NYSERDA Solar Thermal Incentives for New York State 12.16.2010

SUNMAXX SOLAR HOT WATER SOLUTIONS

NYSERDA SOLAR THERMAL INCENTIVES FOR NEW YORK STATE

Date: 12/16/2010

Okay. Good morning. Charlie, I see you’re the only participant this morning at this webinar. So this is good for you. I can customize it a little bit. I’m going to go over the NYSERDA PON 2149. This is an opportunity where we’re going to see about a 600% growth rate in the solar thermal market that is already funded. So can you confirm that you can hear me, Charlie? You can type in the little chat box before I go too far. I just want to see that you can hear me. Great. Okay.

So, basically what NYSERDA wants to see happen realized is about a 600% growth in solar thermal installations in the next five years. And they funded it with a $24 million incentive package, with the goal of installing 45 megawatts of solar thermal capacity. 45 megawatts would represent a 600% growth rate in this industry in 5 years. So that growth rate is really unparalleled in other industries. It’s similar to a growth rate they saw in the European market, but over the course of 7 to 9 years. We’re going to see the rate is going to be much greater here in New York State. Now, a quick overview. For residential domestic hot water consumers, they are going to cap out at $4,000. For non-residential, laundromats, hotels, and carwashes and the like, they cap out at $25,000. This funding is expected to cover at least 15 to 20% of the cost. Now, when I say “up front”, it’s cost paid to the installer. Part of the fund is released earlier. However, the system needs to be fully commissioned and approved prior to the installer actually getting the check from NYSERDA. And it’s only for electric hot water consumers. So they have to have an electric hot water heater in operation for at least a year.

So, looking ahead, if you have clients that are looking to upgrade their existing hot water system, and they install an electric hot water tank, you would not be able to take advantage of this funding for another year. So they have to have it in operation for a full year. Now the incentives do get paid to the installer. However, the benefit to the installer needs to be deducted from the invoice. So the real benefit needs to go to the end user in form of having a lower cost up front. So essentially, the installer has to ride that benefit from the time they begin installation to the time they get the check from NYSERDA. They’re only available for new systems, so they’ve got to be new systems. They can’t be upgrades to existing solar thermal systems. They have to be entirely new. And the incentive that the end user will receive is based on electrical usage displacement. So if they’re consuming 3,000 kilowatts a year for hot water, the solar thermal upgrade can replace 2,000 kilowatts. And the incentive will be based on that 2,000 displaced electrical consumption.

Now the solar thermal system needs to be sized by the manufacturer or the installer so that it does not exceed 80% solar fraction. Now we typically don’t recommend a solar fraction any higher than this anyway. But NYSERDA will not pay for any system that exceeds an 80% solar fraction. And over time, next year for example, and in following years, the incentive, which is currently at $1.50 per kilowatt will be diminished, will be reduced so they have a certain amount of funds available. They’re loading the front end of this incentive to stimulate the market. So the early adopters, the early installers, are the ones that are going to benefit the most, because next year, that incentive will be less.

Now, NYSERDA is also going to benefit from this, not only be reducing their electrical consumption with their customers, but also by acquiring the renewable energy credits for all these systems. So, essentially, they’re going to have renewable energy credits for 45 megawatts of solar thermal capacity. And they hold those recs for 3 years. This doesn’t affect the homeowners really because there’s not a lot that a homeowner can do with the rec. Commercial projects is another story. That is, one of the benefits of doing a commercial job that the building owner will hold a real body of credits.

Okay, the installer, in order to be on the NYSERDA eligibility list, the scholar must meet one of these criteria: they must be either NABCEP solar thermal, they must have 18 hours of manufacturer certified training such as the SunMaxx EduPower, or they have to have accomplished 40 hours of training in a nationally recognized accreditation program or as an apprentice. Okay, so those first three options, any one of those will suffice, however after two years they have to become NABCEP certified. If they do not become NABCEP certified after two years they have to reapply for NYSERDA eligibility. Once they are accepted into the program, then they have to sign an agreement and they are on the permanent list for NYSERDA, permanent being for two years. Okay, the first step once a contract is secure, the installer must do a clipboard energy audit. Okay, that clipboard must access the building’s energy consumption, paying particular attention to the electric load. So that is accomplished in two steps. First, interview the homeowner and try to understand the age of the building and the energy use, and then doing an identification and energy efficiency measures, where they can make upgrades to energy consumption and at little or no cost. And then it needs to conclude with a debriefing for the homeowner.

The homeowner is not obligated to take action on any of these recommendations, but the installer is obligated to make recommendations, and then the homeowner can decide. This is something that you should do regardless of the NYSERDA incentive when you do a site survey of the building, especially for solar thermal we can have a much bigger impact on their total energy budget by incorporating other upgrades in addition to solar thermal. Here are some examples of what can be included in the energy audit. We can inspect their wiring, the timers on air conditioners and any vampire loads, we can look at the age and condition of doors and windows and weather ceilings? Are there any installation upgrades for insulation? Are the appliances energy star qualified? Okay, so some very simple, and they call it a clipboard audit because you don’t have any instrumentation that you necessarily need, all you need to do is make some observations, and from those observations you make recommendations. This is customary and ultimately it’s going to lead to a much larger energy reduction.

