Loading...
HomeMy WebLinkAboutPackard Foundation Grant Application June 2004Town of Los Altos Hills Application for a grant from the Packard Foundation June 2004 This is an application for a grant of $75,000 for the "Green Energy" programs of the new town hall of the town of Los Altos Hills. Background The town of Los Altos Hills is going ahead with the construction of a new town hall. The existing buildings are over 40 years old, substandard, and inadequate for the needs of the town. A project was started in 2002 which was subsequently rejected as too costly (over $5 million), too high (exceeding town ordinance for height), and in a style not consistent with the character of the town (Mission style). A new project was initiated in early 2003 following a change in the composition of the town council. A competition took place for a design, and following a survey of residents, the "rural' style was chosen, and Peter Duxbury was selected as the architect. The budget was set at $3.75 million, which includes demolition, building, interior finishes, furniture, temporary relocation, and a limited amount of landscaping. Construction will start at the end of June, and is scheduled to be complete in June 2005. Several of the desirable features, such as an advanced audio-visual system, broadcasting system, landscaping, solar energy system and energy management systems are not included in the budget. Donations from residents are being sought through a "Donor Wall" project, consisting in selling individual tiles to residents for a modest price. The goal is to raise funds while encouraging a sense of ownership in the building on the part of the citizen. The Donor Wall project will start in June and take probably a year to be completed. Request from Packard We are soliciting and accepting donations only from residents of Los Altos Hills. Given that there are no businesses in town, only individuals will contribute. The only exception will be the Packard Foundation, given the link between the late Packards and the Town, including the Packard house. Specifically our request is for $75,000 for the Green Energy program, as follows: • A solar generation system and • Landscaping plantings to screen part of the system. Solar Electricity Generation System Our desire is to incorporate into the design of the new building elements of a "green" energy system. Solar electric systems are the most environmentally friendly way of generating electricity. According to the EPA, a typical 30kw system will save 50 pounds of nitrogen oxides (NO) each year, 70 pounds of sulfur dioxide (SO2) each year and 27,000 pounds of carbon dioxide (CO2) each year -- equivalent to the CO2 absorption of ten acres of trees. And these benefits will continue for the 30+ year lifetime of the system. The consultants have analyzed the following two among several possible sizes for the system, depending on the number of photovoltaic panels: • a minimum 20KW system, which requires panels covering the surface of the roof (south facing exposure only), and • a more powerful 37 KW project, requiring pole mounted panels to supplement the roof mounted ones. We will definitely select a system in the range of 20-37 KW. Given the greater savings generated by the larger system, and the larger rebates available from PG&E, the economics of the larger system are much more attractive. The larger system provides initial on-going annual savings from solar generation of $10,150 v. $5,360 for the smaller system. Savings grow as the cost of energy increases- an estimated 5% per year. Additionally, the annual rate of return of the larger system is 10.1 % v. 8.4% for the smaller one- both outstanding rates of return. In addition to the installation of solar panels, we propose to install LED traffic signals, and make numerous design choices that will produce energy savings. These amount to $56,950 in costs, and generate 11,000 a year in savings. The larger system would require approximately $60,000 more cash compared with the smaller system. In both cases the loan from the California Energy Commission (CEC) is the same $160,000, so even with the larger rebate associated with the larger system, the cash requirement is larger. More details are included in the attachments. The final decision on the size of system to be installed has not been finalized, although we are leaning towards the 37KW system. The larger system qualifies for a larger rebate per KW, but funds may not be available. A grant from Packard would reduce the net cost to the Town between 35 and 50%, and will certainly help up make the decision for the larger system, which is the right one from an economic standpoint. Landscape screening The larger solar system requires pole mounted panels. These are 14 feet high structures. While there are no surrounding houses directly affected by the sight, a few neighbors might catch a glance at the structures from across Fremont