DISTRIBUTED PV PRICING Trends and Challenges
Transcript of DISTRIBUTED PV PRICING Trends and Challenges
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TECL # 25739
Eric Cotney – VP of Sales and Marketing
January 18, 2017
PRESENTED TO:
PRESENTER:
DATE:
NTAEE
DISTRIBUTED PV PRICINGTrends and Challenges (From an Installer’s Perspective)
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AGENDA
• Who is Axium Solar?• What are the Current Trends in PV Pricing?• What will Drive Distributed PV Pricing in the Future?• Why is the Range of Market Pricing So Wide?• Is Overpricing a Problem?• What Strategies Can be Employed to Protect
Consumers?• Should Utilities Design Incentives to Protect Consumers
from High Priced Vendors?
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WHO IS AXIUM SOLAR?
• North Texas based renewable energy Engineering, Procurement, & Construction company
• Specialized in the design and construction of grid connected solar electric systems for both commercial and residential clients
• Founded out of Axium Electric, (dba Automated Controls), a low voltage, building automation subcontractor serving the commercial market for the past 26 years
• 20 MW of Installed Capacity
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CURRENT TRENDS IN PV PRICING?
YEAR RESIDENTIAL COMMERCIAL
2010 17.68% 16.63%
2011 3.4% 17.04%
2012 12.56% 17.17%
2013 29.77% 9.77%
2014 Flat 12.69%
2015 Flat Flat
2016 5.26% 24.06%
2017 (Projected) 5% 10%
Chart Shows % Decrease From Previous Year in Turnkey Project Cost
$3.52 $2.94
$3.34 $2.23
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CURRENT TRENDS IN PV PRICING?
What Are the Current Trends in Texas for Residential and Commercial PV Pricing? Rapid Decline in C&I. Modest Decline in ResidentialFactors in Decline:• Module Pricing – decreased ~20-30% this year.• Technological Advances
• Higher module power ratings/efficiencies• 1000V Inverters• Racking
• Labor Efficiencies – Better labor strategies
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CURRENT TRENDS IN PV PRICING?
What Are the Current Trends in Texas for Residential and Commercial PV Pricing? Rapid Decline in C&I. Modest Decline in ResidentialReasons for Only Modest Decline in Residential Pricing• AHJ requirements and process• Majority of our customers are wanting the latest and greatest
technology• Rapid Shutdown – State of Texas adopted NEC 2014 on September 1,
2014• Economies of scale• Shape of residential rooftops
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FUTURE DRIVERS?
What will drive distributed PV Pricing in the Future? • Code Requirements – Module Level Shutdown • Increased competition• Module Tariffs
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WHY SWINGS IN PRICE?
Why is the Range of Market Pricing So Wide?• Economies of scale• Premium vs standard technology • Mounting application• Site specific conditions• Inefficient project procurement • Bad actors and solar novices
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WHY SWINGS IN PRICE?
Premium module adds $.50/watt or more
RESIDENTIAL PRICING TEMPLATE
Canopy adds $3500-$5000
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WHY SWINGS IN PRICE?
All figures are pre-tax
COMMERCIAL PRICING
$/WATT RANGE TYPICAL SIZE
Ballasted Roof Mount 1.50-1.90/Watt 100-500 kW
Ground Mount 1.40-1.80/Watt 500-1MW+
Canopy 2.25-2.80/watt 100-500 kW
Attached System (SlopedRoof)
1.50-1.90/watt 100-500 kW
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CASE STUDY
TAYLOR STREET MOB – 99.99 kW Sherman, TX ~1.93/Watt
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CASE STUDY
TAYLOR STREET MOB – 99.99 kW Sherman, TX
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CASE STUDY
TAYLOR STREET MOB – 99.99 kW Sherman, TX
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CASE STUDYTAYLOR STREET MOB – 99.99 kW Sherman, TX
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CASE STUDYSYSTEMkW DC 99.99
FINANCIALSystem kW 99.99$/kW $1,923.67TOTAL PROJECT COST $192,347.80Utility Incentive $83,380.72Other Incentive $0.00NET $108,967.08Federal Investment Tax Credit (30%) $32,690.12MACRS Depreciation $32,417.71NET (Out of Pocket) $43,859.25Income Tax on Utility Incentive $0.00TOTAL Out of Pocket with Tax $43,859.25
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CASE STUDY
ENERGYAnnual kWh Consumed 3,300,682Annual Energy Production (kWh) 142,758AVG Monthly PV Production (kWh) 11,89725 Yr PV Production (kWh) 3,362,801% Offset 4.3%
PAYBACKEstimated Savings (Annual) $7,835.36Simple Payback (YRS) 5.2425 year Energy Cost /kWh $0.013
