How Utility Rates and Time of Use "TOU" Rates Work With Solar

Understanding Time of Use Rates
Gary Fairhead 2010

 PG&E customers are billed according to “how much” electricity they consume. This volume of energy is measured in kilowatt hours i.e. kWh.   “Tiers” have been created to “Price” the energy you use each month.  These “Tiers” of energy increase in price as consumers consumption of energy increases. The first tier is what PG&E believes the average consumer “should” use to power their home.  If consumers decide to use more than this “baseline” of energy, PG&E then starts increasing their pricing as consumption increases.

The following is a brief graph of how PG&E bills most customers. This is based on an E-1 electric rate in territory R B. Total electricity used it this example is 2255 KWH and the total cost is $723.05.

Tier 1 543 KWH $.11887 $62.61

Tier 2 162 KWH $.13502 $21.35

Tier 3 380 KWH $.28562 $98.70

Tier 4 569 KWH $.42482 $241.72

Tier 5 600 KWH $.49778 $298.67 (unlimited)2010 Pricing

 As the above chart shows, the more energy you consume, the more PG&E charges you per KWH. Notice that the first two inexpensive tiers account for only $84 of your entire electric bill. From that point on you jump immediately from $.13 to $.28 per kwh and then on to $.42 and $.50 per kwh! After the first $84 per month, you will be paying a very high price for your electricity.

To help consumers go solar, there are financial incentives available for them including State rebates and Federal Tax Credits.

However, the one financial tool that is seldom given the credit it deserves is the “Time Of Use” rate  i.e.TOU.  Electrical current produced by a solar system  is first used to satisfy the home’s electric needs. Should extra energy be produced, it is sent out to the grid to “help out” the community’s energy needs. California uses “Time of Use” rate structures for solar customers, which means that this excess electricity sent out to the grid during the day puts credits in the customer’s account at a higher dollar value than the electricity he buys back at night.

Summer TOU rate schedules

Summer Peak Pricing  1PM-7PM    $.30 per kWh
Summer Part Peak Pricing  7PM-9PM   9AM-1PM  $.14 per kWh
Summer Off Peak Pricing   9PM-9AM  $.10 per kWh

During Peak hours, you account can receive a credit of $.30 per kWh for every kWh you send out on the grid!  In addition to this, you will only be charged $.14 per kWh during Part Peak times and just $.10 per kWh in Off Peak times. 

Because this “exchange” rate is so financially attractive, solar customers can utilize several tips to maximize their energy savings while increasing their kWh of consumption!

One tip is to over cool your home in summer months several degrees lower than you would like up to 1 PM. This is because you are now doing the major cooling of your home at the 11-14 cents per kilowatt hour rate. As soon as 1 PM arrives, you can have your thermostat automatically set back to the temperature you would normally set it at. Turn on some ceiling fans and now coast until the temperature forces the AC system to start cooling down your home. This “coasting” time should create  4-5 hours of high solar credits to your account to now use back at very inexpensive rates.

 Pools and spa equipment, exterior lighting, laundry, and air conditioning utilized during Part Peak and Off Peak times are now billed at these very low rates.

Time of Use Rates can easily become a 2nd rebate that is usable for the entire life of the solar system. Without this exchange rate, customers would need to build a 20-30% larger solar system!

 Conservation should also be utilized to increase your life style while lowering your energy demands.  You will see many articles on energy conservation in our blog with more coming soon!

Why Solar in 2012

Solar in 2012

The high cost of electricity is expected to soar in the next 5 years and nearly everyone is looking for a way to lower their costs. Solar power is a great way to do this because you own and operate your own system plus state and federal rebates pay for about half of the investment price.

According to the Environmental Protection Agency, “solar energy systems are the best way to generate power because they do not cause pollution or noise.” In fact, a 6KW solar system can, over 25 years, reduce carbon dioxide by over 350,000 lbs., NOx by 1124 lbs., SO2 by 1124 lbs., and asthma causing particulate by 69 lbs. This is the equivalent of not driving 569,818 miles, or

planting 3 acres of trees.

Solar works when photons from the sun strike the semi conductor material of the solar panel and are absorbed by electrons in the silicon semi conductor.  Electrons are “bumped” into a flow producing DC electricity. This DC current is sent to an inverter which changes the current from DC to AC. The AC current is then used to satisfy the home’s electric needs. Should extra energy be produced, it is sent out to the grid to “help out” the community’s energy needs. California uses “Time of Use” rate structures for solar customers, which means that this excess electricity sent out to the grid during the day puts credits in the customer’s account at a higher dollar value than the electricity he buys back at night.

