California Affordable Housing June 15, 2017 Housekeeping Use the - - PowerPoint PPT Presentation

SLIDE 1

Solar Risk: How Energy Storage Can Preserve Solar Savings in California Affordable Housing

June 15, 2017

SLIDE 2

Housekeeping

Use the red arrow to open and close your control panel Join audio:

• Choose Mic & Speakers to use VoIP
• Choose Telephone and dial using the

information provided Submit questions and comments via the Questions panel This webinar is being recorded. We will email you a webinar recording within 48

• hours. Resilient Power Project webinars are

archived online at: www.resilient-power.org

SLIDE 3

Who We Are

3

www.cleanegroup.org www.resilient-power.org

SLIDE 4

Resilient Power Project

4

• Increase public/private investment in clean, resilient power systems
• Engage city officials to develop resilient power policies/programs
• Protect low-income and vulnerable communities
• Focus on affordable housing and critical public facilities
• Advocate for state and federal supportive policies and programs
• Technical assistance for pre-development costs to help agencies/project

developers get deals done

• See www.resilient-power.org for reports, newsletters, webinar recordings

SLIDE 5

www.resilient-power.org

SLIDE 6

6

Panelists

• Seth Mullendore, Project Director,

Clean Energy Group

• Wayne Waite, Waite & Associates

SLIDE 7

Solar Risk:

How Energy Storage Can Preserve Solar Savings in California Affordable Housing

June 15, 2017 Seth Mullendore Project Director Clean Energy Group

SLIDE 8

• 50-unit affordable

housing property in San Diego

• Evaluate impact on

solar bill savings due to changes in NEM policies and utility rates

• Explore ability of energy

storage to offset anticipated losses to solar value

Assessing Solar Risk

SLIDE 9

• Proposed policy and rate changes could erode bill

savings from solar by 56 percent for affordable housing property owners.

• Affordable housing tenants could see a 29 percent

reduction in solar savings.

• Adding energy storage to solar can unlock

additional bill savings, reversing solar losses.

• By increasing savings, energy storage could

improve project financing feasibility, boosting project cost coverage by as much as 60 percent.

Key Findings

SLIDE 10

• 1. Shifting Time-of-Use (TOU) peak pricing

periods later in the day

• 2. Introducing Non-Bypassable Charges for

exported solar energy

• 3. Increasing utility Demand Charges

Shifting Solar Landscape

3 changes to solar policy and utility rates will significantly impact solar bill savings:

SLIDE 11

Shifting TOU Periods

San Diego Gas & Electric

Current TOU solar production:

46% peak 54% semi-peak

Proposed TOU solar production:

23% peak 77% off-peak

SLIDE 12

Changes = 56% Savings Loss

SLIDE 13

• Solar time-shifting
• Demand charge management
• Utility rate tariff switching

Adding Energy Storage

Adding storage to solar can unlock additional value streams:

SLIDE 14

Storage Can Reverse Solar Losses

SLIDE 15

Rate Switching = 8x Solar-Only Savings

SLIDE 16

For Tenants, Changes = 29% Loss

SLIDE 17

• How many affordable housing properties

will be impacted? How many can storage help?

• What are the barriers to deploying storage

with solar for affordable housing?

• Should solar programs include incentives

for storage technologies?

California Policy Implications?

Results raise questions regarding policies to incentive solar for affordable housing:

SLIDE 18

National Policy Implications?

Source: North Carolina Clean Energy Technology Center, “The 50 States of Solar Report: 2016 Annual Review and Q4 Update”

SLIDE 19

13

Contact Information

Seth Mullendore

Project Director Clean Energy Group Email: seth@cleanegroup.org Phone: (802) 223-2554

SLIDE 20

Project and Tenant Economics:

How do changing utility costs and energy savings affect project feasibility and tenant benefits?

Wayne Waite Waite & Associates Energy Foundation Grant waynewaite@solarplusolutions.net

SLIDE 21

• Is solar PV a reliable hedge against changing

utility policies/costs for property owners?

