Solar PV Economic Impact Analysis for CPS
UNIVERSITY OF THE INCARNATE WORD
H-E-B SCHOOL OF BUSINESS
CAPSTONE 2009
INSTRUCTOR: DR. DAVID G. VEQUIST IV
BY
HARISH CHAUDHARI
CHIEN MING HO
HALDUN UNAL
Table of Contents
Scope Statement for CPS Solar PV Project: ............................................... 3
PV Market Overview ................................................................................ 4
PV Growth Factors ................................................................................... 7
Renewable Portfolio Standards………………………………………………………………8
Texas' Solar Energy Potential………………………………………………………………….8
Analysis of PV incentive program and PV Growth Trend…………………………9
New Jersey Renewable Energy Manufacturing Incentives…………………….14
California Solar Initiative Research, Development and Demonstration
Plan……………………………………………………………………………………………………..15
New Jersey Rebates and Installations…………………………………………………..15
California Incentives and PV Installations……………………………………………..16
Employment Effect of the PV..………………………………………………………………19
California Incentive Structure……………………………………………………………….23
Recommendation.................................................................................. .24
Strategy 1.............................................................................................. .24
Strategy 2.............................................................................................. .27
Strategy 3.............................................................................................. .33
Suggestion ............................................................................................ .34
Reference ............................................................................................. .36
2
Scope Statement for CPS Solar PV Project:
Business Objectives
CPS will be building a solar energy capacity. According to one scheme planned to
achieve this goal solar power equipment suppliers will partner with the commercial
building owners. The rooftop of commercial buildings will be utilized for the purpose
of generating electric power through photovoltaic(PV) panels. A substantial amount of
business is expected to be created. An assesment of the business that will be created is
needed. Assesment should concentrate on the impact of the business to job creation in
San Antonio.
Magnitude of the project
Assesment will be made for 100MW of solar generated distributed energy.
Contributing factors
Solar power capacity goal: 100MW by 2020.
Price per watt for solar generated energy: CPS is paying $0.27 per kW
Minimum renewable energy requirement for the State of Texas:
Net grid status: No net grid. CPS will purchase the power generated.
The solar energy generation in a distributed energy model.
PVs will be installed by contractors. There will be a need for installers and
3
suppliers and other personnel in the installation of the panels and there will be a need
for personnel in the operation and management of the installed solar panels.
Project shall include comparisons of similar schemes in other cities.
Project will deliver a complete assessment of the business and employment the
solar power generation will create in the Greater San Antonio Area.
PV Market Overview
In 2008, total US PV installations reached 286.9MW which reflects an annual
increase of 79% from the previous year. At the end of 2008 the cumulative installed
capacity PV capacity was 789MW.
US PV Installations MW
350
MW
300
250
200
150
100
50
0
US PV Installations MW
2007
2008
160.3
286.9
A.O.S: All other states. Source: IREC, 2009 Updates and Trends
As per data from a report by Interstate Renewable Energy Council, at the end of
4
2008 California had the largest cumulative PV capacity. California, New Jersey and
Colorado had installed capacities of 526MW, 70MW and 36MW respectively which
make them the top 3 states.
2008 Cumulative Instaled PV Capacity by State - MW
600
500
MW
400
300
200
100
0
CA
NJ
CO
NV
AZ
NY
HI
CT
OR
MA
A.O.S
2008 Cumulative Instaled PV Capacity
526
by State - MW
70
36
34
25
22
14
9
8
8
39
A.O.S: All other states. Source: IREC, 2009 Updates and Trends
At the end of 2008 California had the largest PV capacity installed per capita with
14.6MW; Nevada was second with 14.2MW and Hawaii was third with 10.6MW.
Top Ten PV W per Capita 2008
16
14
12
10
8
6
4
2
0
PV WDC per Capita
Cumulative 2008
CA
NV
HI
NJ
CO
AZ
CT
DE
OR
VT
14.6 14.2 10.6 8.1 7.7 4.3 2.5 2.2 2.1 1.8
PV WDC per Capita 2008 4.9 6.7 6.2 2.6 4.6 1.1 1.5 0.7 1.3 0.6
In the chart below we can observe the percentage share of installed PV capacity by
5
state at the end of 2008.
PV Installed Capacity % by States 2008
CT, 2%
OR, NC, A.O.S , 6%
2% 1%
AZ, 2%
CA
NY, 2%
HI, 3%
NJ
NV, 5%
CO
NV
CO, 8%
CA, 61%
HI
NJ, 8%
NY
AZ
CT
A.O.S: All other states. Source: IREC, 2009 Updates and Trends
OR
Many states showed significant increases in PV installations. California PV
installations increased by 92%:
MW
PV Installations MW 2007 and 2008
200
180
160
140
120
100
80
60
40
20
0
NV
HI
NY
AZ
CT
OR
NC
A.O.