In a recent study, 80% of the American respondents believe that all new homes should include solar. When informed of solar’s higher resale value, 2/3 of the respondents were willing to pay more money for a solar home. What’s more 1/2 of those surveyed said they would pay 10% more for solar energy systems built in.

Conservation is paramount in increasing costumer’s lifestyles and reducing energy needs. Conserving energy is normally 3 to 4 times less expensive than producing new energy. This conservation allows for building a smaller system while saving money at the same time!

The real estate Appraisal Institute published a study that states a home’s resale value increases $20.00 for every $1.00 saved in operating costs. A home that costs less to live in is more desirable, and people are willing to pay more for it.

The one negative to Solar is the initial investment involved. However, the State of California is offering a 10% cash rebate and the federal government is offering a 30% unlimited federal tax credit. Customers are now investing approximately 60 of the overall price of the solar system.

With these high credits, customers are realizing well over a 25% Internal Rate of Return on their investment.

Through the combination of energy and the very attractive state and federal rebates, customers are finding solar to be one of the most cost-effective investments they can make.

Solyndra, Beacon, Sun Power and Government Loan Guarantees

Government Subsidies versus Loan Guarantees

Earlier this week, Beacon Power, a company that builds systems to stabilize solar and energy power, declared bankruptcy. The company's Massachusetts plant will continue to operate at full capacity, but its finances will be restructured. This is big news mostly because Beacon Power received $43 million in Department of Energy loans, and because it follows the recent closure and bankruptcy of Solyndra, which got $534 million from DOE.

Solar is growing rapidly, averaging 65% compound annual growth rate for the last 5 years. Worldwide solar installations doubled from 2009 to 2010. The total amount of solar installed in 2010 was 17 Giga Watts! A gig watt is a big deal. One gig watt is equivalent to one nuclear power plant. Although a nuclear power plant produces more energy overall, solar provides "peak energy" and is critical to our society during high energy use times. So in 2010, solar negated the peak energy need for 17 nuclear power plants! All this, and installed in just one year! A nuclear power plant typically takes ten years or more from inception to actually producing power. These plants, unlike solar, are usually slated to be removed from service in approximately 20 years.

Some naysayers have gone on the record as saying solar should not be subsidized. No one I am aware of has ever endorsed loan guarantees. Especially for the likes of Solyndra whose business plan and installed costs were much too high to ever legitimately compete and succeed in the market place. What the solar industry has asked for is help in creating demand for a product that would ultimately require vast amount of private investment dollars to get a foot hold in the market place. Just for the record, government subsidies in oil and gas dwarf solar subsidies, and gas and oil industries are already established and should receive no subsidies from the American tax payer.

However, because of these subsidizes in solar, panel prices have dropped from $4.10 per DC watt in 2006 to $1.00 per DC watt in 2011! These large drops in pricing are because the subsidies allowed for private investment into technology, research, manufacturing, and have ultimately helped establish volume discounts across the board. This is a perfect example of how subsidies should work and help every single American tax payer. Creating jobs, jobs that generate income taxes, employees that realize better buying power as consumers, consumers who have more money left over every month to invest or spend, and reducing our dependency on foreign oil are just a few of the benefits of solar subsidies.

Consumers are very aware that owning their own energy and preserving their current lifestyle, is paramount for their quality of life especially in retirement. In these very difficult economic times, when so many households are truly stretched, these subsidies have created an opportunity to lower consumer’s monthly electric bills while on their way to ultimate ownership of this energy.

Thanks to government subsidies and subsequently lower prices, we are now nearing grid parity in the solar industry. Grid parity is realized when no government incentives are needed to create demand for an industry.

SOLAR PANEL COMPARISONS

Solar Panels and Kilowatt Hour Productions

Consumers interested in going solar often wonder which solar panels are the “best” and also which panels represent the best “value”
A lot of emphasis will be placed on the financial stability, years in business, and warranty differences by solar sales people. So, which solar panels are the best value???
Below is a list of solar panels that compare eleven different solar panels. The calculations are targeting the total annual kilowatt hours produced as per the state’s solar production calculator.