Road. The sight can be nearly completely obliterated by some plantings on the Fremont Road side. We estimate that a budget of approximately $5-10,000 would suffice to achieve the desired screening. N: c W, 3 Solar Electric 37kW Generating System Proposal Los Altos Hills Town Hall Submitted by: Akeena Solar, Inc. 605 University Avenue Los Gatos, CA 95032 408.395-7774 888-253.3628 408-395.7979 fax www.akeena.net Copyright 2003 Akeena Solar, Inc. Confidential Material Akeena Solar, Inc. 605 University Ave., Los Gatos, CA 95032 www.akeena.net 408-395-7774 April 5, 2004 Breene Kerr Town of Los Altos Hills 26379 Fremont Road Los Altos Hills, CA 94022 RE: 37kW PV System Dear Breene: We are pleased to submit this preliminary feasibility analysis for a Solar Electric Generating System to be installed at the proposed new town hall in Los Altos Hills. The system that we propose is summarized below and described in detail in the following pages. PV System Investment Summary 240 Modules Total Price $331,534 Renewable Buydown Rebate -$165,767 Price Net of Rebate $165,767 Less Refundable Audit Fee $0 State Solar Tax Credit $0 Federal Solar Tax Credit (pending) 10% Federal Tax Credit (business) $0 Net Price $165,767 Budgetary Cost Allocation 240 NT185-U1 Modules $170,931 52% 15 2500 UL -SBD Inverters $ 36,749 11% Balance of System Components $ 39,414 12% Labor $ 84,440 25% Total $ 331,534 100% PV System Savings Summary Peak Power Output (DC watts) Annual Energy Output (kwh/yr) First Year Energy Savings Total Energy Savings (30 yr life) Avoided CO2 (tons) (30 yr life) Avoided NOx (pounds) (30 yr life) Avoided SO2 (pounds) (30 yr life) Locked In Net Cost/kwh (30 yr life) Tax Free Rate of Return Net Present Value Scenario A 44,400 57,390 $ 10,151 $ 674,422 599 1,105 326 $ 0.0963 10.1% $ 85,477 Copyright 2003 Akeena Solar, Inc. Confidential Material Akeena Solar, Inc. 605 University Ave., Los Gatos, CA 95032 www.akeena.net 408-395-7774 Solar electric systems are the most environmentally friendly way of generating electricity. According to the EPA, a typical 30kw system will save 50 pounds of nitrogen oxides (NO) each year, 70 pounds of sulfur dioxide (SO2) each year and 27,000 pounds of carbon dioxide (CO2) each year -- equivalent to the CO2 absorption of ten acres of trees! And these benefits will continue for the 30+ year lifetime of the system. We have designed this system so that you will achieve the maximum possible energy cost savings benefits while minimizing your expenses. More detailed information about this solar electric system is provided in the attached proposal. In order to move ahead quickly, we have also enclosed a sample electrical system design, project schedule, Utility forms, Rebate forms and Purchase Agreement. Please note that the size of this system makes it eligible for currently available rebates of $4500 per kilowatt through the PG&E Self -Generation Incentive Program. The rebate from this program is paid to you upon the completion of the installation and inspection of the system by PG&E. Part of the Akeena Solar value -add as a turn -key system installation contractor is to manage the process of applying for rebates and permits, and coordinating all necessary PG&E agreements and inspections pertaining to the system. Do not hesitate to contact us if you have any questions. Your 100% satisfaction with this analysis is very important to us, and we will do everything possible to exceed your expectations. Very truly yours, 51�0 GZ-1� Akeena Solar, Inc. Copyright 2003 Akeena Solar, Inc. Confidential Material Akeena Solar, Inc. 605 University Ave., Los Gatos, CA 95032 www.akeena.net 408-395-7774 Project Team The team fielded by Akeena for this project has extensive photovoltaic system design, consulting and project management expertise. Akeena reserves the right to substitute consultants, experienced project managers and field superintendents with comparable experience. Project Manager Mr, Tom Oelsner will serve as Project Manager for this project. Mr. Oelsner is dedicated to the detail, thoroughness and timely completion demanded by Akeena for solar installations. Field Superintendents John Soman will serve as Field Superintendent for this project. He is highly experienced and certified in all aspects of system installation. Engineers Luis Rangel (Mechanical Engineer) is a North American Board of Certified Energy Practitioners Certified PV Installer. Mr. Rangel, Gary Fourer (Electrical Engineer) and Bill Larson (Structural Engineer) have worked with the Project Manager on several similar PV projects. They are all experienced in coordinating their work with the project architect and other project engineers. Mr. Rangel is a North American Board of Certified Energy Practioners Certified r � PV Installer (TM). , MORE) Commercial Experience Akeena Solar was founded early in 2001 by a team that includes solar energy research expertise and construction