Okay, the non-residential clipboard audit is a little more detailed in that besides the first two recommendations, they also have to take a look at energy star’s portfolio manager as a benchmarking tool, and if they’re able to create a score, and energy use index for that building. Once the energy use index is determined, then the building owner has a better understanding of what additional funds they’re going to be eligible for. So NYSERDA PON 2149 is for solar thermal upgrades only, however there are other grants, many different grants that are accessible for non-residential buildings that are seeking energy upgrades. So a good installer of solar thermal will have his hand in many of those additional upgrades as a referral or a consultant, whether it’s residential or commercial the installer must leave a list of certified contractors that could potentially perform these services.

No in order to apply for the incentive, you can expect it to take about 20 business days. The appendix B, attached to the link that I’m going to show you in a few moments, can be filled out, it doesn’t take very long at all, just a few minutes. However, one of the most important things is that the proposal, the application must include a simulated software performance assessment. This simulation can be run by RETScreen which is a public entity that can be downloaded for free from any installer, or solar pathfinder which is purchased through solar pathfinder or T*SOL. Now T*SOL is the software that SunMaxx uses, and is willing to do T*SOL reports for your system, so all you’ve got to do is contact your sales rep and he or she will enter the appropriate information for your system and spit out a T*SOL report for you to be able to send that off for your application. Once they’ve determined whether the eligibility for this system, they will notify you whether it’s approved or declined. If it’s declined, they’ll tell you why and you can make changes. If it’s approved then the funds will be set aside and the installer will be notified and the installer will be notified that the funds are set aside for that installation. Then and only then should the installer begin that installation. So knowing that the installer will not be paid until the system had been certified, the homeowner basically reaps the benefit of that NYSERDA incentive immediately but the installer will not be paid until the system has been certified after installation.

Here’s an example of appendix B, the application process. It is quite simple to fill out for the system, all you have to do is obviously the customer information at the top and then the type of system and then we have to look at the equipment being used. We recommend that you go with a manufacturer’s prepackaged system or OG300. OG300 system does not require a performance assessment. If it’s a prepackaged kit, the components must be OG100 certified, and the manufacturer must supply a performance assessment, as I spoke about before. That performance assessment is going to give us, and I’ll show you here in just a moment, the performance assessment is going to give you a total annual output. Okay, now in terms of the requirements for these systems that are non-OG300 as I mentioned must come with a five-year warranty, this is a manufacturer’s warranty covering performance, and after five years performance cannot fall below 10 percent of initial performance. So basically after five years the warranty needs to cover at least a 90% production as if it were new. The system must also be monitored every three months for production. Now that production monitoring can be accomplished using standard RESOL IntelliMaxx controller. That IntelliMaxx controller is going to accumulate the kilowatts produced, and every three months the installer can go and read off the controller and submit that to NYSERDA for auditing purposes. It’s not real clear how that submittal process will work yet, and if they’re going to be submitted at all or randomly audited. Nevertheless, we have it in place with our controllers, the IntelliMaxx that can monitor total kilowatts produced.

Now once the installer is notified that the monies have been set aside, they have 120 days to complete the system. That should be ample time, but there is a deadline, and that’s a 120 days. Here’s an example of a T*SOL that was run for our Empire System Kit. SunMaxx has developed a new kit called the Empire System, which is designed exclusively for electric hot water heater upgrades. For this particular example we have a two-collector system, two SunMaxx TitanPowers, tied into an 80 gallon pressurized tank that is preheating cold water supply to an electric on-demand. The total production on this system is 2800-kilowatt hours. This is after losses and after system efficiency; this is what’s being delivered to the storage tank, 2800 kilowatts. So if we take a look at 2800 kilowatts for this particular system, the dealer cost at $3700 allows for a pretty considerable markup for installation, and now we’re looking at $8500 for total installed and user cost. Okay, with a 2800 kilowatt per year production, the rebate is going to cap out, it’s just over $4000. So the end user can deduct $4000 up front for the cost, homeowner pays the installer the balance, and then the balance of $4500, then the homeowner can get a 30% tax credit on that $4500, which is $1350 and then they get a 25% state tax credit off of the balance of there, which is $787, bringing the final cost to the customer to only $2363. Now with a $2363 initial investment and savings at $532 per year, their return on investment is 22%. Now that’s 22% zero risk. Now I don’t know any other investment where I can get 22% with zero risk. There’s plenty out there that’s medium to high risk, but none that are zero risk. Now, the simple payback on 2800 kilowatt hours per year, and paying 19 cents per kilowatt hour, we’re going to save $532, which means 4.4 year payback, and this is conservative and it’s set at current energy cost. So as prices increase, the values of these systems are going to increase as well.

Now here’s a couple of action steps that I recommend are made by interested installers. First you’ve got to get on the NYSERDA eligible installer list. Once you’re on the NYSERDA eligible installer list, then you also need to become NABCEP solar thermal certified, and there’s a link at the back of this page that shows you how to begin that process. You have to sign and return the eligible installer list, find your potential clients and prequalify them because they must have electric hot water. Then the installer will work with the manufacturer and try to find the most appropriate solar thermal system. Once that is established, then the manufacturer will provide the installer with simulation software, and then the application for the incentive can begin. Once the funds are awarded, the installer begins, monitors that every three months, they pass the test for NABCEP and become permanently eligible for NYSERDA. If they do not pass the NABCEP exam, then they must reapply to become NYSERDA eligible after two years.

Here’s a list of links that you can learn more about this NYSERDA funding, the 2149, there’s a couple of phone numbers, emails if you have any questions. As always, you can email me and here’s a link to the NABCEP requirements for solar thermal certification. This is a long, drawn-out process, so I recommend that you get things started as soon as possible. Thank you very much for your attention, I hope you found it useful. Thanks again, and good luck.