Whenever you consider a major life investment you need to do your homework. Aside from the house and car and the kids college, solar is one of the bigger investments many of us will make. Taking the upfront system cost minus the available incentives divided by the annual energy savings gives us a simple payback in years. For most of our customers in the northwest that number is down under 5 years. Not a bad payback. But what really gets exciting is what happens after you’re system’s paid for.
The Energy Trust of Oregon’s Lizzie Rubado paints the picture really well here:
Escape the simple payback trap
Simple payback is the financial metric customers reference most when considering installing solar or investing in energy-efficiency upgrades, yet it is not the best metric to inform these decisions.
After years of fumbling with the “what’s the simple payback” question, I took some training in financial analysis and accounting and discovered why simple payback is not the most useful metric when discussing investments. While simple payback is a useful second or third screen for determining financing requirements for a project, it is less useful when determining whether a project is profitable. Letting customers consider simple payback alone can prevent them from making investments in solar and efficiency projects that are genuinely profitable.
So why is simple payback a poor metric? The simple payback period tells you the amount of time it takes to recover your initial investment through savings, but it completely ignores the time value of money and any savings generated after the payback period, both of which are financial strengths of a solar investment. Consider a few examples:
- I have two projects for you to consider investing in, both of which cost $20,000 and have a five-year payback. With the first project, you’ll get no cash flow until year five, at which point you’ll get the initial $20,000 investment back. The second project will produce monthly cash flow and, at the end of the fifth year, the sum of the returns will equal your initial $20,000 investment. They both have a 5-year payback, but which project is the better investment?
- What if you had two other projects with 5-year payback periods, but one had a 6-year life and the other had a 15-year life? Which would you choose?
In both cases, the second project is a better investment, but you would never know that if you use only simple payback as your yardstick. We need to start educating customers about better financial metrics such as modified internal rate of return, savings-to-investment (or benefit-cost) ratios and net present value.
This is why it’s so important to get a professional site analysis, system design, shade report and financial calculations done. At Hire we like to make sure you know before you go solar.
Being ready for natural, economic or political disaster only makes sense. If you take a look at history we’ve definitely had it better for longer than any other people group on the planet.
The Chamber of Commerce of the City of Prosser and Lower Valley Committee of Safety are working together to create our first annual Northwest Preparedness Expo. It will be hosted on May 2nd & 3rd, 2014 at the Walter Clore Center in Prosser, Washington. There will be both educational speaker sessions and vendor booths on display.
Hire Electric will have a booth and be presenting about solar for energy security.
To find out more visit: http://www.nwpreparednessexpo.com/about.html
Goal Net Zero: step #487
Hire is in the commissioning process with Pacific Power and Energy Trust of Oregon for this gorgeous 50kW Endurance Wind Machine at Tamastslikt Cultural Institute in Pendleton, OR. The Museum has been working on efficiency for several years now and is heading toward the goal of being net zero. The East Oregonian did a great write up and tribute to Michael Cooper – the project instigator here. Stay tuned for information about the ribbon cutting.
Rural Energy Assistance for FY 2014
Since it was first authorized in the 2008 Farm Bill–and now reauthorized for another five years with dedicated funding through the Agricultural Act of 2014–the Rural Energy for America Program (REAP) has helped thousands of businesses, farms and ranches nationwide advance a variety of renewable energy and energy efficiency projects. Between 2009 and 2013, in fact, Oregon’s REAP program contributed to more than 150 renewable energy and energy efficiency projects installed to create or save more than 36.9 million kilowatt hours. That’s enough to power 3,689 average U.S. homes annually!
USDA accepts applications on a continuous basis with funding decisions made once per year. The application cutoff date for 2014 has not yet been announced, but is expected to be in the coming couple of months. If you are working on an on-farm or rural business-based project, you may be able to apply this year. Keep in mind, however, only expenses accrued post-application are eligible for funding. Interested applicants should contact USDA Rural Development now to determine the viability of completing an application by the 2014 deadline.