expertise combined with sound business practices. Our goal is to meet the growing Bay Area need for turnkey design -build photovoltaic systems installed in a reliable and cost effective way. PV systems must be considered as part of a system to reduce overall building energy costs. We pay special attention to reducing overall building energy usage by integrating systems with existing energy management equipment. During these planning stages we consider various energy (kwh) and power demand (kw) charges that apply, and evaluate different electric metering and control options that are compatible with our PV systems. Moreover, a variety of State and Federal funding programs are available that can reduce the installed costs to the customer by over 50%. In many cases the PV system will generate a positive cash flow for the customer. Akeena will work with you and your general contractor to evaluate and pursue all applicable funding alternatives (CEC rebate program, PG&E rebate program, low interest financing, etc.) that would be practical in light of the building construction timeline. Copyright 2003 Akeena Solar, Inc. Confidential Material Akeena Solar, Inc, 605 University Ave., Los Gatos, CA 95032 www.akeena.net 408-395-7774 Quality assurance/control for our PV power system projects is ensured through a combination of personnel training and inspection. Compliance with contract requirements and specifications will be the responsibility of the Project Manager, who will maintain a schedule of documentation submittals. In addition, the Field Superintendent will review and approve all work plans on a daily basis to ensure adherence to the specifications as well as conduct a 100% inspection of all materials delivered to the site. Our approach to successful management of this project is based upon a solid understanding of the technologies, expertise and experience required -- all based upon a strong corporate philosophy of "keeping it simple." It is of critical importance that the design/engineering team has a clear understanding of the operating requirements of PV power systems. Several similar projects that have been completed by project teams consisting of Akeena and its partners are described below: • Mt. Eden Winery, 27 kW Ground -mount PV Project, Saratoga, CA (Jeffrey Patterson 408-867-5832) • Stanford University, 9 kW Student Housing PV Project, (Rob Kolar, Stanford Housing 650-725-6226) • San Jose State University, 3 kW Solar PV Awning, San Jose, CA (Salas-O'Brien Engineering, Carl Salas 408-282-1500) • MBA Architects, 9 kW Parapet -mounted PV Project, San Jose, CA (Marvin Bamburg 408-297-0288) • Spirit Rock Meditation Center, 8 kW Roof -top PV Project, Woodacre, CA (Hart & Associates, Rob Hart 415-893-1333) • San Jose Area Rooftop and Ground -Mount PV Projects, 250 kw (10-20 kw each), for various residential customers • CAL EPA Roof -top PV Project, 30 kw, for Turner Construction (Terrence Richards 916-443-1530) • PV System at the Rancho Seco Solar Facility, 750 kw, for Sacramento Municipal Utility District (SMUD, Dan Leach 916-732-6532) • PV System at CAL EXPO Parking Lot, 430 kw, for SMUD (Dan Leach 916-732- 6532) • Photovoltaic Carport System, 25 kw, McCarthy Brothers Company (Dana Metoyer 925-355-1980) More information and examples of our commercial work are available on our website at www.akeena.net. Copyright 2003 Akeena Solar, Inc. Confidential Material Akeena Solar, Inc. 605 University Ave., Los Gatos, CA 95032 www.akeena.net 408-395-7774 Project Management Installation Timeline and Checklist We have prepared an Installation Timeline and Checklist for your project. Please note that this information is for a typical installation and may not include unanticipated issues such as special engineering or design work, home equity loan and/or related financing issues, delays in equipment shipment from our suppliers, permitting requirements and utility or energy commission delays. In our experience, the longest delays relate to local building permitting and utility signoff. Begin Project (Project Start) Installation Agreement Date Initial Payment Date Copy of recent utility statement Date Proof of insurance Date Reservation Request Form or Pre -Installation Application Date Renewable Buydown Rebate Note Date Supporting Documents (1-2 weeks) Electrical drawings Date System mounting and installation drawings Date Customer approval of installation plan drawings Date Receive applicable Building & Planning Department permits Date Order equipment Date Installation (4-6 weeks) Equipment delivery Date Install modules Date Install inverters Date Install balance of system components Date Test system Date Schedule final inspection Date Final Documents (5-7 weeks) Final building permit inspection signoff Date Final purchase invoice and payment Date 5 Year Warranty and system commissioning Date Reservation Confirmation and Claim Form Date Application for