology works best when the
Not only do SunPower cells capture more light, but they also make use of a wider range of the su
®
SunPower solar cells convert more of the photons to electricity in the short wavelengths (blue) and
(red) of the solar spectrum than conventional solar cells. This means that in wintertime and on clou
sunshine isn’t postcard-perfect, SunPower panels continue to produce high levels of electricity.
sun is at its brightest. However, even during cloudy
days, it is possible to capture energy when using cells
GRADATION
designedp-type
to silicon
harness
the shorter
wavelengths
(blue)
ause they use boron-doped
— experience
an oxidation
reaction
light. This means
the energy
production
capacity for (red)
the solarof
panels
use spectrum.
and
longer
wavelengths
the that
solar
SUNPOWER CELL
RELATIVE EXTERNAL QUANTUM EFFICIENCY, %
EXCELLENT LOW-LIGHT RESPONSE
NUMBER OF SUNLIGHT PHOTON (M -2 S -1 MICRON -1 ) E + 19
SUNPOWER GENERATES MORE ENERGY BY CAPTURING
A BROADER LIGHT SPECTRUM.
SunPower cells offer exceptional performance, even in low-light environments. SunPower’s premiu
cell substrate enables the cell to be very sensitive to very low levels of light. The advantage is that
percent within the first few days after installation1. Not the case with SunPower’s
“wake up” the inverter earlier in the morning, and the system is still generating energy later in the
that contains fewer impurities and uses a phosphorous dopant, eliminating the
technologies. Simply put, youCONVENTIONAL
get more solarCELL
electricity every day from a SunPower solar system.
Overcast skies do not prevent solar radiation - anyone
who has sunburned on a cloudy day understands this
ONSE
phenomenon implicitly. Because SunPower designs
ure more light, but they also make use of a wider range of the sunlight spectrum.
its cells to capture as much of the solar spectrum
e of the photons to electricity in the short wavelengths (blue) and long wavelengths
ascells.
possible,
your
system
abledays
to when
produce
more
onventional solar
This means that
in wintertime
and is
on cloudy
the
unPower panelselectricity,
continue to produce
high levels of
regardless
ofelectricity.
the weather.
.
perform better in higher temperatures than conventional PV panels by having a lower tempera
and a lower Normal Operating Cell Temperature (NOCT)2. With our technology, the reductio
is roughly 0.38 percent per degree Celsius rather than the typical 0.48 percent for convention
WAVELENGTH, MICRONS
In addition, SunPower panels run cooler than conventional solar panels given the same ambie
SunPower cells use more short ultra-violet and long infrared wavelengths.
The hotter it is outside, the bigger the difference between SunPower and conventional PV prod
Performance
NUMBER OF SUNLIGHT PHOTON (M -2 S -1 MICRON -1 ) E + 19
When
exposed
to the sun, all solar panels become hot
SUNPOWER
CELL
and experience a temporary reduction in the efficiency
with which they convert sunlight to energy. Panels
with a lower temperature coefficient “run cooler,”
allowing them to generate more electricity even on
NVENTIONAL CELL
the hottest days. Because SunPower panels have a
lower Normal Operating Cell Temperature (NOCT)2,
they consistently produce more energy, even at higher
temperatures. The hotter it becomes outside, the better
they perform relative to other solar panels.
5 GLOBAL SPECTRUM
All solar panels get hot. And
they
do, power production falls due to loss of voltage. Su
AMwhen
1.5 GLOBAL
SPECTRUM
olet and long infrared wavelengths.
AS THE AMBIENT TEMPERATURE RISES,
From “A Call for Quality: Power Loss from Crystalline Module Degradation Causes a Big Headache for the Industry”, Photon International, March 2008
SUNPOWER’S ADVANTAGE INCREASES.
1
6
% ADDITIONAL ENERGY PRODUCTION FROM BETTER HEAT RESISTANCE
MORE ENERGY BY CAPTURING
Temperature and
RUM.
HIGHER PERFORMANCE AT HIGHER TEMPERATURES
AMBIENT TEMPERATURE (˚F)
ine Module Degradation Causes a Big Headache for the Industry”, Photon International, March 2008.
2
NOCT is measured at continuous sunlight exposure of 800W/m2, 20°C ambient, and wind speed of 1m/second.
2. NOCT is measured at continuous sunlight exposure of 800W/m2, 20°C ambient, and wind speeds of 1m/second.
M A X I M I Z I N G T H E T O TA L E N E R G Y O U T P U T F R O M A S O L A R P R O J E C T
SECTION 1
4
SECTION 1
System Mounting Technology
Even with the best cell technology, your solar panels will fail to deliver peak performance if they are not properly
aligned with the sun. Consequently, many installers try to maximize solar exposure by mounting panels at high-tilt
angles. Unfortunately, this requires spacing the panels far apart to prevent any module from shading the ones
behind it. The higher the tilt, the more space is needed to avoid shadowing.
