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Solar Water Heating as a DSM Strategy for Colorado Utilities & Their Customers
Joe Bourg October 22, 2009
Millennium Energy, LLCGolden, Colorado
[email protected](303) 526-2972
3rd Colorado Utility Efficiency Exchange
Presentation Summary
• News you can use
• Tips on solar program design
• United Power SHW Pilot Program • Utility Perspective• Customer Perspective
• SHW Business Models
• Tools for Customer Service Reps
• Q&A
US Markets Heating Up for Solar Water Heating
• In 2007, California approved a 10-year plan to add 200,000 solar water heaters statewide.
• Renewal of Federal solar investment tax credits provides a long-term extension of tax credits; removes $1,500 cap
• Lakeland, FL: 3,000+ systems in outsourced package deal
• February 2009, Energy Star™ Launched solar water heating promo; U.S. stimulus to include SWH
SWH IS Water Heating in Austria, Australia
But How Will That Play in Colorado?
Solar fraction: the % of typical, annual residential water heating needs that can be met by standard SWH technology.
Source: NREL
The Utility Can Add Strategic Value
• Improving customer service• Reducing customer bills• Diversifying the utility resource mix (easy solar)• Supporting local economic development• Meeting or anticipating regulatory requirements• Generating RECs for possible future use • Managing peak loads (demand-side management)• Reducing purchased power costs
Caveats:1) Is electric water heating significant in the utility territory, or is fuel-
switching from propane or gas advised?2) Is it worth going after such a small, dispersed solar resource?
Principles of Good Program Design
• Assess co-op program drivers (situation analysis)• Review technical potential• Adjust for market potential (define the target market)• Address technical and market requirements• Choose a business model (financing and incentives) • Test program economics and make adjustments• Plan for implementation• Plan for evaluation and improvement
Don’t Forget the Economic Development Impacts
United Power SHW Program AnalysisCoincident Peak Demand Reduction - Winter
United Power SHW Program AnalysisCoincident Peak Demand Reduction - Summer
United Power SHW Program AnalysisMonthly Coincident Peak Demand Reduction
United Power SHW Program AnalysisMonthly Coincident Peak Demand $ Savings
United Power SHW Program Economics• Inputs:
• Results (NPV basis):
Peak Demand Cost Demand Ratchet Avoided Energy Green Tag Value Avoided Coincident Program Cost$/kW-Month Months/yr Gross Margin $/kWh Peak kW/SWH system $/SWH System
$21.50 12 11.00% $0.00 0.45 $200.00
Rebate Model -- Utility Perspective CostsRebate $0Program ($200)Gross margin lost energy sales ($568)(Maintenance is customer cost) $0
BenefitsAvoided demand charge $2,081Green Tags $0Other $0
Total Net Benefit (cost) $1,314
United Power SHW Program Customer Economics
• Inputs:
• Results (NPV basis):
• The economic analysis was conducted with the Millennium Energy developed spreadsheet model available on the “GEO Utility SHW Tools and Information Resource CD”
Life of Annual Energy Annual Energy Year '1' Cost Inflation Rate Federal Cost of Solar WaterSystem Savings (kWh) Consumption Of Energy Tax Credits Heating (SWH) System
20 2,703 10,000 0.1066 3.50% $2,625 $8,750
Total Rebatesfor System (GEO)
$3,000
Discount Rate
4.25%
Estimated AnnualO&M Costs ($/kWH)
$0.005
Customer Cost ofSWH System
$3,125
Net Present Value Benefit-Cost Average Annual Simple Payback Lifecycle % of Electricof SWH System Ratio Value of Energy Period (years) IRR Bill Savings
$1,796 1.53 $407 7.7 9.37% 27.03%
Customer Payback Vs. System Cost
3 Basic SWH Business Models
1. Rebate Model. Utility provides support services and rebates, paid to solar customers or sometimes to trade allies. The most common utility program model.
2. Utility Ownership Model. Utility provides turnkey SWH energy services. Success has been limited, but instructive.
3. Third-Party Vendor Partnership Model. Similar to ESCO model. Customer receives SWH at no charge, but continues to pay for kWh-equivalent energy services. The utility benefits by outsourcing risks and partnering to meet strategic and economic needs. An emerging business model worth watching.
Tools and Information for Customer Service Reps: Education and Outreach CD
More ResourcesDenholm, P., The Technical Potential of Solar Water Heating to Reduce Fossil Fuel Use and
Greenhouse Gas Emissions in the United States, National Renewable Energy Laboratory, Technical Report, March 2007. Available at http://www.nrel.gov/docs/fy07osti/41157.pdf
Energy Star Residential Water Heaters: Second Draft Criteria Analysis and Proposal, U.S. EPA, October 2007. Available at http://www.energystar.gov
Solar and Efficient Water Heating: A Technology Roadmap, U.S. DOE Energy Efficiency and Renewable Energy Program, 2005. (New plan under development in 09-10) Available at http://www.nabcep.org/solar.cfm
Solar Thermal Action Plan, European Solar Thermal Industry Federation, September 2007. Available at http://www.estif.org
U.S. H2O, utility-solar interest group, information at www.eere.energy.gov/solar/ush2o
Contact: Joe Bourg, President
Millennium Energy LLCGolden, Colorado
[email protected](303) 526-2972