Financial Implications of PV Solar Systems for Residential Adopters

1. Financial Implications of PV Solar Systems for Residential Adopters Cornelius Conboy (310) 451-8627

2. Motivation for Adoption • Solar electricity appeals to environmental desires • This perspective has limited appeal to a niche market • Moving to a solar electrical system has financial rewards • This appeals to an unlimited market • Our task is to demonstrate that PV is a financially competitive option • Our findings show that it is a most attractive option Cornelius Conboy California Solar (310) 451-8627

3. The Solar Balance • 3 KW system generates 6000 KWh per year • Year 1 unadjusted • Utility Bill: $962 • PV Initial Price: $24,000 • Financially Impossible Cornelius Conboy California Solar (310) 451-8627

4. The Solar Balance • Incentives for PV • CEC rebate $3.00 per watt:$7,952.40 • 15% CA State Income tax credit:$2,407 • PV Net Cost:$13,641 • Better but Still Financially Unattractive Cornelius Conboy California Solar (310) 451-8627

5. The Solar Balance CEC Projections Show Rate Increases • This Years Bill: $962 • Next Years Bill: $992 • And the Next: $1,047 • And the Next: $1,094 • And the Next: $1,137 • And the Next: $1,173 • And the Next: $1,215 • And the Next: $1,253 • And the Next: $1,299 • And the Next: $1,354 • And the Next: $1,400 • And the Next: $1,449 Cornelius Conboy California Solar (310) 451-8627

6. The Solar Balance CEC Projections Show Rate Increases • This Years Bill: $962 • Next Years Bill: $992 • And the Next: $1,047 • And the Next: $1,094 • And the Next: $1,137 • And the Next: $1,173 • And the Next: $1,215 • And the Next: $1,253 • And the Next: $1,299 • And the Next: $1,354 • And the Next: $1,400 • And the Next: $1,449 Cornelius Conboy California Solar (310) 451-8627

7. The Solar Balance CEC Projections Show Rate Increases • This Years Bill: $962 • Next Years Bill: $992 • And the Next: $1,047 • And the Next: $1,094 • And the Next: $1,137 • And the Next: $1,173 • And the Next: $1,215 • And the Next: $1,253 • And the Next: $1,299 • And the Next: $1,354 • And the Next: $1,400 • And the Next: $1,449 Cornelius Conboy California Solar (310) 451-8627

8. That’s a Long Time • Manufacturer’s offer 25 year warranty on PV modules • 40 year old systems are in place and operating at 85% of their initial efficiency • Technology has improved in 40 years • With no moving parts PV modules will last virtually long as the sun comes up Cornelius Conboy California Solar (310) 451-8627

9. Even Better News Tiered Rate System • As an “incentive to conserve” many utility companies penalize large energy users by charging higher rates for use above a certain baseline. • Rates can be as high as $.25 per KWh vs. the average $.16 used in typical projections • Designing a system to eliminate this top level usage provides faster payback and greater cash flow Cornelius Conboy California Solar (310) 451-8627

10. Documented Increase of Property Values $20 for each $1.00 in annual energy savings $19,240 increase upon installation $5,599 immediate gain Source: National Association of Real Estate Appraisers, Nevin, Bender et al : Construction and the Appraiser More Evidence of Rational Market Values What if I Sell? Cornelius Conboy California Solar (310) 451-8627

11. Appraisers Logic • How does $1,000 per year savings translate into $20,000 increased value? • The $1,000 not spent on electricity is available to be spent on an equity loan payment with no net change in the cost of living • A Caveat: These statistics were arrived at from national figures. Studies have not been done exclusively in Southern CA • Solar electric systems add value to homes by: • Reducing or eliminating electric energy operating costs • Hedges against inflation • Provides an attractive vehicle for investment in home ownership Cornelius Conboy California Solar (310) 451-8627

12. Ratio Can Vary • Depending on interest rates it can range from 10:1 to over 30:1 • At 6% ratio is 25:1 • We use 20:1 to be conservative Cornelius Conboy California Solar (310) 451-8627

13. Risk vs. Reward • Good rate of return compared to relative risk of professionally installed system • Risk is manageable once it is quantifiable and understandable Cornelius Conboy California Solar (310) 451-8627

14. Other Home Improvements Source: www.remodeling.hw.net 2003 cost vs. Value Report Cornelius Conboy California Solar (310) 451-8627

15. Compare to Solar Cornelius Conboy California Solar (310) 451-8627

16. Financing Options:Home Equity • Often the most cost effective • Low interest rates • Tax benefits of interest payments • Minimizes large capital outlay • Makes ownership more achievable for some adopters Cornelius Conboy California Solar (310) 451-8627

17. Financing Options:Include in Mortgage Roll PV costs into your mortgage and achieve immediate positive cash • Example: 30 years @ 5.5% interest. Annual cost $861.25. • Additional tax benefits assume 36% tax rate • $27,757 positive cash flow over the life of the note Cornelius Conboy California Solar (310) 451-8627

18. Additional Information Available Online http://www.dsireusa.org/library/includes/map2.cfm?CurrentPageID=1&State=CA

19. Additional Information Available Online http://www.consumerenergycenter.org/erprebate/financial_companies.html

20. Financial Implications of PV Solar Systems for Residential Adopters Cornelius Conboy (310) 451-8627