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CASE STUDYCASH FLOW MODELYEAR COST ENERGY OFFSET INCENTIVES PAYBACK
SYSTEM O&M kWH PRODUCED OFFSET RATE TOTAL OFFSET$ UTILITY TAX ITC DEPRECIATION USDA REAP CUMULATIVE CASH FLOW NPV IRR0 ($192,347.80) 0.055$ 83,380.72$ 32,690.12$ 32,417.71$ $0.00 (108,967.08)$ (108,967.08)$ 1 $0.00 142,758 0.055$ 7,835$ -$ -$ 32,690.12$ 17,019.30$ (51,422.30)$ 57,544.78$ (51,572.65)$ -47.19%2 $0.00 142,044 0.056$ 7,952$ -$ -$ 6,159.36$ (37,310.82)$ 14,111.48$ (39,027.60)$ -28.96%3 $0.00 141,334 0.057$ 8,071$ -$ -$ 3,695.62$ (25,544.60)$ 11,766.22$ (28,969.79)$ -16.30%4 $0.00 140,627 0.058$ 8,191$ -$ -$ 2,217.37$ (15,136.38)$ 10,408.22$ (20,414.99)$ -8.05%5 $0.00 139,924 0.059$ 8,313$ -$ -$ 1,773.25$ (5,050.24)$ 10,086.14$ (12,443.77)$ -2.26%6 $0.00 139,225 0.061$ 8,437$ -$ -$ 1,552.81$ 4,939.32$ 9,989.56$ (4,852.52)$ 1.89%7 $0.00 138,528 0.062$ 8,562$ -$ -$ 13,501.78$ 8,562.46$ 1,403.99$ 4.54%8 $0.00 137,836 0.063$ 8,690$ -$ -$ 22,191.83$ 8,690.04$ 7,509.50$ 6.61%9 $0.00 137,147 0.064$ 8,820$ -$ -$ 31,011.35$ 8,819.53$ 13,467.65$ 8.23%10 $0.00 136,461 0.066$ 8,951$ -$ -$ 39,962.29$ 8,950.94$ 19,282.01$ 9.50%11 $0.00 135,779 0.067$ 9,084$ -$ -$ 49,046.59$ 9,084.31$ 24,956.04$ 10.52%12 $0.00 135,100 0.068$ 9,220$ -$ -$ 58,266.25$ 9,219.66$ 30,493.13$ 11.34%13 $0.00 134,424 0.070$ 9,357$ -$ -$ 67,623.29$ 9,357.03$ 35,896.58$ 12.00%14 $0.00 133,752 0.071$ 9,496$ -$ -$ 77,119.74$ 9,496.45$ 41,169.63$ 12.54%15 ($9,999.00) 133,083 0.072$ 9,638$ -$ 3,499.65$ 80,258.34$ 3,138.60$ 42,845.35$ 12.69%16 $0.00 132,418 0.074$ 9,782$ -$ -$ 90,039.90$ 9,781.56$ 47,866.94$ 13.08%17 $0.00 131,756 0.075$ 9,927$ -$ -$ 99,967.20$ 9,927.30$ 52,767.34$ 13.41%18 $0.00 131,097 0.077$ 10,075$ -$ -$ 110,042.42$ 10,075.22$ 57,549.46$ 13.68%19 $0.00 130,442 0.078$ 10,225$ -$ -$ 120,267.76$ 10,225.34$ 62,216.17$ 13.91%20 $0.00 129,789 0.080$ 10,378$ -$ -$ 130,645.46$ 10,377.70$ 66,770.26$ 14.10%21 $0.00 129,140 0.082$ 10,532$ -$ -$ 141,177.78$ 10,532.32$ 71,214.43$ 14.27%22 $0.00 128,495 0.083$ 10,689$ -$ -$ 151,867.04$ 10,689.26$ 75,551.34$ 14.41%23 $0.00 127,852 0.085$ 10,849$ -$ -$ 162,715.56$ 10,848.53$ 79,783.58$ 14.52%24 $0.00 127,213 0.087$ 11,010$ -$ -$ 173,725.73$ 11,010.17$ 83,913.68$ 14.63%25 $0.00 126,577 0.088$ 11,174$ -$ -$ 184,899.95$ 11,174.22$ 87,944.10$ 14.71%
RESULTSPAYBACK (YRS) 5.24COST OF ENERGY $0.013NPV (25 Years) $87,944.10IRR (25 Years) 14.71%
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CASE STUDYRichardson Homeowner – 10.335 kW
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CASE STUDY
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CASE STUDY
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CASE STUDYWest Texas Food Bank – 73.405 kW Midland, TX
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CASE STUDY
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CASE STUDY
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IS OVERPRICING A PROBLEM?
Is Overpricing a Problem? Deterrents to Overpriced Solar:• Increased market competition• Educated consumers• Waning pool of incentives and low utility rates
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STRATEGIES TO PROTECT CONSUMERS?
What Strategies Can be Employed to Protect Consumers? Education is key.• Grassroots consumer advocacy groups• Licensing and certification• Multiple bids, references• Company rating systems (BBB, Angie’s List)
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STRATEGIES TO PROTECT CONSUMERS?
Should Utilities Design Incentives to Protect Consumers Against High Priced Vendors? We would like to see utilities increase the requirements for program participation but not get involved in setting pricing caps.• NABCEP Certification• Electrical license• Minimum insurance requirements• Local vs. non-local
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CONCLUSIONS
• Axium Solar remains optimistic about the trajectory of PV pricing, but concerned about the future impact of code changes and possible tariffs.
• Other than a few bad actors, swings in price are largely due to project specific factors and not to PV contractors trying to take advantage of consumers.
• Increased competition, consumer education and a declining pool of incentives have created a market that discourages overpricing.
• Utilities can play a positive role in protecting consumers by ensuring that all PV contractors applying for funds meet minimum quality requirements.
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THANK YOU!