S
2008 176 22.5 21.7 14.9
8.6
7
6.2
5.3
4.8
4
15.9
2007 91.8 20.4 11.5 15.9
2.9
3.8
2.8
2.5
1.1
0.4
7.2
CA
NJ
CO
A.O.S: All other states. Source: IREC, 2009 Updates and Trends
Other areas that we have to review are the research activities and the number of
6
businesses. The chart below depicts the current situation for select states in number of
businesses, in federal research awards and number of scientific publications for
comparison. Percentages of research activities show the shares in the US total.
Research and Business for Select States
25%
20%
15%
10%
5%
0%
California
Colorado
Massachusettes
Texas
Number of PV businesses
310
85
34
65
Percentage of Federal Research
Awards Total
15%
11%
8%
4%
Percent of Number of Scientific
Publications
20%
19%
8%
3%
350
300
250
200
150
100
50
0
Source: The Energy Report, Texas Comptroller of Public Accounts, 2008
PV Growth Factors
Interstate Renewable Energy Council lists the factors which helped the strong
growth in PV installations: One of them is the change in investment tax credit which is
shown as the most important federal solar component policy. The change included an
increase for increase for commercial installations and covering residential installations.
Another driver has been the incentives offered by the states which helped installations
more than double in several states. Renewable Portfolio Standards which mandated a
specific solar power generation solar percentage in it made a significant impact on
7
installations. In California, where the largest energy installations have been taking
place the incentive program California Solar Initiative (CSI) continued to make
progress and contributed to the overall increase PV installations in the US.
In addition, we believe increasing awareness among public regarding the benefits
of the renewable energy for a cleaner environment and sustainable economy with less
dependence on fossil fuels, have an important role in the growth of PV installations.
Renewable Portfolio Standards (RPS)
RPS is a term used to define the minimum renewable energy percentage the
utilities should have in their total power production capacities.
There was a considerable activity in state level RPS requirements in 2008 and
2009. California increased its RPS to 33% by 2020. Missouri increased its renewable
goal from 11% to 15% and specified the solar power generation to be at minimum at 2%.
Several states created provisions for solar energy while enacting or modifying their
RPS policies. RPS is one of the drivers which have guaranteed the growth in solar PV
generation.
Texas’ Solar Energy Potential
It is not surprising that Department of Energy designated San Antonio as one of
the Solar America Cities in 2008. According to State Energy Conservation Office,
Texas ranks first amongst all states in solar power generation potential.
8
Analysis of PV incentive program and PV Growth Trend
Every state has different solar energy developments and incentive programs. Some
states develop it early, and some states do it lately. The following charts show the
number of different size PV systems, average costs, and incentives under different
incentive programs from 16 states from 1998 to 2008. The data was made available in
the Tracking the Sun II study of Lawrence Berkeley National Laboratory. These 16
states include the top solar states such as California, New Jersey, Colorado, and
Arizona. The charts include data from the available years specific to the program and
differ from each other since they have different starting and ending years.
$ / MW
CA Self Generation Incentive Program Systems 10-100 kW
12
120
10
100
8
80
6
60
4
40
2
20
0
No.of Systems
2002
2003
2004
2005
2006
2007
2008
9
44
109
107
73
53
30
Avg. Cost
9.6
8.2
8.5
8
7.8
7.5
7.1
Avg. Incentive
4.4
3.9
4
3.8
3.3
2.6
2.4
9
0
CA Self Generation Incentive Program Systems > 100kW
$ / MW
9
8
7
6
5
4
3
2
1
0
120
100
80
60
40
20
2002
2003
2004
2005
2006
2007
2008
No.of Systems
9
44
109
107
73
53
30
Avg. Cost
4
3.4
3.8
3.7
3.4
2.7
2.4
Avg. Incentive
8
7
7.9
7.5
7.5
7.3
7.2
0
$ / MW
Los Angeles / LADWP Solar Incentive Program Systems
<10kW
12
300
10
250
8
200
6
150
4
100
2
50
0
2003
2004
2005
2006
2007
2008
No.of Systems
189
37
69
125
275
34
Avg. Cost
9.6
9.2
8
8.6
8.8
8.4
6
3.8
3.2
3.6
3.7
3.7
Avg. Incentive
10
0
MA Commonwealth Solar Program Systems 10100kW
$ / MW
16
14
12
10
8
6
4
2
0
2003
2004
2005
2006
2007
2008
No.of Systems
5
9
17
14
11
34
Avg. Cost
13
10.9
10.3
10.6
9.1
8.7
15.2
8.5
11.2
8.3
7.9
4.1
Avg. Incentive
40
35
30
25
20
15
10
5
0
$ / MW
NJ CEP Customer Onsite Renewable Energy Systems =
<10kW
10
1000
8
800
6
600
4
400
2
200
0
2003
2004
2005
2006
2007
2008
No.of Systems
32
246
407
812
480
669
Avg. Cost
9.3
9.1
8.7
8.6
8.7
8.7
Avg. Incentive
6.2
6.2
6
5.6
5
4.3
0
In order to figure out how many residential and commercial PV systems can be
created by per incentive dollar, our group assumes that if the size of PV system lowers
11
or equals 10 KW which is residential PV system and the size of PV system higher than
10 KW which is commercial PV system in this report. The following graphs show that
the increases of number of residential and commercial PV system from 2004 to 2008:
No. Residential PV System
Increase of No. Residential PV System
2004-2008
14,000
10,785
12,000
10,000
7,650
8,000
6,000
11,459
4,976
4,521
2004
2005
4,000
2,000
2006
2007
2008
No. Commerical PV System
Increase of No. commercial PV System
2004-2008
2,000
1,638
1,318
1,500
1,027
1,000
551
672
500
2004
2005
2006
2007
2008
From 2004 to 2008, the average of residential PV system incentive on per PV Watt
was $3.4, and the averages of total PV system and capacity were 7878 units and 35.17
12
MW. Hence, average per incentive dollar can create 2317 PV systems and 10.34 MW in
these years. In terms of commercial PV system, its average of incentive on per PV Watt
is $3.8, and its averages of total PV system and capacity are 2290 PV systems and 10.22
MW from 2004 to 2008.