• Can solar PV systems generate net positive

economic benefits for tenants?

• What strategies are needed to protect

investment value?

FOCUS

COSTS CASH FLOW COVERAGE

SLIDE 22

LANDSCAPE

TIME PERIOD January February March April May June July August September October November December

0:00:00 1:00 1:00 2:00 2:00 3:00 3:00 4:00 4:00 5:00 5:00 6:00 6:00 7:00 7:00 8:00 8:00 9:00 9:00 10:00 10:00 11:00 11:00 12:00 12:00 13:00 13:00 14:00 14:00 15:00 15:00 16:00 16:00 17:00 17:00 18:00 18:00 19:00 19:00 20:00 20:00 21:00 21:00 22:00 22:00 23:00 23:00 24:00:00

OFF PEAK OFF PEAK

Current TOU Periods

PEAK SEMI-PEAK

TIME PERIOD January February March April May June July August September October November December

0:00:00 1:00 1:00 2:00 2:00 3:00 3:00 4:00 4:00 5:00 5:00 6:00 6:00 7:00 7:00 8:00 8:00 9:00 9:00 10:00 10:00 11:00 11:00 12:00 12:00 13:00 13:00 14:00 14:00 15:00 15:00 16:00 16:00 17:00 17:00 18:00 18:00 19:00 19:00 20:00 20:00 21:00 21:00 22:00 22:00 23:00 23:00 24:00:00

OFF PEAK

New TOU Periods

SUPER OFF PEAK OFF PEAK PEAK

Property Cash Flow Change: - (15% to 25%) Tenant Cash Flow Change:

• (10% to 15%)

Added Twist:

Conversion to mandatory TOU rates may increase cost burdens for almost 30% of low-income tenants - (31.6%)

SLIDE 23

LANDSCAPE

Year Southern California Edison Pacific Gas and Electric San Diego Gas & Electric 2005 23.3 16.1 16.19 2006 26.62 22.07 18.65 2007 25.43 22.13 15.42 2008 26.11 18.28 21.31 2009 28.16 21.13 25.38 2010 29.22 21.43 24.75 2011 27.4 21.31 28.02 2012 28.1 26.19 30.68 2013 33.14 28.4 35.68 2014 38.14 30.96 41.87 2015 43.14 36.46 45.75 Average Year-to- Year Increase 7.70% 11.50% 16.60%

California Peak Demand Charge Rates: 2015 – 2015

Average annual increase to demand change rates has outpaced increase to electricity use charges

Source: Sage Renewables (https://www.sagerenew.com) Source: Sage Renewables (https://www.sagerenew.com)

SLIDE 24

COMMON AREA SYSTEM COVERAGE

Assumptions:

• 6.5% interest
• 20 year financing
• 1.2 DSCR
• No ITC

Implications:

• Potential out year financial risks
• Diminished value proposition and project feasibility
• Need for new revenue streams and strategies to avoid utility costs

60% 50% 40% 30% 20% Non-Bypassable Charges 10%

(Percent

• f

Capital Costs)

• Devalua5on

from TOU period changes

• Added
• ut-year

demand charges

SLIDE 25

TENANT SYSTEM COVERAGE

Assumptions:

• 6.5% interest
• 20 year financing
• 1.2 DSCR
• 80% tenant benefit

Implications:

• Steep financial gap to scale solar to tenant units & deliver benefits
• Need for added program resources to reach tenants
• Potential for higher tenant cost burdens without benefit

protections

20% 10%

(Percent

• f

Capital Costs)

60% 50% 40% 30%

SLIDE 26

FACTORS AFFECTING TENANT BENEFITS

Solar Value

• $
• 39.00
• New

TOU Rates Changes

• Value

Adjustments from Utility Tariff Changes

• Potential

Rent Increase from

• Solar

Installation

• Residual

Benefits

• f
• Stand-Alone

PV

(Utility Allowance Adjustments)

