Understanding PV Cost and Financing Estimators
SolarTech announced the release of an extensive report on publiclyavailable solar financial calculators. This is a major step forward inSolarTech’s efforts to drive down financial transaction costs for solarPV with a comprehensive survey of the “state of the art.”
Thiswork was sponsored by SolarTech Finance Committee in partnership withthe Gary J. Sbona Honors Program at San Jose State University (SJSU)School of Business, and a California Energy Commission PIER Grant.
All solar projects come down to three simple questions: 1) what is theresulting cost per kilo watt-hour as compared to other procurementoptions; 2) what is the expected return on investment; and 3) whatcash-flows or payback period can we promise investors? To facilitate the answers to these questions numerous calculators have been developed,both public and private.
However, these calculators don’t oftenagree on the resulting electrical production and financial paybackclaims. “When customers receive conflicting quotes from differentproject sponsors this causes confusion in the buying process,” said Todd Grenich, Managing Partner, Grenich Capital, LLC and Finance CommitteeChair. “The industry needs tools and methods that are predictable andbuild customer confidence in what is still a nascent growing industry.”
A survey of existing financial calculators in the public domain is stepone in developing an understanding of the “state of the art.” Thenoffering recommendations to tool developers that would be helpfulimprovements for users. SolarTech engaged the Accounting and Financedepartment at SJSU to study the various financial calculators availablein the public domain.
A team of three students in the SbonaHonors Program agreed to conduct a survey and analysis as part of theirsenior class project requirement. After considerable research, including interviews with industry experts, the leading contender was NREL’sSolar Advisor Model. The Clean Power Estimator, RETScreen, and the NCSCSolar PV Financial Calculator were close seconds.
More important are the lessons in best practices and model capabilities that nextgeneration tool developers can derive from an examination of all of theavailable calculators. Each estimator had one or two superior elementsand the ideal tool would pull ideas from all of them.
Financialpayback in solar is very critical to an accurate estimation of theproduction potential of the proposed solar PV project. The SolarTechPerformance committee has been working on this closely related issue and will be introducing the industry’s first Solar Energy Estimate (SEE)Report at the Intersolar North American conference, on July 12, 2010.
“Our goal for the Solar Energy Estimate Report is to move the conversationfrom cost per Watt to cost per kilo Watt-hour,” said Tim Keating, VicePresident of Marketing, Skyline Solar and Performance Chair. “Similar in concept to EPA’s standard formatting for MPG, it moves the solarindustry towards the day when standardized metrics and resultspresentation will establish the necessary consumer buying confidence togrow the market.”
The Performance Committee is also supported byanother student intern team from SJSU. “SolarTech has been fortunate toenjoy the services of several undergraduate and graduate teams over thelast two years,” said Doug Payne, Executive Director of SolarTech.
“The new green economy workforce isn’t just about installation on the roof.” SolarTech has studied and believes in aligning workforce development at all phases of the Solar PV Value Chain. The Workforce Committee firstintroduced SolarTech’s Framework for Industry Workforce Development atthe 2009 Workforce Symposium.
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