Schedule E -NET or Utility Pre -Application Date Utility Interconnection Application Date Utility final inspection Date Utility final written approval Date Activate system Date Rebate Receipt Date Rebate Note Repayment Date Copyright 2003 Akeena Solar, Inc. Confidential Material Akeena Solar, Inc. 605 University Ave., Los Gatos, CA 95032 www.akeena.net 408-395-7774 Solar Site Survey and Electric Bill Analysis - 37kW PV System We first met with you at Duxbury Architects on March 8, 2004 at 2:00 PM. During our discussions you indicated that your goals were to install a system that would offset the optimal portion of your electrical loads, while maximizing the system Net Present Value and to tie this system into the power grid to reduce your overall energy costs. The costs and savings for your PV system are greatly affected by your current electrical consumption. We therefore analyze your electrical consumption both before and after the PV system is installed. The PG&E A-1 Rate charges a seasonal rate for each kilowatt-hour of electricity consumed. In summer (May — October) the energy cost is about $0.22 per kwh; in the winter (November — April) it is about $0.14 per kwh. There is a monthly meter connection fee of $8.00 to $12.00. The following chart is based on the projected monthly energy consumption figures that you provided to us. These consumption figures were then mapped into your utility's rate schedule. Based on the above assumptions, your annual electric bill is $14,068 for 81,335 total kwh — an average of $0.1730 per kwh. By installing a PV system you will significantly reduce your electrical consumption. The following section of this report details the specifications of the system that we designed for you. The chart below shows how the PV system we have designed for you reduces your energy consumption in the highest rate tiers. Copyright 2003 Akeena Solar, Inc. Confidential Material A-1 Rate: Current Monthly Energy Costs and Surcharges $1800, rY r it $1,600 $1,400,,r sr�rx $1200 $1,000114, m Total Energy Surcharges IM $800", ® Total Energy Charges $00 ga $4400 h �r $200€ 6 O�o��` 5eQ �o, peo Based on the above assumptions, your annual electric bill is $14,068 for 81,335 total kwh — an average of $0.1730 per kwh. By installing a PV system you will significantly reduce your electrical consumption. The following section of this report details the specifications of the system that we designed for you. The chart below shows how the PV system we have designed for you reduces your energy consumption in the highest rate tiers. Copyright 2003 Akeena Solar, Inc. Confidential Material Akeena Solar, Inc. 605 University Ave., Los Gatos, CA 95032 www.akeena.net 408-395-7774 A-1 Rate: Monthly Energy Costs and Surcharges with PV System $1800 $1600 xr $1,400 �� t k� �• � �� s���� �� �� � '-� ��� ��'� Mkt M' t',�':�l',,.f �, MO 3g� $1,200 �s . $1,000 �� t t © Total Energy Surcharges $800. �., _. $600 - ��� t;; ® Total Energy Charges $400 �'a: $200 SOF 0 �4 ,06 USF Based on the above assumptions, your solar electric system will reduce your annual electric bill to $3,917 for 23,945 total kwh — an average of $0.1636 per kwh. The system will reduce your annual kwh consumption from the utility by 70.6%, and it will reduce your annual bill by 72.2%. As you can see in the above chart, your solar electric system will reduce your electric bill, with monthly variations based on your orientation, local shading and monthly sunlight. In months in which you have very low consumption, you may actually have a net negative bill for the month. Your utility will apply this credit to subsequent month's bills. Below is a chart that shows the monthly energy output of the PV system. Copyright PV System Energy Production 0 7,000 6,000 o 5,000 M1,¢pyti�- 4,000 3,000 2,000 13 1,000 awag �3q ;w tam0 A KA Q goQ �° pe Copyright M1,¢pyti�- 2003 Akeena Solar, Inc. Confidential Material Akeena Solar, Inc. 605 University Ave., Los Gatos, CA 95032 www.akeena.net 408-395-7774 Photovoltaic System - 37kW PV System During our design process we make our best efforts to optimize the performance of the system while minimizing your costs. All components of the proposed system are UL listed and certified for the State's Solar Electric Rebate Program. At this stage of the project, pictures and diagrams submitted herein are representational. Details of actual hardware installed may be slightly different. We reserve the right to substitute PV modules with comparable quality and price -performance characteristics. We have done our best to identify any special requirements for installing your system, and these are explained below. Installation plan drawings will be reviewed with you by your design consultant for your approval prior to our submittal of the application for the building permit. Should unexpected changes be required, a change order will be created that will detail the time and materials charges