Estimated Annual Value

• f
• Tenant

Solar Credits

• Non-Bypassable

Charges

• Adjustments

to Baseline Utility Allowance Levels Recapture

• f

Tenant Solar Credits

• CARE

DL TOU

• New

TOU Periods

• NBCs

PV Project Providing 70% kWh Offset

Modeled Tenant Benefits

• PV

System Offsetting 70%

• f

Tenant Electricity

• Reductions

to Tenant Solar Value (PV System Offsets 70%

• f

Tenant kWhs) Level

• f

Tenant Benefits

• (Dollars

per Year)

TENANT ENERGY SAVINGS ARE IN JEOPARDY

• $

400

• $

300

• $

200

• Pre-Solar

CARE Benefits Level $120.00

• $

100

• $
• $
• 400.00

ADJUSTMENT TO TENANT SOLAR VALUE

SLIDE 27

FACTORS AFFECTING TENANT BENEFITS

• $

150

• $
• 172.00
• Reductions

to Tenant Solar Value (PV System Offsets 30%

• f

Tenant kWhs) Level

• f

Tenant Benefits

• (Dollars

per Year)

• $

175

TENANT ENERGY SAVINGS ARE IN JEOPARDY

Estimated Annual Value

• f
• Tenant

Solar Credits

• $

100

• $
• 50
• Pre-Solar

CARE Benefits Level $50.00

• $
• PV

Project Providing 30% kWh Offset

Recapture

• f

Tenant Solar Credits

ADJUSTMENT TO TENANT SOLAR VALUE

Modeled Tenant Benefits

• PV

System Offsetting 30%

• f

Tenant Electricity

NEGATIVE TENANT BENEFITS

• $
• (50)

($54.00)

Solar Value

• Value

Adjustments from Utility Tariff Changes

• Potential

Rent Increase from

• Solar

Installation

• Net

Lost from

• Stand-Alone

PV

• New

TOU Periods

• NBCs

(Utility Allowance Adjustments)

• CARE

DR TOU

• New

TOU Rates Changes (SDGE)

• Non-Bypassable

Charges

• Adjustments

to Baseline Utility Allowance Levels

SLIDE 28

STORAGE – Property Coverage Boost

Implications:

• Energy storage opens up multiple new revenue streams
• Properties that can opt into alternative tariffs without demand charges

significantly increase cash flow and financing options

• Integrated energy investments can improve the effectiveness of the

program and may reduce incentive requirements

80% 70% 60%

79.3%

Added Solar PV savings from new Rate Structure

Enhancement to Common Area Cost Coverage from Storage

Stand Alone Solar PV a<er U>lity Tariff Adjustments

Poten>al System Cost Coverage from Net Energy Savings

• (Percent
• f

Capital Costs)

Par8al savings from demand charges & TOU Shi>ing Storage + PV

• Under

Tariffswith Demand Charges (TOU- AL) Storage + PV

• Under

Tariff w i th

• ut

Demand Charges (TOU- A)

18.6%

50% 40% 30% 20% 10% Elimina8on

• f

demand charges by shi>ing to alterna8ve rate

• p8ons

24.6%

Investment enhances project economics and program performance Investment would require additional financial support; cost effectiveness issues

Assumptions:

• Storage assumes

10 year term and

• perating savings
• No ITC

SLIDE 29

STORAGE – Tenant Benefit Gains

Implications:

• Tenant benefits are not a significant investment driver for

energy storage systems

• Tenant benefits from storage are ancillary to cost savings from

property demand charges and other revenue streams

• Energy storage provides added safeguard for tenant benefits

10% Increase to tenant benefits from

• TOU

Rate Shi6ing 40% 30% 20%

(Percent

• f

Capital Costs)

60% 50%

Investment adds measure to safeguard and supplement possible tenant benefits

SLIDE 30

Find us online: www.resilient-power.org www.cleanegroup.org www.facebook.com/clean.energy.group @cleanenergygrp on Twitter @Resilient_Power on Twitter

Seth Mullendore Project Director Clean Energy Group Seth@cleanegroup.org

Thank you for attending our webinar