Solar PV Panels, can they help me reduce my energy costs?

Guest Blog by James Hasselbeck, New Hampshire Operations Manager for ReVision Energy

Business is booming in New Hampshire. We have the lowest unemployment rate in the country.  These jobs run the gamut from healthcare, government, education and, among others, skilled manufacturing and industry. This influx of industry has brought with it a concern from both business leaders and politicians that the cost of electricity in New Hampshire is prohibitively high, inhibiting potential economic growth in our state. While, on average, utility electric rates trend on the high end in New Hampshire, photovoltaic solar energy is a solution which is often forgotten or discounted, even though it provide reliable and cost-effective electricity to businesses, municipalities and residences across the state, in addition to diversifying energy sources and reducing transmission costs for all New Hampshire ratepayers.  

Our state’s solar industry has grown rapidly over the past decade. According to the Solar Energy Industrial Association (SEIA), there were more than 1,184 full-time New Hampshire jobs focused on solar in 2016 and more than 9,000 residents generating their home electricity with reliable, renewable energy on a daily basis.  A concrete example of this growth is Revision Energy, which has expanded from two guys operating with a pickup truck and garage in 2003 to a company with around 170 full-time employees and five locations throughout New England in 2017.  Solar is not just for homeowners, however. More and more businesses and municipalities are recognizing the substantial economic and social benefits of a solar energy system.

ReVision Energy and many other solar development companies have partnered with New Hampshire business and municipalities to install over 20 megawatts of photovoltaic solar energy capacity in 2016 alone. That’s over 70,000 solar panels in the Granite State! According to the Environmental Protection Agency’s greenhouse gas equivalency calculator, these solar installations are equivalent to offsetting nearly two million gallons of gasoline consumption or the carbon sequestered by nearly 17,000 acres of forest, each and every year. Aside from the significant environmental benefits, there is the real and vital economic benefit to the companies who invest in solar power, providing millions of dollars statewide in annual energy savings with no negative impact on utility ratepayers.

From an individual business perspective, the capital budget savings a photovoltaic system can provide are substantial. According to the US Department of Energy and US Energy Information Administration, commercial electricity rates in New Hampshire average 12.36 cents/kWh, and industrial rates average 11.82 cents/kWh. On average, the 40-year cost of energy from a photovoltaic solar system is less than $0.03/kWh, more than 75% savings from utility prices if they remain flat over the next four decades. If history is our guide, we can continue to expect utility electricity prices to increase, making solar energy systems even more economically attractive as future electricity rates rise.

How can solar provide such meaningful capital expense savings? An excellent question and one ReVision Energy commercial design representatives often hear. The primary misconception is, “Solar doesn’t work in New Hampshire,” which is unequivocally false.  The key factor in solar electricity generation is latitude. While we here in New Hampshire are blessed (some may say cursed!) with an alpine environment and latitude of 43 degrees, so is Germany at 51 degrees—a full 8 degrees farther north. A more accurate comparison is the French Riviera, well-known for sunbathing celebrities, which shares our 43-degree latitude.  In 2016, Germany was able to achieve 90%+ of the country’s electricity usage with renewables, where in New Hampshire we stand at less than 2%. So, we can be confident that our geography, climate and location is not our barrier to solar generation, but instead legislative policy and customer education.

Solar energy is a proven electricity generation resource in New Hampshire utilizing equipment with 25-year warranties to provide a safe and reliable energy investment. Factor in federal tax benefits (30% of project cost), tax depreciation incentives (20-30% of project value) and cash rebates from the NH Public Utilities Commission valued at up to 25% of the project cost. In short, the economics are extremely attractive, with commercial projects typically becoming cash flow positive in 4-6 years and receiving significant tax advantages along the way.  With no moving parts and minimal maintenance, a solar energy system can easily have a 40-year lifespan, essentially providing 34 years of free, carbon-neutral electricity.

Aside from immediate savings, solar energy systems provide significant value to businesses that are budgeting for energy-intensive operations.  While the deregulation of the state’s utility market has allowed for energy supply companies to provide competitive rates, they are, ultimately, subject to the variable utility market.  A solar energy system can eliminate that risk and variability and provide 40 years of reliable and bankable electricity expense costs that any CFO would appreciate.

A ReVision Energy customer, Mr. David Greer, CEO of Wirebelt Company of America in Londonderry, states, “Manufacturing companies have many cost centers, and electricity can be a large cost. Generating 40% of our own energy is like a huge relief valve. It is a cost center we no longer worry about, no matter what the electric utilities do with prices.”  Mr. Greer and Wirebelt, a fourth generation family-owned, ISO 14001 certified facility, has utilized solar as a method to reduce local operational costs in a competitive manufacturing environment.