Hire Electric has helped several farm and winery customers with successful REAP grant technical applications. Let us know if you have an energy project you’d like to see happen at your farm.
Join us at one of our happy Solarize Mid Columbia customer’s homes in Kennewick, WA on Sunday the 6th of April from 2 to 6pm. Find out more about the Washington incentive for solar and see Washington made iTek panels and inverters at work.
Bob and Jonathan will be on hand to answer questions.
Where: 1604 S Harrison Street, Kennewick, WA 99338
When: April 6, 2014 from 2 to 6pm.
What: Solar Open House
Gorge Owned sponsored GO! Talks this fall in Hood River and Hire’s Jonathan Lewis gave an historical energy tour around the gorge with a pitch for a new Rural RE Electrification Act:
Jonathan Lewis of Hire Electric’s Renewable Energy Division will be presenting at this month’s GTA Featured Event: Tuesday, February 25, 2014 at 6:30pm White Buffalo Wine Bar & Bistro Hood River, OR. Free to GTA members. $10 for non members. GTA Announcement.
Come learn about the history of Rural Electrification in 1936 and the Bonniville Power Administration’s early days. “Power to the People” was the motto for the movement. Woody Guthrie wrote songs about it. 1000′s of jobs were created. People died. The Grange organized. Lives were changed forever. Wars were won. Lights and pumps and milking machines whirred and hummed throughout our Gorge.
Then we’ll flash forward to 2014: The wired Gorge with a lake running through it looks very different than it did in 1936. Rural Electrification was extremely successful with almost 100% of farms now connected. Wind farms have made dry wheat land consistently profitable for the 1st time. But we have some challenges: Too much power from hydro run-off and spring winds (resulting in curtailments); limited ability to export power to Seattle, Portland, CA and eastern grids; increasing electric rates for rural residents; aging, dirty, nasty coal fired plants shutting down in 2020 (35% of Oregon’s electricity and 66% of Pacific Power’s comes from coal); public and private utilities with competing interests; a dinosaur-like regulatory landscape; industrial flight – just to name a few… Within each of these challenges is a potential opportunity. The early 20th century energy divide was closed by federal investment in centralized power. The requisite transformation away from fossil fuel dependance in the early part of the 21st century can be wrought by a resilient, locally owned network of Distributed Generation and storage. “Power from the People” is the motto for today’s Rural RE-Electrification in The Gorge.
#RE_Electrification See the shorter talk that was done at Gorge Owned here.
Irrigation Scale Water Pumping Made Possible by ABB
Until recently solar water pumping has been limited to small scale pumping operations: 6 gallons per hour, residential scale or stock watering units.
But things have changed.
We’ve been installing Variable Frequency Drives (VFD’s) at Hire Electric for almost 20 years now. Driving pumps from 3hp to 250hp. I’ve often wondered when someone would make the jump to a solar drive. A VFD is basically a rectifier that turns 3 phase, 480V AC (or 208V or 240V single phase) into DC and then uses IGBT’s to deliver a variable frequency and voltage to a 3 phase motor – running it at whatever speed is required for the operation. The applications are almost limitless and the cost savings over across-the-line AC control can be vast: Think utility demand charges, wear & tear, inefficiency of running a motor at full tilt and valving it down to 25%, etc. So, heating up the DC buss in a drive with solar rather than rectified AC is basically just cutting out the middle man.
I’ve seen some experimental projects using large scale solar and bench built drives to pump water but until recently there hasn’t been a commercially available product.