Every year, increases of number residential and commercial PV systems have
different growth rates. There are some factors indirectly or directly impact them. They
are PV system’s install cost, incentive program for per PV Watt, unemployment, and
GDP. The following graphs show that residential and commercial PV systems’ install
cost, unemployment, and GDP from 2004 to 2008:
Average Per Residential PV Watt
Install Cost and Incentive 2004-2008
U.S. Dollar
10.0
8.0
6.0
4.0
2.0
0.0
2004
2005
2006
2007
2008
Install cost
8.8
9.0
9.0
9.0
8.7
Incentive
4.2
3.7
3.4
3.0
2.9
Residential and Commercial incentive programs for PV system’s support are
regularly going down every year. Sometime they keep the same supports. However,
although residential and commercial PV install costs are gradually decreasing every
13
year, they might increase sometime. Hence, when people have to pay more money for
PV installation, this would directly decrease their demands for installation PV system.
For example, the average of PV install cost was increase in 2005. In this year, the
growth rate of residential PV system was negative and the growth rate of commercial
PV system was around 22% which is low than 37% of average growth rate.
New Jersey Renewable Energy Manufacturing Incentives
As of September 23, 2009 New Jersey Board of Public Utilities’ decided to pay
incentive dollars for PV equipment including solar panels, inverters, and racking
systems which are purchased from a certified New Jersey Manufacturer. In order to
qualify for the incentive at least 50% of the equipment purchased must be manufactured
in New Jersey.
Renewable Energy Manufacturing Incentives
Incentive
Maximum
Maximum
($/ Watt)
System Size
Incentive
Residential: 0 - 10 kW
$0.25
10 kW
$2,500
Non-Residential: 0 - 50 kW
$0.14
50 kW
$7,500
Non-Residential: 51 - 100 kW
$0.12
100 kW
$12,000
Non-Residential: 101 - 500 kW
$0.08
500 kW
$40,000
Residential: 0 - 10 kW
$0.15
10 kW
$1,500
Non-Residential: 0 - 50 kW
$0.09
50 kW
$4,500
Non-Residential: 51 - 100 kW
$0.07
100 kW
$7,000
Non-Residential: 101 - 500 kW
$0.05
500 kW
$25,000
Solar Panels
Inverters and Racking Systems
14
California Solar Initiative Research, Development and Demonstration
Plan
This plan has allocated $50 million of the CSI funding for research, development
and demonstration programs. Its goals include increasing technology efficiency and
technology adoption increase.
New Jersey Rebates and PV Installations
Rebates which are provided in the State of New Jersey resulted in more than
108MWs in PV capacity in 9 years from 2001 to 2009. Total rebate provided to the
projects were about $292 million. The number of projects was 4,522 which consist of
3,645 systems with 10kW or smaller capacities and 877 projects larger than 10 kW
capacities.
