• 04 Aug 2014 12:30 PM | Anonymous

    What the PV Value® Assessment Tool Doesn’t Assess


    By Peter Gorr, ISEA Board of Directors Member       

      

    The added value to a home that a Solar PV system contributes is a very important component that can help offset the concern regarding the initial capital outlay required to purchase a solar system. I have always been a critic of anyone who presented a financial case for purchasing solar equipment that consisted of illustrating a payback period determined by dividing the cash outlay by the annual energy savings and nothing else. 


    While the energy savings is important and perhaps the most obvious component to offset the cost of the system, real tangible value has been added to the home that will be recovered to some degree when the home is sold. These 2 items are a certainty so it is important to calculate them accurately. Additional items that can generate value but with less certainty and accuracy are the sRECs that the system will generate and potentially be sold and, perhaps the hardest to quantify, the importance (or premium) a potential owner places on using clean energy. For me and many people I meet, this last point is a significant driving force that led us to consider and eventually purchase a Solar PV system.    

    Determining a home’s added value has been a challenge so I was happy to see an assessment tool developed, PV Value® (http://energy.sandia.gov/?page_id=8047). Unfortunately I was extremely disappointed to see how this model assessed the value of my system. Valuing a PV system with this tool is done using a discounted cash flow approach, which primarily considers the present value of projected future energy production. While I have no argument with this approach, to peg the total added value to the home using just this computation is incomplete. What is missing is indeed difficult if not impossible to model but should not be ignored.


    As someone with a math degree and a MBA with a concentration in statistics, I certainly understand and respect the power of number crunching.  But my MBA also came with a concentration in Marketing and with over 30 years of sales and marketing experience I also understand and respect that there are some things you can’t input into a pricing model but if you ignore them you will leave serious money on the table if not lose the sale completely.  This something is called “perceived value”. Real or perceived, value is what people seek and determines what they are willing to pay. A skilled salesperson knows how to identify any and all value a system offers a prospective customer. And that’s my issue with PV Value®. It misses some real value and all of the perceived value that the system offers.


    First let’s start with the missed real value namely potential SREC sales. While selling sRECs are far from certain as well as the price one might receive, sRECs do provide a potential source of income. Since my system was installed over 3 years ago, I have average $70/month in SREC sales income. PV Value® offers no way to account for this which undervalues my system in my opinion. With my energy savings almost the same ($68/mo),  PV Value® is undervaluing my system by more than one half. A way to add some value to the system for the income potential it offers the owner should be included. Certainly this should be the case in a state where there is a SREC market or potential to have one. I hate to state a problem and no solution, but I don’t know how to account for this value yet it has been real and I expect it to continue to generate some income.


    Second is the perceived value of the system. Most people interested in Solar PV systems are motivated by a concern over climate change and want to lower their carbon emissions. This motivation is so great with some people, like me, that there is a willingness to pay a premium. How much of a premium is certainly subjective and again impossible to input into a model. But it is real enough to add value to the home. Studies indicating homes with solar systems sell faster suggest these homes offer something of higher value to set them apart and this desirable point of differentiation should command a premium.


    In conclusion, PV Value® has a place in helping to determine the added value to a home of a Solar PV system but it offers only a part of the total assessment. It basically sets the minimum added value. The current and projected SREC income potential in a given state needs to be added in some fashion as well as the premium justified with a home that has significantly lower carbon and pollution emissions. These additional two other value generators push that assessment up, how high is primarily dependent on the potential buyer. When I add up all the real and perceived value I have received from installing a Solar PV system and compare it to the investment I made, I have always stated and will continue to state “It made me wealthier the day I flipped the switch”. This assessment is accurate, at least to me, and that’s what counts.


    About Peter Gorr

     

    Peter Gorr is a retired Director of Marketing, Product Management, and Business Development. He holds aMBA in Marketing and Statistics from the U of Chicago. He is currently the Chair for the NW Cook County Group of the Sierra Club and was recently elected to the state chapter Executive Committee.  He is active in local habitat restoration and is on the Board of Directors for Friends of Busse Woods and a founding member of Friends of Deer Grove East. He has been an active member of ISEA assisting the organization with promoting and hosting the Solar Tour, hosting 2012 Summer Social, as well as assisting at several events. His home features a 6.72kw Solar PV system which he has used as a platform to promote the benefits of clean renewable energy throughout the area with speaking engagements and advocating for pro-solar legislation with state representatives

  • 15 Jul 2014 4:26 PM | Anonymous

    Solar Energy in Illinois – Where Do We Stand?

     

    By Glenn Reed, CPA

     ISEA Treasurer and Board Member



    Where does Illinois stand compared to other states in terms of energy production-- especially solar? With 13 million people, Illinois ranks 5th in population1, but only 11th in total energy production2.


    Where does Illinois’ energy come from? Mostly fossil fuels. We’re number one in the US for electricity produced from nuclear energy, and number three for coal2. Not such a good thing when you consider that 90% of the uranium purchased for US commercial reactors comes from outside the US2. Plus, Illinois is a net importer of coal, despite the fact that a huge amount of it is mined right here in our state3.