In addition to material financial advantages, photovoltaic solar systems can also provide social and marketing benefits in a competitive business environment. Annette Lee and Nicole Carrier, co-founders of Throwback Brewery in North Hampton, saw both financial and consumer value in partnering with ReVisionEnergy on the installation of a 48kW array, which offsets approximately half of the brewery’s annual electricity usage and provides a visible and tangible differentiating factor from their competitors.

Many of us enjoy a tasty, craft-brewed beer. But a growing percentage of consumers are looking to spend their dollars with businesses that are making a tangible commitment toward social responsibility. This is also true for major retailers and buyers who are looking to realize new sustainability purchasing targets. Solar energy systems do just that in a highly-visible and authentic manner, while also providing significant financial benefits to businesses owners.

This, of course, is reliant on reliable and forward-thinking legislative action in our state.  While solar electric incentives are attractive, they are also uncertain in New Hampshire’s legislative environment. To continue the unprecedented job growth and commercial and industrial electricity savings, we require clear and deliberate legislative leadership.

There is another common misconception about solar energy, that it is dependent on government subsidies to be cost-effective. While the existing federal and state incentives improve the economics, that is not unique to solar as an energy resource. Conventional fossil fuel energy resources historically have received and continue to received billions of dollars annually in government incentives. Because solar energy is a long-term investment, long-term and forward-thinking legislative policies are important to the continued growth and success of our state’s renewable energy industry. New Hampshire has in place a 10-year energy strategy that focuses on modernizing the grid, energy efficiency measures, fuel diversity and choice and transportation options. We need our leaders to act on this strategic plan so all residents and business can share in the success of a clean energy transition, keeping our state pristine while providing the economic development opportunity we know is there. When dollars stay in the local economy, everyone benefits.  

Because of the rapid increase in solar demand and limited state funds in New Hampshire, the state rebate is currently on hold while the Public Utilities Commission (PUC) determines the amount of funds available for the new fiscal year that began July 1. ReVision Energy is cautiously optimistic that full or partial rebates will be available for projects under contract by September 1. In the event rebate funds are reduced, it will somewhat extend the payback period, though larger, commercial projects will still generate five- or six-figure savings and provide the least-expensive, long-term rate of electricity available while greatly reducing the reliance on fossil fuels.

In June, the PUC issued a long-awaited ruling on solar net energy metering (NEM). The rule is a compromise which resolves uncertainty around the Granite State’s solar energy policy, and reinforces the basic argument of solar advocates—that solar generates value for the grid well above wholesale rates – as well as calling for important pilot projects which will help regulators design future solar policy so that the market sends accurate price signals to ensure that distributed energy resources, such as solar electricity, continue to be deployed in a way that saves everyone money and also reduces pollution.

Solar electric systems in New Hampshire provide a unique opportunity for business to achieve the coveted triple bottom line: people, planet and profit. New Hampshire businesses who invest in solar can realize an immediate benefit to the people, with employees and customers who see their differentiating value in powering their operations with reliable, renewable energy. They see an intrinsic value to the planet in the positive environmental benefits via carbon reduction and distributed generation of a renewable energy resource. And, not insignificantly, profit in which a solar energy system in New Hampshire can provide important capital budget savings. ReVision Energy, a Certified Benefit corporation with locations in New Hampshire, Maine and Massachusetts, welcomes the opportunity to answer any questions. Learn more at revisionenergy.com.

James Hasselbeck, New Hampshire Operations Manager

Throwback Brewery

Wirebelt Company  Rooftop Solar Array w/ReVision Energy electrician

What are “emerging technologies”, and can they help me? Answer: Depends on your age, and yes they can! Let’s face it, a lot of technological changes have occurred in the past 50 years of my working lifetime.  Consequently, your perspective on “emerging technologies” depends on your age.  It’s easy today to look at buildings (for example) that were built 50 years ago and mutter the words “What were they thinking?“, because of what you know to be true today.  However, a great deal of that “change” has come from both real time emerging technology and higher costs for energy products (electricity & fuels).  The miracle of the Free Market: the ebb and flow of supply and demand can produce amazing results.  Sometimes progressive thinkers invent things before we can dream them up, and once invented, we want them immediately.  Sometimes WE are the ones who clamor for answers and inventors respond with the solutions.  When it comes to producing energy and using energy, for the most part, change has evolved over the past fifty years more slowly than in other industries due to the “disruptive” nature of the commodity market changes …..as well as the governmental shift from monopolized markets to regulated markets to unregulated markets. We are all still waiting for the free, perpetual energy machine to reach the market!  And yes, from time to time we see “government” stepping in with programs or incentives to push us in a particular direction…………. or regulate us in such a way to accomplish the same thing.