Total Rebate Millions
38MW
80
30
60
974
867
729
40
20
0
35
3
37
95
693
835
Total
100 New Jersey Solar Installations by Year All ProjectsTotal MW 40
25
20
15
10
289
5
0
2001 2002 2003 2004 2005 2006 2007 2008 2009
The projects in New Jersey by market segmentation can be observed in the table below:
15
New Jersey Solar Installations by Market Segment As of 10/31/09
Installed Capacity
% of Installed
Market Segment
# Projects
(KW dc)
Total Rebate $
Capacity
Commercial
545
56,165.8
$100,647,166
51.96%
Residential
3,664
26,769.5
$116,938,981
24.77%
School Public K-12
66
10,391.5
$31,557,164
9.61%
Municipality
25
5,074.7
$8,679,595
4.69%
Government Facility
30
3,857.4
$13,338,328
3.57%
University Public
14
2,300.9
$7,350,274
2.13%
SUNLIT
48
1,078.0
$3,400,192
1.00%
Non Profit
70
952.0
$3,526,943
0.88%
Farm
46
839.7
$3,268,403
0.78%
School Other
11
413.6
$1,652,558
0.38%
University Private
3
245.0
$2,194,660
0.23%
Total
4,522
108,088.3
$292,554,263
100.0%
Total* = Program to date totals for Paid projects plus projects pending payment; preliminary results
subject to true-up based upon inspection results.
Source:
http://njcleanenergy.com/renewable-energy/project-activity-reports/installation-summary-by-technolog
y/solar-installation-projects
California Incentives and PV Installations
Today when we consider the cost associated with the PV system ownership, we
can see that the incentives provided by the governments either at local or at state levels
have been helping the development of PV market; hence, the PV generated power. In
order to calculate if there is a good return of the investment made possible with these
incentives provided we took the data of three consecutive years from the California
Solar Initiative Statistics web site. We eliminated the cancelled applications in the raw
16
data. After finding the total incentive amount and the total cost of the projects for each
year, we divided the total cost by total incentive amount. The result implies the effect of
the solar incentives provided by the State of California. The first calculation was made
for both large and small size PV systems. Average of the ratio for the systems for three
years is 383% which translates to “for every solar PV incentive dollar provided, $3.83
of business may be created.”
California Incentives vs. Total Cost of Projects
Number of
Applications
Incentive
Total Cost
Total Cost/Total
Incentive Amount
2007
6,057
283,687,357
882,481,715
311%
2008
10,842
302,718,695
1,205,003,460
398%
2009
12,294
215,284,117
944,535,153
439%
Total
29,193
801,690,169
3,032,020,328
Average: 383%
Source: http://www.californiasolarstatistics.ca.gov
1,000
Total Cost
1,200
Total Cost
$ Millions
California Solar
Initiative:
Incentives v.s
CostCost
of Projects 2007 California
Incentives
v.sTotal
Total
1,400
2009
Total Cost / Total 2007
311%
Incentive
0
Incentive
200
Total Cost
400
Incentive
800
The average of the same ratio for systems smaller than 10kW is 486%.
600
2008
398%
2009
439%
Source: http://www.californiasolarstatistics.ca.gov Raw Application Data as at 10/31/2009 after cancelled, withdran and removed applications
17
California Solar Initiative: Incentives vs. Total Cost of Projects 2007 - 2009 Systems <
10 kW
Number of
Applications
Incentive
Total Cost
Total Cost/Total
Incentive Amount
2007
5,746
63,276,114
258,154,134
408%
2008
10,344
93,789,744
455,660,290
486%
2009
11,968
92,727,704
522,258,816
563%
Total
28,058
249,793,562
1,236,073,240
Average: 486%
Source: http://www.californiasolarstatistics.ca.gov
California Incentives v.s Total Cost
600
500
0
2007
Total Cost / Total
2008
Total Cost
100
Incentive
200
Total Cost
Incentive
300
Incentive
400
Total Cost
$ Millions
California Solar Initiative: Incentives v.s Total Cost of Projects 2007 - 2009
2009
486%
563%
Source: http://www.californiasolarstatistics.ca.gov Raw Application Data as at 10/31/2009 after cancelled, removed and
The average ratio for PV systems larger than 10 kW is 329%.
California Solar Initiative : Incentives vs. Total Cost of Projects 2007 - 2009 Systems >
10 kW
Number of
Applications
Incentive
Total Cost
Total Cost/Total
Incentive Amount
2007
311
220,411,242
624,327,581
283%
2008
498
208,928,952
749,343,170
359%
2009
326
122,556,413
422,276,337
345%
Total
1,135
551,896,607
1,795,947,088
Average: 329%
Source: http://www.californiasolarstatistics.ca.gov
18
California Incentives v.s Total Cost
2007
Total Cost / Total
283%
2008
359%
Total Cost
Incentive
Total Cost
Incentive
Total Cost
800
700
600
500
400
300
200
100
0
Incentive
$ Millions
California Solar Initiative: Incentives v.s Total Cost of Projects 2007 - 2009
2009
345%
Source: http://www.californiasolarstatistics.ca.gov Data as at 10/31/2009 after cancelled, removed and
withdrawn applications were excluded.
The result of this analysis is showing us that the incentives are driving the
investment growth and continuity in PV. PV incentives are catalysts for the solar PV
projects at the current level of the cost associated with them.