These calculations are based on:

1. 8.10 Kw DC system
2. SMA SB8000US inverter
3. Solar panels facing south
4. 22 degree slope

Solar Panels---------- Annual Kilowatt Production


Talesun 240 660P-----------12,454 kWh
Schuco 225 PS09 ------------12,446 kWh
Centro Solar E225-----------12,382 kWh
Mage Solar 225/6PH -------12,375 kWh
SunPower 230M------------- 12,350 kWh
Sun Tec 225 W-20/Wd-----12,325 kWh
Mitsubishi -------------------12,325 kWh
BP 3225-T------------------- 12,320 kWh
Kyocera KD 2256X-LPB----- 12,310 kWh
Solar World 225P -----------12,291 kWh
Sharp 224 ND-U224C1 ------12,158 kWh

It is interesting to note that three of the top four manufacturers are all German engineered panels. All four are well established, have very heavy aluminum frames, and offer top industry warranties.  Talesun benefits by being the newest plant with state of the art manufacturing equipment.  It incorporates all German robotic equipment, and enjoys the highest efficiency rating of the panels listed and is the largest solar manufacturing facility in the world.

Right under the Talesun are the German panels. Talesun and Schuco are the top performing panels as per the EPBB State calculator. These are both very good panels and have a higher efficiency rating than all the other panels. A lot to do is made of panel efficiency. Higher efficiency allows the contractor to install the same size KW system as competitors only in a smaller area. This is usually only one panel on an average system. However, pricing is typically lower for ground mounted systems due to the smaller footprint of these higher efficiency panels. Warranties are similar with the Top Five Solar Panels.

At Nova West Solar, we are committed to high quality solar panels and inverters. We offer Schuco, Centro Solar, Talesun, and Mage Solar panels. Our experience is that all four overproduce what the calculators say. On my Schuco solar system, the EPBB calculator estimated my system should produce 13,469 KWH per year. I recently reached a one year true up period. My system produced over 15,500 KwH’s!!!

Needless to say I will truly enjoy receiving the overproduction check PG&E is sending me. With utilizing our advice on time of use times, cleaning solar panels, as well as owning an energy efficient home, my rebate check will be in the $900 range! I am going to let PG&E help subsidize MY retirement by not having a utility bill. As I plan on investing these monies every year, PG&E will help add to my 401K.

It is also our belief that contractors that support and install high quality equipment are in the industry for the long haul and are most likely to back up the best equipment with quality installs and service.

How Much Power Should I Offset

When you are purchasing a solar system, you have the option to offset part or all your power. Here in Fresno and the Central Valley, summer bills can get out of control with air conditioning use and kids being out of school so it pays to think this through before finalizing the purchase.

Many solar companies here in Fresno and the in Central Valley will usually recommend offsetting all your usage except for the "lower two tiers" of your bill. They are referring to the baseline and the next tier after the baseline, which have been locked by the California Public Utility Commission (CPUC) to low pricing to help lower income individuals from high bills.

Recently, PGE was able to coerce the CPUC into removing the pricing lock for the lower 2 tiers, meaning that PGE can raise rates even though this will affect low income individuals and raise utility bills for every one. These two tiers will run from $80 to $100 per month before moving on to higher rates, depending where you live.

Going back to how much power should you offset, when you purchase a solar system you are getting rebates and tax credits as a one time payment to help you offset the cost of solar. If you leave a part of your bill, even though they are called "cheap energy", you are still tied to the utility company paying something every month. You have made a significant investment to go solar/green and yet you still have a bill due every month, for the rest of the life of the system.

Let's think about this: the State of California the Federal Government and in some cases, your city/county is paying for such a huge part of your solar system, go ahead and offset 100% of your bill. It is true that your IRR will drop because you are using solar to offset cheap energy.
Your internal rate of return (IRR) might not look as good, but you will not end with a $1,400 - $1,800 bill at the end of the year when your True-Up Period is due. You can use that extra 1,500 per year and put it to your kids college fund, your Ferrari fund, whatever makes you happy.

Remember that every dollar you send to the utility company is an after tax dollar. Realize that even the cheap energy builds up and becomes quite a bill at the end of the year.

On another note, once you start using a lot of your energy on a Non-Peak Time of Use (TOU) you can start paying HUGE rates if your system is not designed to offset all of your bill. TOU penalizes you for using power during PEAK times AND when your power consumption is high on Non-Peak and Part-Peak. I will go over this on the TOU page.

Rates at the first two tiers on Non-Peak and Part-Peak are cheap, but as soon as you pass the first two tiers in consumption (at around 500 kWh/month in Winter, 800 kWh/month in Summer) you will be paying OUTRAGEOUS rates per kWh.