    Another concern with coal is air pollution. Largely due to burning coal, Illinois is ranked 6th in the nation for sulfur emissions2 and 5th for CO2 emissions4. More than 38% of Illinois CO2 emissions come directly from electric power generation4.


    What about renewable energy? Illinois ranks 34th in percentage of power generated by renewables5. Folks, we can do better!


    That said, there is some good news on the renewables front. Illinois ranks 15th in the nation in wind energy potential. We are in the top four states in terms of installed wind power, with more than 3,500 MW of installed capacity6. Way to go!


    What about solar? The US has incredibly abundant solar energy at our fingertips-- nearly 400,000 TWh/year, or 100 times our total energy consumption in 20117! Why not use it?


    Is it sunny enough for solar to work here in Illiois? Absolutely. Mt. Prospect, Illinois has more solar irradiance than Miami, Florida during June, July, and August, measured in kWh/m2/day of sunlight falling onto a horizontal surface8. And we’re putting it to work. Illinois ranks 22nd in installed solar capacity, with over 52MW. In 2013 alone, 2 MW of solar was installed here. Currently, there are over 184 solar installation and related companies in our state, employing over 2,100 people9.


    Is solar growing? Absolutely. Over 4,750 MW of photovoltaic capacity was installed in the US in 2013-- a 41% increase over 2012. We just need to have more of that growth here in Illinois. In 2012, solar contributed to 10% of all new electricity generation capacity. In 2013, it jumped to 29%, making solar the second largest source of new electricity generating capacity, behind natural gas5.


    Illinois can be a leader in renewables, as it has been in other forms of energy. Doing so will mean cleaner air, lower energy prices, and more jobs here in Illinois.


    Sources

    1. U.S. Census (2010 Actual, 2013 Estimate)
    2. U.S. Energy Information Administration (eia.gov)
    3. David Kashi, International Business Times, January 15, 2014
    4. U.S. Environmental Protection Agency (epa.gov)
    5. U.S Department of Energy (energy.gov)
    6. American Wind Energy Association (awea.org)
    7. Anthony Lopez, Billy Roberts, Donna Heimiller, Nate Blair, and Gian Porro, U.S. Renewable Energy Technical Potentials: A GIS-Based Analysis, National Renewable Energy Laboratory, Technical Report NREL/TP-6A20-51946, July 2012
    8. Michael Boxwell, The Solar Electricity Handbook, 2014 Edition,Greenstream Publishing
    9. Solar Energy Industry Association (seia.org)


    About Glenn



    A member since 2003, Glenn has attended solar and wind workshops, and volunteered for the Illinois Solar Tour and other events.  Glenn is a principal at Green CPA, co-founder of Northwest Suburban Green Drinks, and Treasurer of Mt. Prospect Toastmasters.  With management and biology degrees from Purdue, he brings over 10 years of accounting experience.  Glenn is also a member of the AICPA, ICPAS, ASES, USGBC, and Fox Valley Electric Auto Association. His vision is to help the ISEA continue to grow by strengthening its financial base, through enhanced reporting and fundraising efforts. 
  • 02 Jul 2014 1:48 PM | Anonymous


    Solar Brings Freedom from Traditional Technology


    by Taylor Gendel, ISEA Intern


    Independence Day is upon us and I couldn’t help but notice several new innovations in solar. Solar energy is everywhere and its presence gives us the possibility to become increasingly independent from other, less clean sources of energy. As technology expands, so do the opportunities to put panels in places that were never before possible.  Here are some recent ways to capture and use solar energy.


    1. Cars: No, not electric cars that you can charge with a solar station. Actual cars that have solar panels on them! Here is a list complete with pictures. It includes a solar paneled golf cart, and a solar camper van! Imagine a camping trip where you could be completely isolated from humanity yet still have a power source.


    2. Benches: In Boston, park benches will now charge your cell phone! The new solar benches, called Soofa, are a new project from Changing Environments, a group of 3 women from the MIT media lab. The solar seats have USB ports to charge electronics and send location-based data like air quality and noise level to their website.


    3. Roads: By now you’ve probably seen one of your friends post this on Facebook, but a couple in Idaho is working on a way to cover roadways with solar panels! Solar Roadways have many innovative elements including heating abilities to melt snow and ice, five-color LED lighting to create road lines, and corridors for moving and storing storm water. The surface of the panels is made out of textured glass that can withstand 250,000 pounds. Solar Roadways has already received two phases of funding from the U.S. Federal Highway Administration for research and development. The roads are still in production but this is definitely a project to look out for!


    AND NOW:


    4. Pop-up Solar Stations: The Ecos Powercube is a fully functioning solar-powered energy station. It is transportable and can be used for disaster relief, in refugee situations, and all around the world. It has wifi capability for up to 30 miles, a small wind turbine which adds to the energy stored in onboard batteries for later use, and it can draw moisture from the air to make clean drinking water. If that’s not enough it also opens up to a space inside that can function as a temporary shelter, school, or medical center AND it can act as a generator to power other buildings. Sounds like a win win win win win win win….you get it.

    _________________________________________________________________


    Taylor Gendel is ISEA's Program Development Intern. She graduated from the University of Wisconsin-Madison in 2013 with a degree in Community and Environmental Sociology and an Environmental Studies certificate. She is originally from Evanston, IL.



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