Employment Effect of the PV
Effect of the Solar and Wind Generated Energy in Energy Sector
Employment
Studies have shown that renewable energy increase the employment more that the
traditional power generation sources, such as gas, coal and fossil fuels. In report by the
Renewable and Appropriate Energy Laboratory of the University of California,
Berkeley shows that as the percentages of the renewable energy sources are increased,
the employment created by the energy sector is increased dramatically. In the study, a
19
20% Renewable Portfolio Standard which will be achieved by 2020 was assumed. The
study also made the assumption that 3,858,452 GWh electricity generation in the US do
not change until 2020 due to efficiency gains.
Electricity Generation Source % with
Employment Estimates
20% RPS by 2020*
Biomass
Wind
Solar
Coal
Scenario
%
%
%
%
Construction,
O&M
Manufacturing,
AND Fuel
Installation
Processing
Natural
Total
Gas %
Employment
Scenario
85
14
1
0
0
52,533
111,136
163,669
60
37
3
0
0
85,008
91,436
176,444
40
55
5
0
0
111,879
76,139
188,018
0
0
0
50
50
22,711
63,657
86,369
0
0
0
0
100
22,023
61,694
83,987
1
Scenario
2
Scenario
3
Scenario
4
Scenario
5
*20% RPS by 2020 assuming that the electricity demand in the US as at the time report was prepared
remains the same.
Source: Table ES-2, Report of the Renewable and Appropriate Energy Laboratory, April 13, 2004.
Daniel M. Kammen, Kamal Kapadia, and Matthias Fripp (2004) Putting Renewables to
Work: How Many Jobs Can the Clean Energy Industry Generate? RAEL Report,
University of California, Berkeley.
20
Renewable Share in RPS and employment
100%
30%
20%
10%
Wind, 55%
Biomass, 40%
Solar, 5%
40%
Wind, 37%
50%
Biomass, 60%
60%
Solar, 3%
70%
Solar, 1%
Wind, 14%
80%
Biomass, 85%
90%
0%
1
2
3
Total employment
peaks as percentage
of wind and solar
increases in the RPS,
188,018
200,000
180,000
160,000
140,000
120,000
Biomas
s
100,000
Scenario 4 and 5
assumes electicity
generation from coal and
natural gas only to meet
RPS. In these cases
employment occurs at
about half percent of the
first 3 scenarios.
4
80,000
Solar
60,000
40,000
20,000
Wind
0
5
Job Creation in PV Industry
According to a study by the American Solar Energy Society (ASES) the US can
create 4.5 million jobs by 2030 if appropriate policies are implemented. The same study
predicts by 2020 PV industry can generate 105 thousand jobs.
One of the studies for job creation in PV industry was prepared for Canada. In
Ontario it is estimated that 35 jobs can be created per MW by 2025.
There are different estimates from different studies across the US and around the
world which, we believe, may be resulting from the methodologies used for the studies,
from the difference in job definitions and project implementations and / or from the
optimism level of the researchers. For example, the California Energy Commission
(CEC) estimate for manufacturing jobs is 3.18 and for installation jobs is 0.73 which
21
quoted in a study, while Greenpeace estimates the PV manufacturing jobs as 20 and the
installation jobs as 31 before 2010(5). Centers of Excellence in California have
surveyed the solar-related firms in Southern California and have found that those firms
are employing between 5,900 and 6,900 workers. In addition, 73% of the firms reported
that they plan hiring more employees and that they expect 44.7% increase in
employment over the next 12 months when the study was prepared in 2008(6). ASES
has reported the revenues and the jobs created in the PV industry in Colorado and in the
US as shown in the tables below:
PV Industry Revenues and Jobs In the US
PV Industry Revenues and Jobs In CO
Revenue
PV
Jobs
Total Jobs
2006
$1.0 Billion
6,800
15,700
2007
$1.3 Billion
8,700
19,800
2006
Revenue
PV Jobs
Total Jobs
$55 Million
275
650
Source: The American Solar Energy Society, Boulder Colorado
Source: The American Solar Energy Society, Boulder Colorado
Although, the job creation numbers which are estimated varies across
organizations, we strongly believe that PV electricity generation in a distributed energy
model will create more jobs in the San Antonio Area.
22
California Solar Initiative (CSI) Incentive Structure:
CSI was designed to provide incentives to eligible residential and non-residential
solar PV projects from 2007 through 2016. It has a budget of $2.165 billion. 33% of the
budget is allocated to residential projects and 67% of it is allocated to non-residential
projects.
