Myths and Realities of Purchasing Solar Power

Transcription

1 Myths and Realities of Purchasing Solar Power In light of recent, dramatic changes in the industry, now is the time to consider solar.

2 Myths and Realities of Purchasing Solar Power 2 The New Big Picture Solar installations are at an all-time high 1, and it s easy to see why: the cost of solar electricity has never been lower even as the cost of power is increasing across the country 2 and solar technology has proven to be extremely reliable. As a result, now is an ideal time for businesses to invest in solar. But, there is another important economic motivator: U.S. power markets are experiencing record price spikes 3 and solar offers businesses a hedge against this unpredictable volatility. As an energy supplier, Direct Energy Business is in a particularly strong position to understand these market dynamics and successfully integrate solar into an energy management strategy. We see the big picture. In addition, Direct Energy Business now offers some of the most competitively-priced solar installations on the market because of our partnership with SolarCity. The result? Zero-emissions solar power for your business at a rate that may beat what you currently pay for power with little or no capital investment by you. So, today s solar offering is a good deal for businesses even better than it was just a year ago. Still, some old myths persist about solar technology. Here, we ll set the record straight and update you on the latest trends in the solar market. Six Myths & Realities About Solar Myth #1: My business can t afford solar. Reality: Actually, you can. Maybe you couldn t afford solar five years ago, or three years ago. But, solar prices have declined dramatically. Prices fell 5.7% 4 year-over-year in Q alone for non-residential solar systems Before that, prices fell 15% 5 year-overyear in the last quarter of 2013 Overall, the average price of a solar panel has dropped by about 60% 6 since the beginning of 2011 Our prices are particularly competitive. Because SolarCity has installed thousands of solar panels, it enjoys strong relationships and volume discounts with suppliers. Further, SolarCity has refined the installation process and decreased project soft costs which allows them to install your system with maximum efficiency. Was your organization hit hard by skyrocketing energy prices due to the Polar Vortex, the Northeast s natural gas shortfall, or Texas drought? If so, you may be a candidate for solar power, which gives you the opportunity to replace unpredictable market prices with stable pricing. With a solar lease or power purchase agreement ( PPA ), you will enjoy a fixed monthly price per kilowatt hour (kwh). And, you can achieve this with little or no up-front capital investment. Solar offers other financial benefits as well. You may be able to sell any excess power produced by your solar panels back to the grid, depending on your state s net metering rules. Solar can also help reduce your capacity obligation. Your capacity obligation is based on your business peak usage during the previous year and has a direct impact on your capacity charges if you re located in a U.S. capacity market. 1 Global Solar Installation Growth Set to Hit Three-Year High in 2014, IHS press room, Oct. 2013; Solar Industry Data, SEIA 2013 Year-in-Review SMI Fact Sheet, page 1. 2 EIA, Sales and revenue data by state, monthly back to 1990 (Form EIA-826). 3 Polar vortex effect on electricity prices, Energy Research Council, Research Reports. 4 US Solar Market Insight Report, Q1 2014, Executive Summary, Greentech Media and SEIA, page Solar Industry Data, SEIA 2013 Year-in-Review SMI Fact Sheet, SEIA, page 1. 6 Solar Industry Data, SEIA 2013 Year-in-Review SMI Fact Sheet, SEIA, page 1.