In India ABB recently launched a new line of SOLAR drives that run standard, 3 phase, AC motors from 1/2 HP to 25HP. ABB is marketing these drives heavily in the developing world to help reduce the cost of water pumping and open up areas that have never had a reliable water supply. There are huge potential applications for these drives in agriculture and off grid facilities here in the Columbia Basin as well. I recently got this update from ABB:
We here at ABB Untied States are playing catchup with respect to the ACS355 solar pump inverter (SPI). The ACS355 is an industrial drive that normally is installed in factory settings. The big difference between the ACS355 industrial version and ACS355 SPI is the firmware in the drive. The ACS355 SPI was a product developed for India and we here in the US had little knowledge of it until customers started to ask for it.
We’ve asked and they hope to have the product released for sale to distribution by the end of Q2, 2014 (June). Can’t wait! Click here for the ABB Solar Drive cut sheet.
Related article: India Wants To Switch 26 Million Water Pumps To Solar Power Instead Of Diesel
Hire Electric recently joined with other solar installers of Washington to help secure a robust solar industry for our state. Last week 40 of us met in Olympia to show our representatives and the governor that we are a viable and growing industry that is key to job growth and the future of our state. Everyone on the hill seemed excited about what we are doing. Here’s a letter I wrote to the representatives from District 14 that I met with:
It was a real pleasure meeting you last week during the Solar Installers of Washington (SIW) “day on the hill”. I really appreciate the time you took out of your busy schedule. There were 40 solar installers that came out to meet and greet our representatives and find out more about the direction of solar legislation in Washington. I think it was a huge success.
All of the installers were from the west side – except me. There are a few other installers on the east side but for the most part the industry is just coming on the radar over on the sunny side. I started doing solar in Goldendale in 2003. By working with WSU Extension and Klickitat PUD and other local community groups we were able to make Klickitat the highest per capita solar county in the state by 2009. In the last 2 years solar has exponentially boomed in WA – putting us on the map as one of the fastest growing states for solar jobs.
I believe very strongly in private ownership. When we own our own local gardens and farms, factories and energy we are more secure and happy. I see solar as the most democratic of energy sources: The power is free each day and it is produced right where you are using it. In other states the solar industry is growing fastest for Wall Street backed leasing companies. The value of the solar installation is sucked away from the homeowner and business and sent to huge corporations elsewhere. SIW would like to see solar grow in Washington through local ownership. Right now the lease model is not allowed in WA and we’d like your support to keep it that way.
There are a some additional measures and tweaks to existing legislation that SIW believes would help the state and help keep our industry healthy. I’d love to get together with you when you’re back home after the session and talk about solar on the sunny side. Or if you’re ever down in Goldendale please look me up.
Thanks for your service to our region,
Solar is the future and at Hire Electric we’re excited to be a part of it in both Washington and Oregon. Please don’t forget to #gosolar & vote solar.
The Gorge Technology Alliance is bringing this excellent opportunity to learn more about Electric Vehicle technology to The Gorge:
Featured Event on January 28: Business Opportunities in the Electric Vehicle Industry
Join the GTA for our January 28 Featured Event with Jeff Allen, Executive Director of Drive Oregon
. The electrification of transportation systems is creating a host of opportunities in the automotive supply chain, electronics, software, energy storage, specialty manufacturing and other areas. This session will provide an overview of the industry, emerging opportunities, and recommendations for how local businesses can “plug in.”
Oregon has a diverse and growing electric vehicle industry that already contributes over 1,500 jobs and $266 million in economic activity, and $11.9 million in state and local taxes annually. The Oregon Innovation Council and Business Oregon have funded Drive Oregon to accelerate this industry’s growth; to date, Drive Oregon has awarded over $300,000 in grants to businesses and leveraged over $3 million in outside funding. Whether you are interested in purchasing an electric vehicle, providing charging facilities for your employees, or taking advantage of business opportunities in this space, Drive Oregon can help.
We’ll open with a short presentation from Oscar Merida with GTA Platinum Sponsor IBEW 48
.Join us Tuesday, Jan. 28 at 6:30pm at White Buffalo Wine Bar (4040 Westcliff Dr., Hood River). Free for members, $10 for non-members. Networking and appetizers included; no-host bar.