EPBB Payments (per watt)
Residen Commer Gov't/No
tial
cial
nprofit
PBI Payments (per kWh)
Residenti
al
Gov't/
Commer Nonpr
cial
ofit
MW
Step
Statewide MW
in Step
1
50*
n/a
n/a
n/a
n/a
n/a
n/a
2
70
$2.50
$2.50
$3.25
$0.39
$0.39
$0.50
3
100
$2.20
$2.20
$2.95
$0.34
$0.34
$0.46
4
130
$1.90
$1.90
$2.65
$0.26
$0.26
$0.37
5
160
$1.55
$1.55
$2.30
$0.22
$0.22
$0.32
6
190
$1.10
$1.10
$1.85
$0.15
$0.15
$0.26
7
215
$0.65
$0.65
$1.40
$0.09
$0.09
$0.19
8
250
$0.35
$0.35
$1.10
$0.05
$0.05
$0.15
9
285
$0.25
$0.25
$0.90
$0.03
$0.03
$0.12
10
250
$0.20
$0.20
$0.70
$0.03
$0.03
$0.10
Source: CSI Program Handbook July 2009,
http://www.gosolarcalifornia.ca.gov/documents/CSI_HANDBOOK.PDF *First 50 MW
under SGIP.
The program has triggers. Once system capacity in the applications reach the MW
in a particular step program administrators start to offer the incentives at the next level.
For example, when enough applications are made for the 70 MW in step 2, program
23
moves toward step 3 and the incentives decrease.
From January 01, 2007 until December 02, 2009 30,562 applications resulted in an
installed capacity of 277.1 MWs and a pending capacity of 137.2 MWs. Total of the
incentives for this capacity was $908 million.
Recommendation
After our group’s analysis and research, we create three strategies and
recommendations that might help CPS to increase its PV capacity and PV
development:
• New Solar Homes Program
• Solar Homes for San Antonio Program
• CPS Solar PV Farm
• San Antonio Solar Research and Development Center
•
San Antonio PV Manufacturing Incentive Program
Strategy 1
New Solar Home Program
California government has launched a one million solar roofs program to stimulate
people to install PV system and increase total PV system capacity. It also has
24
cooperated with local builders to build new houses with PV systems. When people buy
these new houses, they can directly enjoy the advantages of solar energy. Through this
program California not only can increase its PV system capacity, but also can let more
people to know solar energy’s benefits.
San Antonio is the 7th largest city in the United States. Accord U.S. Census Bureau,
San Antonio has more than 1.35 million populations, and its annual population growth
rate is around 2% from 2002 to 2008. This means its average population can increase
almost 27,000 every month. Since these population choose to work and live in San
Antonio, these are many new buildings be built every year. According to U.S. Census
Bureau’s record, the annual average number of new building is around 10,000 from
2004-2008. Therefore, if CPS can cooperate with local builder to positively promote
PV system to customers and install PV system on new buildings. CPS’s total PV
capacity would enhance a lot.
Moreover, according to the report of Energy Pulse, 75% of Americans feels it is
important that their utilities include renewable resources. Moreover, 50% of U.S.
consumers would be willing to pay more money for renewable energy. Hence, many
people have a high willing for renewable energy. If CPS can adopt this plan to
positively introduce and install solar PV systems for customers, this would let more
people to install and accept solar systems.
25
Testing Strategic Actions
Pro.
More people use and install PV systems
Customers promote Solar PV system to new customers
Might indirectly decrease install cost
Cons.
Local builders do not want to cooperate with CPS
Customers have bad experiences for solar PV system
Decrease potential customers
Increase personnel expense
Implementation
Goal:
Total PV capacity achieve 100MW by 2020
Assumes:
CPS implements the plan next year and ends this by 2020 (10years)
Every year new house: 6,000
Average Home Size PV system: 4.5 KW
After cooperate with Local Builders:
Best Case (70% of new houses installed PV systems):
6,000 X (0.7) X 4.5 X 10 = 189,000 KW= 189 MW
Expected Case (40% of new houses installed PV systems):
6,000 X (0.4) X 4.5 X 10 = 108,000 KW = 108MW
Worst Case (10% of new houses installed):
6,000 X (0.1) X 4.5X 10 = 27,000 KW= 27MW
26
The following chart shows how the best case can help CPS increase the volume of
total solar PV capacity by 89 MW (from 100 MW to 189MW), the expected case not
only can help CPS to achieve its goal, but also increase the volume of total solar PV
capacity by 8 MW (from 100 MW to 108), and the worst case will decrease CPS’s total
solar PV capacity.