3 Myths and Realities of Purchasing Solar Power 3 Myth #2: We should wait until solar becomes an even better deal. Reality: There is a good chance that time is now. Solar manufacturers and installers have been working for years to refine and implement every last efficiency in producing, permitting and installing panels, so that implementing solar projects can make financial sense rather than being financially prohibitive. Solar incentives still add a great deal of value, it s just not clear how long they will continue. Some rebates have already declined 7 and valuable financial incentives have been eliminated over time. For example, Arizona eliminated its incentives 8 for commercial systems and drastically reduced those for residential buyers. It s important to note that for the first time ever, more than one-third of residential photovoltaic (PV) solar installations came online without any state incentive 9 in Q After years of over-supply-driven price reductions in the solar panel manufacturing sector, prices are stabilizing and are not expected to continue to fall as dramatically as in recent years. 10 If you still want to wait, consider this: forecasters are calling for more severe weather ahead, so businesses could be hit again with sudden, escalating energy prices. This leaves your organization at risk for exposure to extreme volatility in your energy prices. Moreover, if your business is like many of today s environmentally-conscious corporations, you have sustainability goals to achieve. By installing renewable solar now, you can achieve those goals sooner rather than later and you re prepared for any increases in state-mandated RPS requirements. Myth #3: Solar panels won t work on our roof. Reality: Solar panels do not have to be on your roof they can be installed elsewhere. Sometimes solar is built in an adjoining field or parking lot, or the panels may not be on your property at all. Instead, your organization may participate in what s States That Allow Community Solar Projects Source: SharedRenewables.org known as aggregated solar, community solar, shared renewables, or solar gardens. Oftentimes, several parties contract for the solar power from these off-site developments. As a supporter of the solar facility, your business is rewarded with a fixed-rate contract, at a cost that may be lower than what you currently pay for power. Community solar is ideal for buildings with older or shaded roofs, or for businesses that lease rather than own their facilities. Rules for community solar vary from state to state and are changing, but Direct Energy Business can provide you with specifics around these rules and advise whether this could be an option for your business. The map at left shows the location of several community solar projects. 7 Galen L. Barbose, Naïm Darghouth, Samantha Weaver, and Ryan H. Wiser. Tracking the Sun VI: An Historical Summary of the Installed Price of Photovoltaics in the United States from 1998 to 2012, 2013, page 4. 8 A Sneak Attack on Commercial Solar in Arizona, Greentech Media, US Solar Market Insight Report, Q1 2014, Executive Summary, Greentech Media and SEIA. 10 Feldman, David, Galen L. Barbose, Robert Margolis, Naïm Darghouth, Ted James, Samantha Weaver, Alan Goodrich, and Ryan H. Wiser. Photovoltaic System Pricing Trends: Historical, Recent, and Near-Term Projections Edition, 2013, page 26.

4 Myths and Realities of Purchasing Solar Power 4 Myth #4: I need stability and reliability from an energy provider, but I might not get that from a solar provider. Reality: SolarCity is one of the largest, most trusted integrated energy companies in the United States. Founded in 2006, the company now provides more than one out of every four new solar electricity systems nationwide. It serves tens of thousands of customers in 15 states 11, including more than 300 schools and universities, all four branches of the U.S. Armed Forces, the Department of Homeland Security, ebay, HP, Intel, Walgreens, and Walmart to name a few. SolarCity attracts such customers because of its years of experience and strong financials the company has raised sufficient funds to finance more than $4 billion in projects. In addition, the partnership between Direct Energy Business and SolarCity ensures that you re also covered by the strength of one of the largest retail suppliers in North America. Direct Energy Business, a Direct Energy company, is wholly owned by Centrica plc, one of the world s leading integrated energy companies, which carries an A- credit rating (S&P), a Moody s Senior Unsecured A3 rating.* In addition, the work performed on your facility is insured, and the equipment that is installed is covered by a warranty. Here s how the warranty works: SolarCity maintains ownership of the PV solar system and takes care of all of the monitoring and maintenance, to ensure your system achieves maximum energy production. SolarCity offers performance guarantees on all equipment to minimize risk to customers and you simply pay for the power that the system produces. This provides your business with peace of mind and alleviates the need to seek out repair technicians or replacement parts if your system doesn t perform it s all covered for the life of the contract. Myth #5: Speaking of the life of the contract, a 20-year contract is just too long for us. Reality: That s okay, we re flexible. Solar power purchase agreements (PPAs) usually run 20 years but we can offer flexible contracts that are still costcompetitive with retail electricity rates. We also offer flexible payment terms. You can pre-pay for your solar electricity or pay on a monthly basis. Your fixed rate includes the costs of installation, insurance, operation and maintenance, and monitoring service. Myth #6: My business is better off navigating energy prices within conventional power Reality: Going solar doesn t mean you have to give up the benefits of shorterterm power purchases and the ability to capitalize on advantageous market dips. In fact, that s one of the biggest advantages of working with Direct Energy Business and SolarCity. We not only provide you a long-term solar contract, but we can also address your complete energy purchasing strategy. When you work with us, our market experts can help you devise a strategy that involves layering both short- and long-term energy purchases and syncing those purchases with your existing solar hedge. Our Advisory Services group will work with you to set and achieve your energy and sustainability goals. With a broad, integrated view of your entire energy purchasing portfolio, we can customize a purchasing mix that works best for your operations and budget. 11 SolarCity, About SolarCity, retrieved July 16, * Moody s credit rating published on February 5, 2013.