SunPower solutions are designed to achieve maximum energy production at the system level by carefully balancing
panel tilt with total system power density. This allows your SunPower solution to optimize precious solar real estate:
Choose from Three Levels of Performance.
SunPower’s newest rooftop product, the SunPower
T5 Solar
Roof
combines
panel,
™
When
choosing
the Tile™
SunPower
servicesolar
package
that best suits your needs and
protects yourunit
solar
investment,
consider
the features
frame, and mounting system into a single, pre-engineered
that
maximizes
power
densitythat will provide the necessary
peace of mind that your system is meeting performance expectations.
on your available roof space.
Performance Monitoring
Performance Basic
Performance Plus
who want the peace of mind that
their system is being watched and
notification when a problem occurs.
for customers who are looking to
leverage existing staff and where
maximum system availability and
production is not essential.
For ground-mounted installations, the SunPower T0
Tracker™
rotation,
Performance Basic
includes all allowing
Performance Plus includes all
Performance
Monitoringprovides
delivers the single-axis
services in Performance Monitoring
services in Performance Basic
services needed to ensure effective
the panels to follow the sun’s path throughout themonitoring
day, yielding
more energy
production
per acre and additional key programs for
plus SunPower
industry-leading
and reporting of system
preventive maintenance to identify
increased performance, including
performance and energy output.
than any other tracking technology.
problems before they happen. Ideal
module cleaning and prompt
This offering is best for customers
The bottom line is that with a SunPower solution, it is possible to generate more energy in less space.
Ongoing Maintenance and Operation
corrective maintenance. Ideal for
customers who are looking for full
service and where maximum solar
power system availability and
production is essential.
How Performance
Compare* PRODUCTS COMPARE 3
HOWProducts
PERFORMANCE
Minimum
Improvement
Like any other investment, solar installations require
Maximum
Improvement
25%
regular upkeep in order to consistently operate at
Performance
Monitoring
peak performance. System monitoring, preventative
Performance
Basic
Performance
Plus
20%
crucial if you hope to avoid downtime and derive
maximum value over the lifetime of your installation.
Unfortunately, such costs necessarily delay payback
periods, scaring away many would-be solar converts.
% Output Improvement
maintenance, and regularly scheduled repairs are
15%
Range of Potential
Performance Improvement
10%
5%
However, you can minimize these costs by identifying
problems before they even arise. SunPower’s Energy
Management Services was designed to do exactly
that, providing warranty protection and preventative
maintenance to ensure uninterrupted power generation.
0%
Monitoring
and Reporting
Module
Cleaning
Preventive
Maintenance
Corrective
Maintenance
Service Offering
* Based on standard 1MW system after 5 years of operation
3. Performance improvements from SunPower Energy Management Services are based on standard 1MW systems after 5 years of operation.
M A X I M I Z I N G T H E T O TA L E N E R G Y O U T P U T F R O M A S O L A R P R O J E C T
SECTION 1
5
CALCULATING THE TRUE COST
OF A SOLAR PROJECT
SECTION 2
The second consideration in optimizing the return on
your solar installation involves determining the total
cost of electricity produced over the system’s lifetime.
Answering this involves estimating the lifetime cost of
a solar installation and comparing this to what you
would spend with your current electricity provider
during that same period.
For example, the Federal Solar Investment Tax
Credit (ITC) essentially subsidizes up to 30% of
the cost of a commercial solar project. Even for
organizations that cannot directly use the ITC, it
is often possible to incorporate incentives through
third party financing arrangements such as a Power
Purchase Agreement (PPA)4.
How Affordable is Solar?
At the local level, you can find even more savings.
Below is a partial list of states that consistently offer
attractive incentives for commercial solar installations:
Why pay top dollar for a solar installation when federal,
state, and utility incentives exist to help you bring down
the cost? Failure to include such rebates and subsidies
into your purchasing decision overstates the true price
of any solar project you may be exploring.
Is Your State Not on This List?
Consult the Database of State Incentives for Renewables and Efficiency (DSIRE) for up-to-date information about
available federal, state, and local rebates specific to your facility. You may also be able to tap into SunPower’s
network of utility partnerships to take advantage of incentives not available to the average solar consumer.
4. The tax provisions referenced are for discussion purposes only. SunPower does not warrant, guarantee, or otherwise advise its partners or customers about
specific tax concerns. You should consult your tax advisor to discuss how local provisions and laws apply to your specific circumstances.
C A L C U L AT I N G T H E T R U E C O S T O F A S O L A R P R O J E C T
SECTION 2
6
SECTION 2
Considering Total Lifetime Costs
When comparing different electricity alternatives, do not make the mistake of focusing solely on short-term
expenses. As with any other business purchase, you must factor in all relevant variables that may increase
or decrease the lifetime cost of whichever energy solution you choose. Below are just a few examples of
commonly overlooked factors:
Today’s utility prices are a poor reflection of what you might have to pay five or ten years from now. Historically, grid electricity prices have risen 3% to 4% every year, depending on the location.