PV Vapacity (MW)
Total PV Capacity by 2010
200
180
160
140
120
100
80
60
40
20
0
189
100
108
100
100
27
Best Case
Expected Case
Worst Case
Strategy 2
Solar Homes for San Antonio
We believe the trigger mechanism in the CSI incentives structure has generated
good results. Therefore, we recommend a similar structure for CPS to implement in San
Antonio. Since, in the initial steps higher incentives will result in faster customer
acquiring, a higher incentive level than the current $0.27 should be considered. We
recommend implementing a Solar Homes for San Antonio initiative which should aim
to create a 160MW solar capacity in San Antonio. The incentive structure should be
27
similar to the one depicted below:
Solar Homes for San Antonio Incentives and
$ Million
$250
0.45
0.4
0.35
0.3
0.25
0.2
0.15
0.1
0.05
0
$200
$150
$100
$50
$0
1
2
3
4
5
6
7
8
9
San Antonio MW
in Step
Business
Potential
Incentive / kWh
10
PBI Payments (per kWh)
MW Step
San Antonio MW in Step
Residential
1
5
$0.39
2
7
$0.34
3
10
$0.26
4
12
$0.22
5
14
$0.15
6
18
$0.09
7
20
$0.05
8
22
$0.03
9
25
$0.03
10
27
$0.03
In order to estimate the economic impact of the PV capacity created, we used the
CSI application data. We have to note that the application data includes completed
28
incentive payments and incomplete incentive payments. However, it provides us with
the potential economic impact of the PV deployment, since application has the
incentive amount and the cost of the projects. From the California Solar Initiative web
site provides application data with the installed and the pending capacity. Between
January 01, 2007 and December 02, 2009, the total of the pending and the installed
capacity in California was 414.3 MW. From the application data, the total cost of the
projects from January 01, 2007 to November 11, 2009
$3,032,020,327.662. This cost
of the projects reflects the business created; therefore in California approximately in 3
years, $3,032,020,327.662 of business was created. We will assume that the incentives
for residential and non-residential have the same effect in creating business. If we
divide the total business created by the capacity, we will have an estimate of the
business potential per MW that PV projects may create. This amount per megawatt
equals to $7,318,417.
29
PBI Payments / kWh)
MW Step San Antonio MW in Step
Residential
Business Potential
1
5
$0.39
$36,592,086.99
2
7
$0.34
$51,228,921.78
3
10
$0.26
$73,184,173.97
4
12
$0.22
$87,821,008.77
5
14
$0.15
$102,457,843.56
6
18
$0.09
$131,731,513.15
7
20
$0.05
$146,368,347.94
8
22
$0.03
$161,005,182.74
9
25
$0.03
$182,960,434.93
10
27
$0.03
$197,597,269.72
Business Potential Total:
$1,170,946,784
The total impact of a 160 MW solar PV deployment may be equal to
$1,170,946,784 during these ten steps. Let’s assume that each of the ten steps takes 1
year to complete. The ASES report indicates that in 2006, the employment was 6,800
jobs in the PV industry. According to this data for every million dollar 6.80 jobs were
created in the industry. In the same study, the total number of employment that was
created in addition to the jobs created was calculated. The multiplier for the
out-of-industry employment can be calculated by the following formula: (Total
employment - Industry employment)/(Industry employment). We calculated 1.31 as the
multiplier by using this formula.
The employment estimates for each year are in shown in the table below:
30
Solar Homes for San Antonio Employment Estimate-1
San Antonio MW Deployed
Year
Each Year
PV Industry
Employment
Other
Employment
Business
Potential
1
5
249
326
$36,592,086
2
7
348
456
$51,228,921
3
10
498
652
$73,184,173
4
12
597
782
$87,821,008
5
14
697
913
$102,457,843
6
18
896
1,173
$131,731,513
7
20
995
1,304
$146,368,347
8
22
1,095
1,434
$161,005,182
9
25
1,244
1,630
$182,960,434
10
27
1,344
1,760
$197,597,269
2,000
$250
$197.60
1,800
$182.96
$161.01
$146.37
1,600
1,400
$131.73
1,200
$200
800
600
$36.59
PV Industry
Employment
$150
$102.46
1,000
400
$ Millon
Job Creation Estimate -1 For Solar
Other Employment
$87.82
$73.18
$51.23
$100
$50
Business Potential
200
0
$0
2010 2011 2012 2013 2014 2015 2016 2017
2019
Given the variety of the estimates for the jobs created for the PV industry, we
believe it would be wise to provide a different estimate. For this purpose we estimated
the employment with an average of the estimates of 5 organizations which was given in
a similar study from UC Berkeley; the average of the estimates was 20 manufacturing
31
and 13 installation jobs per MW or 33 jobs per MW. When the distinction is made for
the types of the jobs, regardless of the ratio accuracy of the estimate, it may be better
conceived why PV manufacturing would cause more jobs in an area. In the table
below there is the number of jobs that may be created per MW in the PV industry and its
effect in other employment using the multiplier we calculated above.
Solar Homes for San Antonio Employment Estimate - 2
San Antonio MW Deployed
Year
Each Year
PV Industry
Employment
Other
Employment
Business
Potential
1
5
165
216
$36,592,086
2
7
231
303
$51,228,921
3
10
330
432
$73,184,173
4
12
396
519
$87,821,008.
