How beneficial Solar for Commercial owners with FLAT RATE ?

Batikikik
Batikikik Solar Expert Posts: 141 ✭✭✭✭✭
in General Solar Power Topics #1
Usually wonder of alternative energy is "drooping down" tiers.
What if customer does not have tiers and has flat rate and pays for electricity 14c per kwH. I am talking about large commercials.
How beneficial this will be ?


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  • BB.
    BB. Super Moderators, Administrators Posts: 33,439 admin
    #2
    Re: How beneficial Solar for Commercial owners with FLAT RATE ?

    You need to study the entire bill... Many (at least in my area) commercial have two parts of their billing... The actual kWH per month used and the peak 15 minutes in the last year (about 1/2 the bill).

    -Bill
    Near San Francisco California: 3.5kWatt Grid Tied Solar power system+small backup genset
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  • SolarLurker
    SolarLurker Solar Expert Posts: 122 ✭✭
    #3
    Re: How beneficial Solar for Commercial owners with FLAT RATE ?

    I know many people who have installed solar to save much less than .14 per kWh. It really depends on the installed price and level of incentives offered.

    Chances are without the state and federal incentives, most people are not going to install solar for financial reasons.
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  • Batikikik
    Batikikik Solar Expert Posts: 141 ✭✭✭✭✭
    #4
    Re: How beneficial Solar for Commercial owners with FLAT RATE ?

    Currently project is in Fresno . PG&E.
    There is no rebates there is only 30% federal tax credit.
    And BB you are right they have bill for entire year + 4 months separete + end of the year.
    Existing electric rate is AG5B , which is TOU.
    It was really confused first time that bill because they have electricity price from 8c up to 14c. And they have separete bill for Aug13 - Sep 13 , and some more separate bills. I am tring to find out what is gonna be savings after solar installation. Currently they use 1,947,766kWh energy every year. Solar Anual Production will be 1,000,234kWh. Will this really effect on energy bill after solar ???


    Thank you very much !
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  • BB.
    BB. Super Moderators, Administrators Posts: 33,439 admin
    #5
    Re: How beneficial Solar for Commercial owners with FLAT RATE ?

    Look at the pge web site. Commercial generally haas reservation or demand charges which is usually based on the peak 15 minute power usage and can easily be half the bill or even more.

    And worst yet, if the 15 minute peak is from solar generation (instead of power consumed), it is possible that could increase there demand bill (a bit of a guess on my part--I have not had to look at a commercial installation myself).

    I am on my phone right now, but use google to look up pg&e tariff and you should find their rate plan.

    They also could be charged for peak kvar too instead of peak kwatts. There is a lot of buried stuff in these rate plans. And you may need to clarify the peak power use vs peak power generated and see how pge bills that. I am not the expert here.

    -Bill
    Near San Francisco California: 3.5kWatt Grid Tied Solar power system+small backup genset
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  • BB.
    BB. Super Moderators, Administrators Posts: 33,439 admin
    #6
    Re: How beneficial Solar for Commercial owners with FLAT RATE ?

    Back at a computer... Here is the PG&E rate plan for AG-5 (agricultural processing/pumping). 18 pages of fun:

    http://www.pge.com/tariffs/tm2/pdf/ELEC_SCHEDS_AG-5.pdf
    14. STANDBY APPLICABILITY:
    SOLAR GENERATION FACILITIES EXEMPTION: Customers who utilize solar
    generating facilities which are less than or equal to one megawatt to serve load and who do not sell power or make more than incidental export of power into PG&E’s power grid and who have not elected service under Schedule NEM, will be exempt from paying the otherwise applicable standby reservation charges.

    And your customer could change over to NEM (Net Energy Metering) service--another mind numbing 17 pages that say what--I am not exactly sure.

    http://www.pge.com/tariffs/tm2/pdf/ELEC_SCHEDS_NEM.pdf

    I really think you have to contact PG&E and talk with them about how billing works with your customer's billing/rate plans. I would not feel confident that I could guarantee how PG&E would bill and what plan they would let the customer operate under (the AG-5 bill appears not to allow net metering--but assumes that the customer loads will always meet or exceed the net solar capacity???).

    If the solar exceeds the customer's actual power usage (they generate power to grid during the day and buy it back at night--for example)--then they need to sign up for NEM (Net Metering)--I Think.

    It would be interesting to hear what you find out... Obviously people do install solar on large industrial/agriculture installations--so somebody must be able to explain how to optimize the installation/billing for any particular customer.

    -Bill
    Near San Francisco California: 3.5kWatt Grid Tied Solar power system+small backup genset
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  • Batikikik
    Batikikik Solar Expert Posts: 141 ✭✭✭✭✭
    #7
    Re: How beneficial Solar for Commercial owners with FLAT RATE ?

    I am working on that now. Like I said Usage is - 1,922,097kwH . Solar output will be 1,000,234 kwH. Energy bill offset will be 50%. But Electric bill offset will be more I think because of the peak hours. If any news I will let you know . You too please.



    Thank you
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  • SolarLurker
    SolarLurker Solar Expert Posts: 122 ✭✭
    #8
    Re: How beneficial Solar for Commercial owners with FLAT RATE ?

    Also, as far as incentives go there is also depreciation for business. This year they can elect 100% depreciation. If the extra depreciation creates a Net Operating loss, they can carry the loss back and get a refund for previous tax years. This could give them a quicker payback than carrying the depreciation forward. The timing of the depreciation really depends of cash flow needs and expected tax rates going forward.
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  • Batikikik
    Batikikik Solar Expert Posts: 141 ✭✭✭✭✭
    #9
    Re: How beneficial Solar for Commercial owners with FLAT RATE ?

