transforming economics on solar - energy exchange · 2017-08-29 · 2016. annual pv installations...
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Tampa Convention Center • Tampa, Florida
Transforming Economics on Solar
Transforming Economics on Solar
Tampa Convention Center • Tampa, Florida
Customer View of Solar PV Costs:Past, Present, and Future
Transforming Economics on Solar
Amy SolanaPacific Northwest National Laboratory
August 17, 2017
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US Average Price of Ground-Mounted Solar PV
Data Source: BNEF 2017
$0
$1
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2010 2011 2012 2013 2014 2015 2016 2017E 2018E 2019E 2020E
Inst
alle
d Co
st o
f PV
($/W
)
Residential
Commercial
Utility-scale Tracking
Utility-scale Fixed
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Historical PV Installations
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• Competition, especially from China– Forced lower profit margins– Increased manufacturing efficiencies– Resulted in technology improvements
• Government/utility programs– SunShot Initiative– Incentives
• Increased demand by making PV affordable• Gradual reduction in incentives forced industry to
reduce costs
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Why the Decline?
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Trend of Solar PV Component Prices
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2010 2011 2012 2013 2014 2015 2016 2017E 2018E 2019E 2020E
Cost
($/W
)
Module
Inverter
BOS
EPC
Other
Data Source: BNEF 2017
Silicon shortage -> innovation -> increased production capacity -> oversupply -> low prices
Production improvementsModular assemblyBetter supply chain managementImproved labor efficiency (automation)
String inverters, mini inverters
Module production improvements trickle down to BOSComponent standardization allows factory assembly and higher throughput
Increased module efficiency reduces per-kW fixed costs and area-based costs (installation labor)Improved mounting systems resulted in faster installation
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• Revisiting PV – feasible where wasn’t before– Tracking, carport and rooftop mounted systems– Sites with lower electricity rates and/or lower
insolation values– Federal agencies can more easily meet renewable
energy goals and mandates• Siting utility projects on their land• Working toward net zero• Viewing PV as resiliency solution, especially
combined with storage (which is also coming down in cost)
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Current Customer Reactions
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• Most predictions point to YES…– SEIA estimates capacity will triple in next 5 years– BNEF estimates even commercial and residential costs will be less than $1/W by 2030
HOWEVER, many factors may reduce PV installation rates and raise prices• Changes in customer charges
– Shift in peak demand (duck curve)– Net metering reduces customer’s bill, pushing grid maintenance costs onto other customers– Reduction in avoided energy cost, and therefore cost-effectiveness of PV
• Bankruptcy– Reduced competition could lead to higher prices
• Trade war– Suniva filed petition for minimum panel cost of $0.78/W
(≈ 2013 cost)• Tax policy
– Reduction in solar incentives (including net metering)– Income tax cuts (reducing value of tax savings)
• Could be replaced by state incentives– US energy policy changes
• Labor shortage
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Looking Ahead: Will Prices Continue to Fall?
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Amy SolanaPacific Northwest National Laboratory
(503) 417-7568amy.solana@pnnl.gov
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Questions?
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Top 5 state PV capacities• CA: 7,379 MW• NJ: 2,284 MW• MA: 1,941 MW• AZ: 1,647 MW• NY: 575 MW
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Installed PV Capacity
Tampa Convention Center • Tampa, Florida
The SunShot Program
Transforming Economics on Solar
Charlie Gay, Ph.D.Solar Energy Technology Office : U.S. Department of Energy
August 17, 2017
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Generation CustomerDelivery
Source: EPRI, 2009
The Grid of the Past
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Electricity Mega-Trends
Renewables accounted for >50% of new worldwide electricity-generating capacity in 2016
2010 20202000
Variable frequency drives
CFL
Source: adapted from 9 February 2017 KeynoteNational Association of State Energy OfficialsChandu Visweswariah, IBM
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Generation Grid Consumer
Monopoly Regulated
Politics: Siting, NIMBY, Multiple Jurisdictions, Eminent DomainRegulatory: Who builds what? How are they compensated?Business: Who owns what? How to finance?