On the energy supply side, we have seen dramatic swings in the pricing, origins (location), and extraction methods for crude oil.  Natural gas, once almost an afterthought, is now a global commodity with the expectation of large volumes of liquefied natural gas (LNG) to be exported around the globe from the US….. due to recently developed fracking extraction technology.  Massive sized wind turbine farms dot the landscape all over the globe, as do its sister renewable energy technology, solar PV farms.  Behind the meter PV systems are growing like wildfire on residential, commercial, and industrial rooftops all around the world. Nuclear energy, once the expected salvation for “cheap” electrical energy in the 1960’s, became politically impossible to site after numerous concerns for safety and health in the US….. but due to recent R&D capital infusions by wealthy entrepreneurs, may make a comeback in the future if it can compete financially.  Also away from the heavy environmental regulations of the US, hydropower energy has continued to expand to provide fossil fuel free electricity to millions of people around the globe, many of whom never had any electricity before.  Coal, once a staple of both fuel and electricity production, is now a dirty word in the American culture, and devoid of a cost effective “clean technology” scrub, may be discontinued completely in another 25 years in the US ………with coal exports headed outside the US to more emerging economies.  Once only known for building materials and firewood, trees have turned into Biomass (wood chips) used for both generating electricity and running boilers for heat and process steam……. not to mention processed wood pellets for stoves and boilers. Geothermal energy, used mostly in relatively smaller scale applications so far, has enormous potential for larger use.  Fuel cells, creating both electrical and thermal energy are in use already and will continue to expand as the technology and pricing continue to change.  Throw in new battery storage technology for storing excess energy (mainly from full run renewable generators like wind and PV), and the energy world continues to evolve. All of this has happened in the last 50 years with the cycle of “change” getting faster.

On the consumption side, we have witnessed a continuous education of the users of energy over the past 50 years to “conserve” or use less of all of these energy commodities. Cars, trucks, buses, homes, factories, office buildings, etc ………all using less fuel and/or electricity today.  Some of this change is driven by “government”, but a great deal is also driven by a combination of economics and societal change.  It is no longer acceptable to “waste” energy if the same task or product can be done more efficiently.  Entrepreneurs and product developers understand these dynamics, and the pace of “efficiency” changes has increased dramatically over the past 20 years.  Talk to a typical millennial and you will find they know no other mantra ………and they are just now entering into the front end of their highest earnings/spending years.  Government has assisted along side that trend line as well.  Industry is beginning to see a price flattening of the energy supply side of fuels and electricity on a regional basis, and there are significant regional differences based upon the costs of production of these commodities on a regional basis.  The further away from the source, the higher the “transportation” costs are going to be ……….in addition to any government taxes, fees, or policy costs that are regionally or locally applied.  Clearly, the costs for the transmission and distribution of electricity in the ISO-NE territory are on the rise in a largely monopolized industry……. and those costs will increase even more if outside security threats force greater “hardening” of our electrical grid system ………. leading to even more, smaller distributed energy resources (DER) to reduce the risks. Hint: You will be reading more about “microgrids” as time goes forward.  What is the risk to your company if the grid you are connected to goes down for any length of time?

If, as a business, you exhaust your ability through competition to lower the commodity pricing of your energy, you are left with five basic options:

• Move/expand your operations to a lower cost region of the country or the world
• Take actions to use less energy and/or less “peak” priced energy where you already are located
• Do nothing, and pass the costs on to your buyers (if you can)
• Do nothing, and pass the costs on to your shareholders (if you dare)
• Become a direct participant (purchaser) of electricity in ISO-NE

We have certainly witnessed these options, or combinations of these options, play out in New Hampshire and expect to see more of that in the future.  That assumes (see Blog Post #12) that government continues to fail to provide any creative solutions on the industrial electrical rate relief front.

Aside from than moving away to another region, becoming an ISO-NE participant, or doing nothing, the last option is to cut commodity use.  Most of those (cutting consumption) options require the use of your own capital, and installing new technology.  Be sure that you have exhausted your ability to cut supply costs through competition, even if that also requires bringing in a third party buyer like a Freedom Energy Logistics type company (Blog Post #10) to accomplish it …. or going directly to ISO-NE as a direct purchaser. We have already talked about undertaking an internal energy plan (Blog post #8): and incorporating energy efficiency (Blog post #9): and using alternative fuels like Biomass (Blog post #13) from Froling Energy.  The most unpopular thing I have to tell any industrial operation is, quite frankly, the need to get past the normal criteria for internal paybacks of 18-24 months for use of your own capital when doing some energy improvements………understanding that its a tough sell for Wall Street.

Private Equity held companies have more flexibility to take (investment) actions that are “out of the box”, as do closely held and/or family held enterprises.  Whatever capital intensive changes you do make, they are likely to give you financial benefits for the next 20-25 years, or sometimes longer.  That is a decision only you can make.  If I had any magic energy bullets to give you ………I probably wouldn’t be writing this blog for you today because I would be way too busy spending my $$millions or playing golf or both!  Cheers………. HT!

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