for the necessary work to be done. Installation Site Your PV modules will be installed over the southeast facing roof of the town hall building, on south facing pole mounted arrays in the orchard, and on the southeast facing roof of the shed in the orchard. Wiring from the panels to the inverter will be run in conduit to the inverter location. Electrical DC power from the modules will be routed in electrical conduit to the inverter. AC power from the inverters will be routed to your main electrical service entrance. A splice kit and load center will be installed to permit the addition of a breaker for each inverter connected to your home electrical system. An AC disconnect box will be installed within ten feet of your existing electric meter. Conduit will be run on the outside of the roof and walls, and will be painted to match the underlying surface if possible. If you would like conduit run within interior walls or attic spaces, a $500 minimum charge will apply plus additional time and material expenses incurred. PV Modules 240 Sharp NT185-U1 PV modules (or equivalent depending on customer's desired installation timeframe) will be installed. These are reliable, durable and highly efficient PV modules with a 25 -year manufacturer warranty. Please refer to the attached specification sheets for more information on these modules. Inverters 15 SMA 2500 UL -SBD inverter(s) will be installed. Your inverters will be installed in a location to be determined in the town hall, near your existing electrical meter, and in the shed in the orchard. These locations are shaded. A Kwh meter will be included with the system so that you can determine your net energy production. We have sized your system to maximize your annual solar energy collection. By taking this approach we may slightly oversize the array — thereby causing the inverter to derate slightly (due to heat dissipation factors) on hot sunny days. Please refer to the attached specification sheet for more information on this inverter. Copyright 2003 Akeena Solar, Inc. Confidential Material Akeena Solar, Inc. 605 University Ave., Los Gatos, CA 95032 www.akeena.net 408-395-7774 Mounting PV modules will be installed with secure, pre-engineered mounting systems using all steel and aluminum hardware for long-term durability. For your composition roof, PV modules will be attached to aluminum angle supports. These supports will be securely fastened to the underlying rafters using stainless steel lag screws and urethane caulk. Additional panels will be installed using this method on the roof of the shed in the orchard. Also in the orchard, panels will be installed on elevated pole -mounted arrays. Remote Monitoring System Each inverter comes standard with a display showing power and energy output. A real- time monitoring system is included that allows for remote viewing of your system performance from a web browser anywhere in the world. Implementation of remote monitoring will replace the SMA inverter display. Akeena Performance Monitoring Web Display -- hardware, software and configuration costs for displaying your system output and performance metrics on a dedicated Akeena web page are included for your system, including the first 5 years' subscription fee of $320 per year. The monitoring system shall include a PC with flat screen monitor and a communication device that will connect to the Internet using your existing broadband Internet connection. The monitoring system will require one available port on an Ethernet hub or router. Surface wiring will be installed from the inverter(s) to the communication device, and from the communication device to the Ethernet port. If this wire run length is more than 25 feet, or if you would like us to run concealed wiring we will create a change order for extra time and materials based on the difficulty of the wiring. Copyright 2003 Akeena Solar, Inc. Confidential Material Akeena Solar, Inc. 605 University Ave., Los Gatos, CA 95032 www.akeena.net 408-395-7774 Photovoltaic System Costs — 37kW PV System PG&E's Self -Generation Incentive Program provides a rebate to PG&E customers for installing solar electric generating systems of $4.50 per watt, up to 50% of total system costs -- including equipment, installation, permitting and sales tax, for PV systems with California Energy Commission (CEC)-rated capacity of more than 30Kw. Note that the State calculates the rebate amount based on their ratings of the output of Certified Systems (the system we propose is a Certified System). This Certified System Output (36840 Wac) takes into account the simulated performance of the panels, as well as inverter efficiencies. As a result, the Certified System Output is less than the manufacturer's rated output of the panels (44400 Wdc). The following table shows the investment for your PV system, including equipment, labor and sales tax -- as well as applicable equipment rebates and