More Grid-ISOs-Central PV-Wind
Less Grid-DG-Microgrids-Storage
Less Grid-DG-Microgrids-Storage
The Grid is the Fulcrum
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Generation ProsumerDelivery
Source: EPRI, 2009
The Grid of the Future
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The Digital Energy Revolution (also a “DER”)
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Centralized and distributed generation optimized with finely tuned 2-way load balancing.
Modern Electric Grid: Two Way Energy and Data Flow
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More progress must be made in order to take advantage of this domestic energy resource and to compete in the growing global market.
Sources: International Energy Agency, "2015 Snapshot of Global Photovoltaic Markets”; “Solar Thermal Electricity Global Outlook 2016”.
Perc
ent o
f Ann
ual E
lect
ricity
Gen
erat
ion
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1
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Solar Supplies 1% of U.S. Electricity & Growing
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2009 2010 2011 2012 2013 2014 2015 2016
Annu
al P
V In
stal
latio
ns (G
W)
PV Deployment and System Price in the U.S. (2009 – 2016)
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Sources: National Renewable Energy Laboratory, "U.S. Solar Photovoltaic System Cost Benchmark: Q1 2016"; GTM Research and SEIA, “U.S. Solar Market Insight Report: 2016 Q4."
2016
$/W
att
(projected)
U.S. Solar: Falling Costs, Rising Deployment
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• Coal’s contribution to total energy collapsed to 14% in 2016, from 23% in 2007. • Natural gas climbed from 23% to nearly 30%, while renewables (including
hydropower) surged to over 10%, from 6.5%.
U.S. Electricity Demand
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Solar currently supplies about 1% of the electricity consumed in the United States.
In the first three quarters of 2016, solar represented one-third of all new electricity capacity installed in the United States.
New Capacity Added Q1-Q3 2016
UTILITIES
19.3 GW
COMPANIES(Non-Residential)
7.2 GW
HOUSEHOLDS
7.6 GW• About 1/3 of all U.S. utilities
in 39 states offer solar power to their customers.
• Over 60,000 U.S. businesses have installed solar to lower their energy costs and help to reduce prices for consumers.
• Electricity customers across all 50 states have chosen solar for their properties.
• Over 1.2M total U.S. homes have installed solar energy systems.
Source: Cumulative solar capacity from GTM Research and SEIA, “U.S. Solar Market Insight: Q4 2016”
Wind12%
Natural Gas45%Nuclear
6%
Solar34%
Other3%
Solar is One of the Fastest Growing Energy Sources in America
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Cumulative Solar Change from 2014 to 2016
Source: EIA, Electric Power Monthly (February 2017, February 2015).
• At the end of 2016 there were more than 100 MW-AC of solar in 28 states (15 states in 2014), and more than 15 MW-AC in 39 states and DC (32 states and DC in 2014)
– More than half of solar capacity is still in two states.
>1,500 MWAC>500 MWAC>100 MWAC
>15,000 MWAC
>15 MWAC
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December 201634.7 GW
December 201416.5 GW
Utility PV
57%
CSP5%
Distributed PV
38%Utility PV
52%CSP10%
Distributed PV38%
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The amount of power that is produced by a PV system depends upon the solar resource availability (in addition to other factors like temperature and snowfall), which is location dependent. The median solar resource for the United States is represented by Kansas City, MO, while the highest solar resource is represented by Daggett, CA, and the lowest solar resource is represented by Seattle, WA.
Average Solar Resource Calculation
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• 5 states produced more than 5% of total net generation from solar in 2016 and an additional five states produced more than 2.5% of total net generation from solar.
