PowerPoint Presentation

Community Solar Project on Lopez Island Schoolin partnership with12

Padric ClancyBen ElkinMaryam MozafariHannah RayJake SadieAlbert Yuen

2OutlineWhat is Community Solar?Financial incentives for community solarModeling Results

33Community solar4

Community owned 77.7 W solar array in El Jebel, ColoradoCommunity solar (WA SSB 6658): solar energy systems owned by local individuals, households, nonprofit organizations, or non-utility businesses that are placed on local government propertyCommunity Solar is defined as a solar-electric system that, through a voluntary program, provides power and/or financial benefit to, or is owned by, multiple community members.4Potential Locations

5IncentivesInvestor-owned (LLC)Non-profit (school bond?)FederalInvestment tax credit30% of system costNoAccelerated depreciation5-yearNoStateWA Solar production incentive (SSB 6658)$1.08/kWh for WA-made solar. $5000/yr max in OPALCO$1.08/kWh for WA-made solar. $5000/yr max in OPALCOSales tax exemptionYesYesOPALCOMember-owned renewable energy (MORE). 10,000 kWh/yr max per system$0.20/kWh for 10 years + $0.10 for 3 years$0.20/kWh for 10 years + $0.10 for 3 years

66Modeling Input Parameters (fixed):Annual energy output (i.e. capacity factor)Capital costAnnual operation and maintenance costResale value of the systemVariables:Washington vs. non-Washington Modules and InvertersFinancing: LLC vs. Non-profit vs. BondInstallation yearInstalled cost ($/W)System size (kW)

7ResultsROE vs. Installation Year, Finance Structure & Equipment:

8$/W:All WA = 7.5WA Module = 6.2Non-WA = 4.85Term ends in 2020System size = 4.95 kWAll LLC Data shown reflects ITC Grant rather than Tax CreditObserve the following outputs:Return on equity (ROE)Debt service coverage ratio (DSCR), ratio of profit to debt

8ROE vs. Size, Finance Structure, and Equipment:

9$/W:All WA = 7.5WA Module = 6.2Non-WA = 4.85Installation date is 20119Federal IncentivesBusiness Energy Investment Tax Credit (ITC):30% Tax Credit ITC in form of a Treasury Grant Construction < 2011

Modified Accelerated Cost Recovery System (MACRS):

10 Only applicable to commercial entities Business Energy Investment Tax Credit (ITC): Incentive on renewable investment. 30% of the capital cost of the project. The Modified Accelerated Cost Recovery System (MACRS) is the current tax depreciation system in the United States. Under this system, the capitalized cost (basis) of tangible property is recovered over a specified life by annual deductions for depreciation.

10 WA State IncentivesWashington State SB6658:Production Based FIT (Residential, Utility or Community)$ 0.30 /kWh non-WA$ 0.72 /kWh WA solar panels$ 1.08 /kWh WA inverter & solar panelsMax Eligible Capacity = 75 kW On Government PropertyTotal available fund = 5% of (0.5% of the utilitys operational revenue or $100,000, whichever is greater) = $5000/yrEnds June 2020

11--x 2.4 WA Modules--x 1.2 WA Inverter- x1.0 Out of state equipment

11 WA State IncentivesWashington State Sales tax exemption:Through June 30, 2013 no sales tax on the sale of solar electric equipment for systems 10 kW or less.Systems over 10 kW are sales tax exempt through June 30, 2011.Between July 1, 2011 and June 30, 2013, solar PV systemsthat exceed 10 kWare subject to sales tax, but qualify for a refund of 75% of their applicable sales tax. Solar PV systems sold after June 30, 2013 aresubject to full sales tax.

12--x 2.4 WA Modules--x 1.2 WA Inverter- x1.0 Out of state equipment

12 Local Utility IncentivesOPALCO Member Owned Renewable Energy (MORE): Voluntary contribution towards green energy

The interconnection year determines the rate for 10 yearsAdditional $0.10/kWh bonus payment through June 30, 2014Capped at 4,000 kWh/year (Residential) & 10,000 kWh/year (Commercial)

13Interconnection YearEstablished rate /kWhBefore July 2012 $0.20 2013$0.17 2014$0.14 2015$0.111314

141515RecommendationsDue to time sensitivity, the project is viable only if started before 2013 - ROE >10%

An LLC finance/legal structure is necessary to take advantage of the federal ITC grant

Installation is limited to 5kW or below, as return on equity decreases sharply with project sizes above this threshold

1616Legislation Assessment Equity: Discrimination against small utilities and cities as well as lower income entities (low tax appetite)Economic Inefficiency:Favoring the monopolist low efficient manufacturer (Silicon Energy) Absence of competitive marketMarket Failure: Investors being able to cut each other out of the pie

What needs to change:Available fund (Increase) Policy AmendmentPrice of WA modules (Decrease) Competitive Market

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Special Thanks to:Chris Greacen18Profitable scenariosWA modulesEquity return: 17%

WA modules + WA inverterEquity return: 38%19

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