5 The Team and Timing Are Right to Make Your Future Bright With Solar Direct Energy Business and SolarCity are committed to building a strong, mutually-beneficial relationship with your business. When you select us for your solar project, we promise to share our more than 25 years of industry expertise and provide a personalized experience that will help your business maximize its opportunities for sustainability and cost savings. Our projects are executed by experienced, professional engineers and contractors, who are dedicated to the highest quality work, so you can enjoy the greatest rewards. We guarantee our systems, so you never have to worry about the performance or system repairs. We ve got you covered. We carefully track state and federal incentives and help you identify the best opportunities for your business solar installation. We have a deep understanding of energy markets and prices, so we can help you integrate your solar strategy into your entire energy portfolio and help optimize your potential for savings. We have financial strength and creditworthiness to back our long-term relationships. Our parent company, Centrica plc, which is a global Fortune 500 company, has an A- credit rating (S&P) and a Moody s Senior Unsecured A3 rating,* which means we re here for you now and into the future. Contact your Direct Energy Business Development Manager today and we ll evaluate your facility to help uncover what solar can do for your business. The team and timing are right for a brighter future. About Direct Energy Business Direct Energy Business is part of the largest retail energy supplier in North America and a champion in serving businesses diverse energy needs. Our leadership position, deep expertise and commitment to addressing our customers unique energy demands is how we earn the trust of our customers and help to make their businesses better. With more than 25 years of industry experience, we are dedicated to helping companies make smart energy choices for their business. Contact us today to discuss your energy needs and we ll help you navigate the opportunities available to your service location(s). Learn more about Direct Energy Business and other energy strategies for businesses and organizations of all types by visiting business. directenergy.com or call The information presented in these pages was gathered and compiled by Direct Energy Business for the convenience of its employees, clients, and potential customers and is for informational purposes only. Direct Energy Business makes no claim to the accuracy, reliability, comprehensiveness or currency of the aforementioned data. All information is provided as is and is not intended for trading purposes or advice. As a viewer of this document/website/publication, you acknowledge that you have no right to use or rely upon the information contained within for the purpose of any claims, demands, and/or actions (legal or otherwise). Direct Energy Business and its licensors retain all intellectual property rights to all information displayed on these web pages and/or transmitted by . Contents therein may not be reproduced, re-transmitted, or redistributed without the express written consent of Direct Energy Business. Results such as those described in this piece are not guaranteed and will depend on many factors, including, but not limited to, your company s risk tolerance, profile, and past and future decisions regarding energy purchases Direct Energy Business. Direct Energy and the Energy Bolt Design are either registered trademarks or trademarks of Direct Energy Marketing Limited in the United States and/or Canada used under license. District of Columbia License No. EA Maryland License Nos. IR-437; IR-719; IR-791. Texas PUCT Cert. No business.directenergy.com * Moody s credit rating published on February 5, DEB 01046C [14]