• Solar technology contribution varied by state, with Hawaii generating most of its energy from distributed PV, while North Carolina generated the vast majority of its energy from utility-scale PV.– During the same time period, CSP generated more than 1% of California’s electricity
and more than 0.5% in Nevada and Arizona.Source: EIA, “Electric Power Monthly,” forms EIA-023, EIA-826, and EIA-861 (February 2017).Note: EIA monthly data for 2016 is not final. Additionally, smaller utilities report information to EIA on a yearly basis, and therefore, a certain amount of solar data has not yet been reported. “Net Generation” includes DPV generation.
13.2%
7.9% 7.8% 7.3%5.8% 4.9%
3.5% 3.0% 2.9% 2.7%1.4%
0%2%4%6%8%
10%12%14%
Sola
r Gen
erat
ion
as a
Per
cent
age
of To
tal N
et G
ener
atio
n
CSPDPVUPV
Solar Generation as a Percentage of Total Generation, 2016
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U.S. Installation Breakdown
• At the end of December 2016, there were 33.0 GW-AC of solar systems in the United States.– Of the 33.0 GW, 19.8 GW were utility-scale PV and 13.2 GW were distributed PV.
• As of December 2016, California system capacity represented 42% of all U.S. PV capacity, leading in both the utility-scale and distributed sectors.
• Half of the top 10 states led in both the utility-scale and distributed sectors, while the other states on the list had less diverse deployment.
Source: EIA, “Electric Power Monthly,” forms EIA-023, EIA-826, and EIA-861 (February 2017).Note: EIA monthly data for 2016 is not final. Additionally, smaller utilities report information to EIA on a yearly basis, and therefore, a certain amount of solar data has not yet been reported.
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5,360 1,260
998 908
733 569
443 287 266 254
2,107
0 1,000 2,000 3,000 4,000 5,000 6,000
CaliforniaNew Jersey
MassachusettsArizona
New YorkMaryland
HawaiiColorado
ConnecticutTexas
Rest of U.S.
Distributed PV Installed Capacity, Top 10 States, as of Dec.2016Megawatts (MWAC)
8,520 2,272
1,611 1,394
981 847
579 545 480 418
2,124
0 2,000 4,000 6,000 8,000 10,000
CaliforniaNorth Carolina
ArizonaNevadaGeorgia
UtahTexas
New JerseyNew Mexico
ColoradoRest of U.S.
Utility-Scale PV Installed Capacity, Top 10 States, as of Dec.2016Megawatts (MWAC)
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U.S. Residential PV Penetration
• Since 2005, when the investment tax credit was passed by congress, the residential PV market has grown by approximately 51% per year, or about 95X.
• As the end of 2016 there were over 1.25MM residential PV systems in the U.S.– The millionth U.S. residential PV system was likely installed in Q2 2016.
• Still, only 1.1% of households own or lease a PV system (or about 1.7% of households living in single-family detached structures)
– However, solar penetration varies by location. HI, CA, & AZ have residential systems on an estimated 29%, 9%, and 7% of households living in single-family detached structures.
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Sources. Res. PV Installations: 2000-2009, IREC 2010 Solar Market Trends Report; 2010-2015, SEIA/GTM Solar Market Insight 2010-16 Year-in-Review. U.S. Households U.S. Census Bureau, 2015 American Housing Survey; state percentages based on 2000 survey.
0
250,000
500,000
750,000
1,000,000
1,250,000
1,500,000
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Cum
. # o
f Res
. PV
Syst
ems
% o
f hou
seho
lds w
ith P
V
Residential PV systemsU.S. householdsSingle-family detached houses
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050
100150200250300350
Cumulative PV Installed (MW)
201420152016
• At the end of 2016, the top 10 cities represented 1.6 GW of cumulative PV capacity, or 4% of total installed U.S. PV capacity– It is estimated that these cities are only using 3%-14% of their technical
potential for rooftop installations.• 17 cities had installed more than 50 watts/person at the end of 2016
– Honolulu had installed approximately 0.5 kW per person.
Source: “Shining Cities Harnessing the Benefits of Solar Energy in America.” Spring 2017.