5
14
462
605
$102,457,843
6
18
594
778
$131,731,513
7
20
660
865
$146,368,347
8
22
726
951
$161,005,182
9
25
825
1,081
$182,960,434
10
27
891
1,167
$197,597,269
1,400
1,200
27
25
22
1,000
25
20
20
18
800
15
14
600
12
10
10
400
200
30
Job Creation Estimate -2 For Solar Homes
7
5
5
0
0
2010
2011
2012
2013
2014
32
2015
2016
2017
2019
PV
Industr
y
Emplo
yment
Strategy 3
Ownership of a PV Farm
There are vast potential for solar energy. According to a PV industry analysis, with
some incentives, the solar photovoltaic market could attract more than a thirty-four
billion investment by 2015. Texas could attract almost five billion of the investment.
There are best resources available in West Texas, a strategy of such size would be more
than enough to meet the country’s energy demand. In fact, the solar energy industry has
the ability to create between 28,000 and 42,000 new jobs in the U.S. by 2015. The value
of ownership of such farms for electricity it produces is significantly higher during the
peak demand for electricity – for instance summer hot days when air conditioners are at
full blast.
Photovoltaic has a small advantage over solar thermal in which these types of solar
farms do not need water. Such investment for large solar farms could be strategically
located in any area whether dry or no access to natural resources.
Pros
Create Jobs
Meet Peak Demand
Tax Incentives
Cons
High cost
Maintenance of Solar Farm Capabilities
33
Suggestions
San Antonio Solar Manufacturing Incentives
In our opinion, CPS can help bring the solar PV industry manufacturing and assembly
jobs to San Antonio. Therefore, we suggest additional incentives paid to solar PV
equipment fully or partially manufactured in San Antonio. Furthermore, CPS may seek
either PV start-ups or already established foreign and domestic solar film
manufacturing companies which need venture capital or incentives for a viable
investment in investment.
Estimate of San Antonio PV Manufacturing Incentive for a Residential PV
System
In this estimate, we assumed the average residential system size as 7.3kW it was in NJ
solar installations data. We also assumed the local origination percentage as 50%,
which means 50% of the PV system was manufactured in San Antonio. If $0.25
additional incentive would be paid then based on the assumptions incentive payment
would be $1,825 and the local revenue from this incentive would be $913 per system
Estimate of San Antonio PV Manufacturing Incentive for a Residential PV System - System Size 0-10 kW
Incentive $
Average System Size kW
Incentive Payment
Local revenue per system
0.25
7.3
1,825
913
Estimate of San Antonio PV Manufacturing Incentive for a Commercial PV
System
For an estimate of a commercial size we assumed that average commercial PV system
34
size would be 103.5kW as derived from NJ solar incentive data. We determined the
incentive payment as $0.07. Again, assuming a 50% local origination we calculated the
incentive payment as $7,245 per average commercial system where $3,622.5 of this
payment would stay with local San Antonio manufacturers.
Estimate of San Antonio PV Manufacturing Incentive for a Commercial PV System - System Size 101-500 kW
incentive $
Average System Size kW
Incentive Payment
Local revenue per system
0.07
103
7245
3,622.5
San Antonio Solar Research and Development Center
Recommendation: A collaborative research and development center which will bring
the brain power of San Antonio together. The research center should focus on while
demonstrating the efficiency of the current technologies; it should also perform
research on how efficiency of the existing technologies can be increased. Another area
it should concentrate on is the discovery of the new technologies through experiments
and research. Therefore; the San Antonio Solar Power Research and Development
Center can employ students and academicians from engineering and business schools.
35
Sources:

http://www.dsireusa.org/documents/PolicyPublications/IREC_Updates_%2
0Trends_2009.pdf


eetd.lbl.gov/EA/emp/reports/lbnl-2674e.pdf
http://www.njcleanenergy.com/renewable-energy/programs/renewable-ener
gy-manufacturing-incentive


http://www.cpuc.ca.gov/PUC/energy/Solar/rdd.htm
http://njcleanenergy.com/renewable-energy/project-activity-reports/installat
ion-summary-by-technology/solar-installation-projects

http://www.californiasolarstatistics.ca.gov/reports/12-02-2009/Dashboard.h
tml

Daniel M. Kammen, Kamal Kapadia, and Matthias Fripp (2004) Putting
Renewables to
Work: How Many Jobs Can the Clean Energy Industry Generate? RAEL
Report,
University of California, Berkeley.

American Solar Energy Society, Estimating the Jobs Impacts of Tackling
Climate Change, October 2009,
http://www.ases.org/pdf/ASES_TCCJobs_Summary.pdf


http://www.cansia.ca/Content/Documents/Document.ashx?DocId=11879
http://www.census.gov/

http://www.cbsnews.com/stories/2007/03/06/eveningnews/main2540879.sh
tml

http://www.dsireusa.org/incentives/index.cfm?re=1&ee=1&spv=0&st=0&sr
p=1&state=TX

http://www.dsireusa.org/incentives/index.cfm?CurrentPageID=1&State=TX
&RE=1&EE=1

http://www.puc.state.tx.us/index.cfm
36