sales tax credits as applicable. These costs include standard engineering costs, but do not include local permitting, building department and licensing fees — which we will bill to you at our cost. We will coordinate and attend local building department inspections as needed. The property owner is expected to be at the final utility inspection. If you would like us to be present on your behalf we will bill you for our time at the rate of $50 per hour, including waiting time. We will bill you for our direct expenses and time at the rate of $100 per hour if it becomes necessary to prepare for and attend local building department meetings on your behalf, if revisions must be made to the standard plans and drawings that we submit, if a structural engineer is required to evaluate your roof, or if soil or geological tests are required. PV System Investment Summary 240 Modules Total Price $331,534 Renewable Buydown Rebate -$165,767 Price Net of Rebate $165,767 Less Refundable Audit Fee $0 State Solar Tax Credit $0 Federal Solar Tax Credit (pending) 10% Federal Tax Credit (business) $0 Net Price $165,767 Depreciation Tax Benefit (MACRS) $0 The investment level reflected above is valid for 30 days from this proposal date. Copyright 2003 Akeena Solar, Inc. Confidential Material Akeena Solar, Inc. 605 University Ave., Los Gatos, CA 95032 www.akeena.net 408-395-7774 Photovoltaic System Estimated Savings — 37kW PV System The following table shows estimates for the environmental and cost savings that you could expect for your PV system. These savings were calculated using environmental data from the EPA based on fossil fuel emissions in your location, manufacturer ratings for collector and inverter performance, our adjustments to these ratings to account for expected temperature and real-world operating conditions based on PVUSA test results, degradation factors for wire runs and panel soiling, shading that we determined based on existing obstructions and tree cover, and financial assumptions relating to electricity cost escalation, loan interest rate, annual discount rate and personal tax rates. Because our analytical process is conservative, the real world output of the system will be lower than what manufacturers may quote under ideal circumstances. PV System Savings Summary Scenario A Peak Power Output (DC watts) 44,400 Annual Energy Output (kwh/yr) 57,390 First Year Energy Savings $ 10,151 Total Energy Savings (30 yr life) $ 674,422 Avoided CO2 (tons) (30 yr life) 599 Avoided NOx (pounds) (30 yr life) 1,105 Avoided SO2 (pounds) (30 yr life) 326 Locked In Net Cost/kwh (30 yr life) $ 0.0963 Tax Free Rate of Return 10.1% Net Present Value $ 85,477 NOx (Nitrogen Oxides) Nitrogen dioxide can irritate the lungs and lower resistance to respiratory infections such as influenza. The effects of short-term exposure are still unclear, but continued or frequent exposure to concentrations higher than those normally found in the ambient air may cause increased incidence of acute respiratory disease in children. Nitrogen oxides are an important precursor to both ozone and acidic precipitation (acid rain) and can affect both terrestrial and aquatic ecosystems. SO2 (Sulfur Dioxide) The major health concerns associated with exposure to high concentrations of SO2 include effects on breathing, respiratory illness, alterations in the lungs' defenses, and aggravation of existing cardiovascular disease. Major sub -groups of the population that are most sensitive to SO2 include asthmatics and individuals with cardiovascular disease or chronic lung disease, as well as children and the elderly. Together, SO2 and NOx are the major precursors to acidic deposition (acid rain), which is associated with the acidification of lakes and streams, accelerated corrosion of buildings and monuments, and reduced visibility. CO2 (Carbon Dioxide) Carbon dioxide is released into the atmosphere as a result of fossil fuel combustion, forest clearing, biomass burning, and non -energy production processes such as cement production. Atmospheric concentrations of CO2 have been increasing at a rate of about 0.5% per year and are now about 30% above pre -industrial levels. Increases in carbon dioxide concentrations contribute to global warming, which is predicted to raise average Copyright 2003 Akeena Solar, Inc. Confidential Material Akeena Solar, Inc. 605 University Ave., Los Gatos, CA 95032 www.akeena.net 408-395-7774 temperatures, alter precipitation patterns, and raise sea levels. These changes may negatively impact quality of life, including increases in infectious diseases, respiratory illness, and weather-related deaths, and decreases in crop yields, water quality, and regional forest health and productivity. Several scenarios (as described in more detail below) were considered in order to give you an idea of the range of your potential savings. In each scenario the power and energy output of the