0100200300400500600
PV Per Capita (Watts/Person)
Leading U.S. Cities
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The “Duck” Curve
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An energy-efficient building, where on a source energy basis, the actual annual delivered energy is
less than or equal to the on-site renewable exported energy.
Zero Energy Ready Building
Building or Campus or District or Portfolio
Zero Energy Building (ZEB) Definition
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‘Smart’ Buildings
ZigBee mesh
Plug Load Controllers
ZigBee mesh
Lighting Load Controllers
HVAC ControllersBEMOSS Core
A building that provides a productive and cost-effective environment through optimization of its four basic components - structure, systems, services and management - and the interrelationships between them." Source: Intelligent Buildings Institute (IBI)
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Current NREL Analytics
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Current NREL Analytics
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Cyber Reference Architecture which enclaves DER devices to minimize common-mode vulnerabilities.
Secure, Scalable Control and Communications for Distributed PV
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Building Energy Optimization
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The Path to Zero Energy
ReferenceBuilding
PV More Efficient
Building Designs
Zero NetEnergy
Annu
alize
d En
ergy
-Rel
ated
Cos
ts ($
/yr)
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Building Energy Optimization - Menu
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Efficiency + PV Analysis Models
New Construction, Life-cycle Cash flow Analysis
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Demand Response – Peak Shifting Potential
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SunShot 2030 Goal + Low Cost Storage (3¢/kWh)
SunShot 2030 Goal (3¢/kWh)
SunShot 2020 Goal (6¢/kWh)
Half the Cost, More than Double the Solar
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• Cost Reduction – Focus on key component and systems level needs, to enable
national unsubsidized options• Permitting/Siting
– Address competing use challenges to promote co-existence (Environmental, Human Use, and Permitting)
• Financing – Reduce risk to investors through demonstration of next
generation of components and systems at scale• Access to transmission
– Develop innovative solutions that address access to transmission and congestion (i.e. forecasting, …)
• Consumer Awareness– Provide unbiased/fact based information and analysis
Renewable Power – Key Priorities
Energy Exchange: Connect • Collaborate • ConserveTampa Convention Center • Tampa,Florida
Transforming Economics on Solar
Economics of SolarCOL (Ret.) Dave McNeil
Hannah Solar Government ServicesAugust 17, 2017
Agenda
• Solar Industry Update• The Economics of Solar• Cost of Solar• Cost of Energy from the Grid• Available Incentives• Types of Solar Systems• Questions?
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Highlights:
– Since 2006 the solar market has grown 65% on average each year (95% from 2015 to 2016)
– Solar PV prices have fallen 19% in the past year and 63% over the last 5 years
– Suniva petition and trade case: implications for the future of solar module pricing
Data obtained from the Solar Energy Industries Association
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SOLAR INDUSTRY UPDATE
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SOLAR INDUSTRY UPDATE
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• Suniva Petition:
– May 23, 2017: Int’l Trade Commission said it would consider Suniva’s petition asking for a $0.78/W price floor in solarmodules
– The Commission will decide by Sep whether or not torecommend “remedies to safeguard against foreign-manufactured crystalline silicon photovoltaic products.”
– If yes, recommendation to Pres. Trump in Nov.
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SOLAR INDUSTRY UPDATE
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• Energy (kilowatt hours) generation is the source of savings– A kilowatt hour (kWh) generated by on-site solar is a kilowatt
hour not purchased from the grid
• 3 Main Drivers of the Economics of Solar:– Cost of solar (equipment and installation)
• Recovering the cost of the system through energy generation
– Cost of energy from the grid• Value of savings directly tied to cost of energy from the grid
– Available Incentives• Incentives may increase the value of energy generated by solar
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THE ECONOMICS OF SOLAR
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The cost of solar refers to the initial investment.• Impacts breakeven point, total return on investment,
and internal rate of return (IRR)Key Factors:• Economies of scale• Techonology – type of modules and inverters;
tracking vs. fixed tilt; Microgrids• Location – CONUS vs. OCONUS• Design
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COST OF SOLAR
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COST OF SOLAR
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Value of energy savings depends on the cost of energy from the grid.• Residential avg price per kWh in Hawaii -
$0.3033/kWh• Residential avg price per kWh in Florida -
$0.1158/kWh
All else constant, solar energy savings are more valuable in HI than in FL.