Any option that delivers low cost energy production in the short-term but quickly depreciates over time is a potentially unwise investment. Gross system price or price per watt can be deceptive measures of cost since they do not include total operating and maintenance expenses over a system’s lifetime. Avoid solar installations that rapidly lose generation capacity or require significant, long-term maintenance to achieve forecast energy output.
Be wary of first-year Power Purchase Agreement rates, poorly structured warranties, or high
interest financing arrangements that mask the true lifetime cost of your solar installation.
C A L C U L AT I N G T H E T R U E C O S T O F A S O L A R P R O J E C T
SECTION 2
7
ACHIEVING THE GREATEST RETURN
ON A SOLAR PROJECT
SECTION 3
Section 1 covered how to derive the most electricity
from your solar installation, and Section 2 explained
what to consider when forecasting the lifetime cost of
that installation. With this information, you can now
assess the total potential savings that a solar energy
solution will provide.
Comprehensive analysis of any solar energy
solution should include all installation, operating,
maintenance, and hardware expenses as well as the
total amount of electricity that will be produced over
the lifetime of that solution. Once you factor in all
of these variables, calculating the Net Present Value
(NPV) of your solar installation is the best method for
understanding total potential savings in real dollar
terms. The NPV financial calculation captures all
project costs and savings as they occur over time
and conveniently converts them into a single dollar
amount. The larger the NPV, the greater the total
savings you can expect.
SUNPOWER
1,000 KW
Your NPV analysis should include any electricity
options you may be considering, including differing
solar technologies. The illustrative example below
shows NPV comparisons for various solar projects
Note that while the
on an 80,000-ft2 roof5.
SunPower system is initially more expensive, it yields
a significantly higher total return because it produces
more energy over the lifetime of the installation.
With more than 25 years of experience in solar
project costing, financing, and planning, SunPower
has the requisite tools to help you properly assess
the lifetime cost of any solar installation you may
be considering. If your facility needs assistance
calculating NPV or sourcing solar incentives, contact
SunPower for a consultation.
CONVENTIONAL SILICON
615 KW
THIN FILM
518 KW
NPV = $590,000
NPV = $375,000
NPV = $367,000
(Gross price = $4.0MM)
(Gross price = $2.4MM)
(Gross price = $1.9MM)
5. Sample NPV calculation is for example purposes only and is based on the following assumptions: $0.12 current rate of electricity, 3 % annual rate escalation,
$0.01 REC value, $0.05 performance based solar incentive over 5 years, 8% discount rate, 25 project life cycle.
A C H I E V I N G T H E G R E AT E S T R E T U R N O N A S O L A R P R O J E C T
SECTION 3
8
THE SUNPOWER ADVANTAGE
SECTION 4
You may be asking yourself whether it is worth the time
and effort to make such a comprehensive assessment
of your solar options. After all, grid electricity is familiar
and reliable. Why research solar technology at all if
what you have currently works?
The answer is simple.
In today’s increasingly competitive business landscape,
success favors those who acquire the best resources
at the lowest costs. If you find a supplier who offers
comparable value at a lower price or better value at
the same price, business logic favors this supplier. The
economics of energy follow the same reasoning. Why
pay more for electricity than you have to?
Done correctly, a transition to solar yields cheaper and
cleaner energy, helping you reduce costs, boost profits,
and become more competitive. SunPower is committed
to helping you make this transition successfully.
Because SunPower specializes in nearly every aspect of the solar value chain, we can help you make realistic and
financially sound decisions regarding any upcoming installations you may be exploring. In addition to continuous
support from installation to operation to maintenance, SunPower offers:
Unparalleled panel efficiency, allowing your installation to capture more
sunlight over longer periods, regardless of heat, weather, or location
Industry-leading warranties and maintenance support to ensure that your
system consistently delivers optimal performance year after year
Assistance in sourcing solar incentives and rebates to help make your
PV system as affordable as possible
Financing and planning consultations to help you accurately assess costs,
payback periods, and ROIs
T H E S U N P O W E R A D VA N TA G E
SECTION 4
9
SECTION 4
By partnering with SunPower, you are choosing the number one provider of commercial solar projects in North
America. With more design, installation, and maintenance experience than any other provider in the country,
SunPower offers unmatched forecasting and consultation expertise. We will arm you with every tool you need to
successfully lead your organization towards a solar future, including financial analysis, site evaluations, financing
options, and a host of other resources and support to help you implement your solar project.
Contact us today to request a free solar consultation and begin taking control of your energy future.
T H E S U N P O W E R A D VA N TA G E
SECTION 4
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SUNPOWER CORPORATION
3939 North 1st Street
San Jose, CA 95134
1.800.SUNPOWER (1.800.786.7693)
sunpowercorp.com
SUNPOWER and the SUNPOWER logo are trademarks or registered trademarks of SunPower Corporation.
© February 2011 SunPower Corporation. All rights reserved.
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