    I am working now on the numbers.
    Project size is 900kW and even $3.75 per watt is not beneficial.
    Facts that financing possible only for 8% APR and There is no rebates now , it is very hard to give beneficial offer to customer. And thats why I think itis very important energy bill analysis and evaluation .

    Will be happy to hear your options.



    Thank you
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  • BB.
    BB. Super Moderators, Administrators Posts: 33,439 admin
    #10
    Re: How beneficial Solar for Commercial owners with FLAT RATE ?

    I think SolarLurker is correct. Higher level Tax Math (accelerated depreciation, possible selling green tag credits, etc.) will be needed to make the system "profitable".

    Analyzing the bill is hyper critical because, at least as I understand it, can actually increase billing costs if the wrong programs/billing assumptions are made.

    Have you tried talking with PG&E yet? I would think they have a whole department dedicated to this hyperspace-billing math. :roll:;)

    -Bill
    Near San Francisco California: 3.5kWatt Grid Tied Solar power system+small backup genset
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  • Batikikik
    Batikikik Solar Expert Posts: 141 ✭✭✭✭✭
    #11
    Re: How beneficial Solar for Commercial owners with FLAT RATE ?

    I am in that process now with PG&E. but I would like to have specialists opinion who already had deal with bill evaluations.
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  • SolarLurker
    SolarLurker Solar Expert Posts: 122 ✭✭
    #12
    Re: How beneficial Solar for Commercial owners with FLAT RATE ?

    Your really have to find out the companies tax info. If structured properly the depreciation can not of an additional 30 to 40%

    Just some crude math I would think you should be able to get them a 11 to 13 year payback with just the ITC and depreciation at 5.50 per watt.

    I do not know what utility and state incentives may apply.
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  • Batikikik
    Batikikik Solar Expert Posts: 141 ✭✭✭✭✭
    #13
    Re: How beneficial Solar for Commercial owners with FLAT RATE ?

    SolarLucker - $5.5 per watt project will cost $ 4,994,000.
    We have proposed $ 3.75 per watt . But still with this price my finance diagram does not show me 13 years payback.
    There is no rebates there is only federal tax credit and depreciation.
    My first question is , Do you quote $5.5 per watt for 900kw system ?
    And approximately how much will be depreciation by dollar amount ??(I know it is very hard to tell) I would like to know our opinion what percentage would you give to that .



    Thank you
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  • SolarLurker
    SolarLurker Solar Expert Posts: 122 ✭✭
    #14
    Re: How beneficial Solar for Commercial owners with FLAT RATE ?

    I understand you are less than 5.5 per watt. So it should work evan better for you.

    The business you are dealing with, what is it tax structure, I.e is it a Corp, partnership, or sole proprietor. Are you quoting to the owner, some one at the company.

    If your dealing with the owner, it may be advantages to have a holding company own the solar and lease it to the actual business. Have you been in touch with the companies CPA?

    If you can I stall for 3.75 I am sure you can make the numbers work. You just need to know how to structure the tax savings.

    Can you get the companies 08 and 09 income and tax due?
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  • SolarLurker
    SolarLurker Solar Expert Posts: 122 ✭✭
    #15
    Re: How beneficial Solar for Commercial owners with FLAT RATE ?

    If you can install the system for 3.75 than the payback should be 6.5 years. If you dealing with a corporation, a sole proprietor or Corp should be better.
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  • Batikikik
    Batikikik Solar Expert Posts: 141 ✭✭✭✭✭
    #16
    Re: How beneficial Solar for Commercial owners with FLAT RATE ?

    SolarLuker not now anymore. Because without rebates its very hard to make 6 ot 7 years payback. I am working on this numbers with differnet banks almost 2 weeks , no way. But I am having hard time to do bill evaluation.
    Because by simple calculation:
    245,000kwh = $ 19,600 => 1kwh = 8 Cents
    It menns if you reduce monthly usage to 47000kwh new bill will be :

    47000kwH * 0.08 = $ 3,760

    But it is not right, becaude there is a peak hour production and non-peak usage factors. And I am trying to out right way to new bill determination.

    there is one more factor too: there is a demand charge for motors and pumps by horsepower, and they charge hourly .

    So those thing need to be done correctly and professional. And I am working on that and will be appreciate colleagues advices.
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  • SolarLurker
    SolarLurker Solar Expert Posts: 122 ✭✭
    #17
    Re: How beneficial Solar for Commercial owners with FLAT RATE ?

    The key to making it work is putting a dollar value on the depreciation.

    CA has a high corporate tax rate, They could be in a combined star and federal rate of nearly 50%.
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  • SolarLurker
    SolarLurker Solar Expert Posts: 122 ✭✭
    #18
    Re: How beneficial Solar for Commercial owners with FLAT RATE ?

    There is also the possibility that this person may qualify for a 25% USDA grant.
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  • Batikikik
    Batikikik Solar Expert Posts: 141 ✭✭✭✭✭
    #19
    Re: How beneficial Solar for Commercial owners with FLAT RATE ?

    Solar Lucker what is USD grant and how you qualify for that ?


    Thank you
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  • BB.
    BB. Super Moderators, Administrators Posts: 33,439 admin
    #20
    Re: How beneficial Solar for Commercial owners with FLAT RATE ?

    I assume:

    USDA - Rural Energy for America Program (REAP) Grants - DSIRE

    This website, www.dsireusa.org is a good palace to start looking for solar RE/conservation grants/subsidies and some information about laws (solar panels on home vs HOA rules).

    -Bill
    Near San Francisco California: 3.5kWatt Grid Tied Solar power system+small backup genset
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