Remember, this is a one time purchase, heavily subsidized. Yes, your IRR will not look as good, but that is only a figure on paper. In the end, taking into consideration other factors, it pays to offset as much as you can up front than to have to pay a lot at the end of your True-Up Period

The Electric Car Option for Solar

Electric Cars and Solar Power

We have a lot of customers that are looking to install solar on their homes and are also considering an electric car. We call this our Electric Car Option. Although we can’t help you get your new Tesla any faster due to the long lead times, we can help you generate the power so you won’t ever have to go to a gas station again.
Here’s how it works. From Wikipedia, I pulled the following information.
The Roadster is the first production automobile to use lithium-ion battery cells and the first production EV to travel more than 200 miles (320 km) per charge.[3] The world distance record of 501 km (311 mi) for a production electric car on a single charge was set by a Roadster on October 27th, 2009 during the Global Green Challenge in outback Australia.[4]
According to an independent analysis from the U.S. EPA, the Roadster can travel 244 miles (393 km) on a single charge of its lithium-ion battery pack, and can accelerate from 0–60 mph (0–97 km/h) in 3.7 seconds. The Roadster’s efficiency, as of September 2008, was reported as 120 mpgge (2.0 L/100 km). It uses 135 W·h/km (21.7 kW·h/100mi or 490 kJ/km) battery-to-wheel, and has an efficiency of 92% on average.[5][6]
So, let’s believe the EPA for a moment and assume that the Tesla can indeed go 244 miles on a single charge. How much electricity does a single charge require? Well, we go back to Wikipedia for an answer.
A full recharge of the battery system requires 3½ hours using the High Power Connector which supplies 70 amp, 240 volt electricity; in practice, recharge cycles usually start from a partially charged state and require less time. A fully charged ESS stores approximately 53 kWh of electrical energy at a nominal 375 volts and weighs 992 lb (450 kg). [77]
A little math shows that 70 Amps x 240 Volts = 16,800 Watts or 16.8 kWatts. If we charge the car for a full 3 1/2 hours, we get 16.8 kWatts x 3.5 hours = 58.80 kWatthours.
Thus and Therefore, if we charge the car with 58.80 kWhs and we can go 244 miles then we get the result that the car requires 0.24 kWhs per mile.If you drive 30 miles per day, we can then assume that 30 miles/day x 0.24 kWhs/mile = 7.23 kWhs/day to run your car.
Well, how many solar panels are required to generate 7.23 kWhs/day. In general, a good rule of thumb is that one module will generate 1 kWh per day, on average, over the course of a year.
Approximately 8 solar modules will power your car 30 miles per day.
Conclusion
All this math adds up to one thing. It is and will become incredibly cost effective to power your car with solar panels. Right now, with State and Federal rebates cutting the cost of solar by about 40%, it is similar to having the government pay for half of your gas bill.
When thinking about putting solar on your home, consider the electric car option.

Smart Meters

Smart meter capabilities

A smart meter system allows for two-way communication between a customer and PG&E. The smart meters record energy use information daily. The technology allows for the meters to be read automatically without the need for a physical visit from one of PG&E’s meter readers. However for quality assurance purposes, after meters are installed, meter readers will continue to read meters for the next few months. In addition, customers will still need to allow PG&E access to the meters for maintenance and safety checks.

The two-way communication capability means PG&E will be able to better manage overall energy needs, implement “green” demand-response programs, quickly detect power outages as they happen, and offer enhanced customer services.

There has just been a startling admission from PG&E about the controversial Smart Meters. The utility has insisted its new meters are accurate, but have admitted to some problems at a state Senate committee hearing in 2010.

PG&E confirmed that more than 43,000 of its Smart Meters have suffered from various problems. The utility remains insistent however that these problems have had little impact on customers' bills.

The Senate's new Select Committee on the Smart Grid called PG&E's senior vice president of customer relations as its first witness. Helen Burt told the committee only a handful of customers had inaccurate SmartMeters.

This may be true, but we have only isolated one customer whose has felt that their electric consumption has remained the same or decreased since the Smart Meters have been installed.

PG&E has stated that the older meters were not measuring the customer's usage correctly. In many cases, the older meters were in fact under measuring the KWH usage. They also wanted to cut overhead by utilizing the smart technology that these meters enjoy.

Customers should keep a watchful eye on their usage this summer as with the new price increases at almost $.5o per KWH in tier 5, and smart meters potentially reading higher kilowatt hour usage, utility bills may be much higher this year over previous years.