Data obtained as of April 2017 and is from the Energy Information Administration (www.eia.gov).
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COST OF ENERGY FROM THEGRID
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Utility Incentives:Incentives for renewable energy generation are offered by utilities often because they are required by state legislation to incorporate renewable energy onto the grid
Types of Incentives:
• Rebates – up-front cash incentives• Performance-Based incentives – incentives that vary based upon
energy production– Buy-all-sell-all or Feed-in tarrifs (FIT)
• Net Energy Metering – credit on a utility bill for energy produced– Energy is produced has the same effect on the utility bill as energy
saved
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AVAILABLE INCENTIVES
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State and Federal Incentives:
The Federal Government and some state governments offer tax related incentives for the investment in renewable energy to promote clean energy and encourage private industry investment in emerging energy markets.
Types of Incentives:
• Tax Credits – 30% Investment Tax Credit (ITC) offered by Federal Government; state tax credits vary by state
• Modified Accelerated Cost Recovery System (MACRS) – schedulefor accelerating the depreciation of solar assets– MACRS indirectly provides state income tax savings in states that calculate
taxable income based on Federal taxable income
• Bonus depreciation – modifies MACRS allowing solar assets to be depreciated by 50% in year one
Government energy buyers increasingly use tax incentives to source renewable energy by leveraging private investement (PPA, ESPC, UESC)
52 Energy Exchange: Connect • Collaborate •Conserve
AVAILABLE INCENTIVES
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Distributed Generation vs. Utility Grade• Distributed Generation
– Typically 1 MW or less– Interconnected with the local utility or coop– Used for energy cost savings
• Utility Scale– Typically 1 MW to 10 MW or larger– Owned by the utility/coop or a third party through a
PPA– Used to diversify generation mix
53 Energy Exchange: Connect • Collaborate •Conserve
TYPES OF SOLAR SYSTEMS
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Grid Tied vs. Off Grid• Grid tied, utility interactive.
– 98% of all solar systems today– Primary focus is energy cost reduction– System shuts off with no back up if the utility power is out
• Off grid (no utility connection)– Primarily for remote sites, battery based
• Hybrid (grid tied, utility interactive with battery back up)– Power savings and battery back up for limited time
• Microgrid (may have utility connection)– A group of interconnected loads and generation sources thatcan
operate independently and autonomously
54 Energy Exchange: Connect • Collaborate •Conserve
TYPES OF SOLAR SYSTEMS
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Ballasted Roof Mounted
Star Gospel Mission: Charleston, SC
18 kW
Target: North Charleston, SC 500 kW
TYPES OF SOLAR SYSTEMS
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Penetrating Roof Mounted: Army Reserve Center, Denton, TX
8 kWStanding Seam Mounted: Hubner Manufacturing, Mount Plesant, SC
918 kW
TYPES OF SOLAR SYSTEMS
56 Energy Exchange: Connect • Collaborate •Conserve
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Ground Mounted
FT Allen, Puerto Rico 937 kW
Tucson International Airport, Tucson, AZ 500 kW
57 Energy Exchange: Connect • Collaborate •Conserve
TYPES OF SOLAR SYSTEMS
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Parking Canopy Mounted
Camp Lejeune, NC 742 kW
Joint Base Pearl Harbor-Hickam, HI 880 kW
58 Energy Exchange: Connect • Collaborate •Conserve
TYPES OF SOLAR SYSTEMS
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Questions?
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COL (Ret.) Dave McNeil President / CEO dave@hsgs.solar
(843) 718-1866
www.hsgs.solar
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