system remain the same. These analyses are done over a 30 -year time period, which is a realistic estimation of the lifespan of the system (the modules themselves are guaranteed for 25 years). Note that if your electrical consumption is greater than we projected your savings will be even greater. Because the State of California is in the process of issuing long term bonds to repay current and future power purchases, it is likely that electrical rates will increase in the future. These power purchase bonds will be repaid from future cash flow from electric ratepayers. We therefore assume that electric rates will continue to increase by an average of 5% each year over the lifespan of your system (since 1960 rates were $0.026 per kwh, marginal electric rates have actually risen by an average of 5.5% per year). A dollar today is worth more than a dollar in the future because inflation erodes the buying power of future money. On the other hand, money available today can be invested and grow. We calculate the Net Present Value for your PV system so you can compare the cash flows you will receive in today's dollar values. To do this NPV analysis we determine what your energy saving, interest payments, principal payments, rebates and tax savings are in each year, then discount these future dollars to today's dollars. The result is your "Present Value" of savings. We then subtract your out-of- pocket costs of the system to determine the "Net Present Value" of the system. We assume a discount rate of 6.0% and a marginal tax rate of 0.0% for the purposes of the Net Present Value analysis. Net Present Value is a financially rigorous way to compare various alternative investments (including just leaving the money in the bank). We therefore prefer to use this figure as a "yardstick" to compare the benefits of various energy saving alternatives. We have also calculated the Rate of Return as another measure of the financial benefits of your PV system. This Rate of Return is calculated on a pre-tax basis so that you can compare it to the return you are receiving on other financial investments. Cash Flow Analyses One very practical way of gauging the cost effectiveness of your PV system is to evaluate the net annual savings that the system provides. Scenario A In this scenario we assume that you pay cash for the system (you do not take out a loan or incorporate this improvement in your building mortgage). The following chart summarizes these annual savings for a ten-year period. The net annual savings include the positive value of your electrical savings, but do not include the initial purchase in Copyright 2003 Akeena Solar, Inc. Confidential Material Akeena Solar, Inc. 605 University Ave., Los Gatos, CA 95032 www.akeena.net 408-395-7774 year zero. Based on the conservative assumptions in this proposal, your system will pay for itself in 12.2 years. Annual Cash Flow in Dollars - Scenario A $20,000 $15,000 LL {' V $10,000 , $5,000_ 1 2 3 4 5 6 7 8 9 10 Year The following chart shows "The Cost of Doing Nothing" — the cumulative cost of continuing to pay your electricity bills over the next 30 years without the benefit of a PV system (red line). The green line shows how, by investing in a PV system, generating your own electric power and paying the utility company a lesser amount each year, you will be money ahead (where the two lines cross) well before the system savings have repaid your initial investment. The Cost of Doing Nothing $400,000s w �x, x _ j r i �-ENV, $200,000 s r $(200,000) _0. mdj t 5 s $(400 000) $(600 000) -���� $(800,000) 4��� zn '*`Y ,�_ s,$ �g3-y'_ a j s y�cr 3 i,..K X33' tt., ."+ '` Lis ��'s`"` Q OR L a' r �,�.`�, Years --- Cumulative Cash Flow w/PV — Cumulative Cash Flow (no PV) Please note that the savings calculated above are for estimate purposes only and are particularly sensitive to current and future electric rates, as well as your future usage of electricity. Your actual savings may vary depending on your actual energy costs, the final configuration and wiring of your PV system, real-world operation of the system, economic factors, actual weather conditions and market conditions. The Federal Solar Tax Credit (pending) is part of the energy bill presently before the US Congress, and will apply only if it is passed as part of that legislation. Consult your tax accountant regarding the tax benefits of your solar PV system. Copyright 2003 Akeena Solar, Inc. Confidential Material I Sk o co 6 co O N c: 0 CL cn ® 0000 } O .-i Ld N a a � ~ N M CY1 b° n > L � = N � y � 3 d � L � U v) LO 00 LU OR Q � �� �o o M _.l N c ❑ a ❑ Q V N z° in 4-- V I I Q � N �S �n m 0 ) N M O LO Q O � Q C 'c IV s m aaciD(^ a)LO (no 0d: ao o IIUH UMOJ, SIIIH SO)IV SOI £LL-SOS 9bO asuaai-1N 60L-56£ X804) XUJ bLLL-56£ (804)'gd Z£OS6 VO `SOIBD sal anuanV AIISaaniun 509 °auI auIos uuaa v Q M a 0 00 o� w ?? U O � o � 0 � o 9 v aa: ii mp F U o00 8y F a N H ° 'd s �gg F b Od