PV SOLAR-SONNEN BATTERY COMBO FOR LOW-INCOME HOUSING PROJECT

The $3.67 million demonstration, low-income housing project, with 7 pre-fabricated duplex units for 14 tenants, $262,000/unit, is located in Waltham, Vermont. Various government and quasi-government entities made cash grants or other donations to the project, totaling about $550,000, to make it a success. 

 

Donor

 $

People’s United Tax Credit Equity*

 2,135,000

VT Community Development Program

 498,000

Home Investment Partnership

440,000

VT Housing and Conservation Board

370,000

Efficiency Vermont

 119,000

Clean Energy Development Fund

 60,480

VLITE

50,000

Total

3,672,480

* Low Income Housing Tax Credit, LIHTC, financing is explained in this article. Federal tax credits (and sometimes also state tax credits) are provided to make money-loosing, low-income housing projects profitable for investors. See Appendix A, B, C, and D of URL.

https://www.occ.gov/topics/community-affairs/publications/insights/...

Smart Solar Energy Storage System Support: Efficiency Vermont, Green Mountain Power, Clean Energy Group, and Sonnen, a German battery company, provided funding to add the smart energy storage systems to the housing units.

 

Entity

$

Efficiency Vermont

 30,000

Green Mountain Power

 45,000

Clean Energy Group

 27,156

Total

102,156

Sonnen Battery

 25% discount.

Donating: If a business, such as GMP, donates services, it can deduct that donation from taxable income as an expense and thus pay less federal and state taxes. If the donation consists of hardware, such as PV solar and battery systems, GMP can use 30% of the value as an investment tax credit, ITC, to offset federal taxes on its other business income, plus GMP can use the 5-year accelerated write off to reduce its taxable income and thus pay less federal and state taxes. Any taxes not paid by GMP would add to government deficits or is paid by other taxpayers. The ITC is due to expire in 2022 for residential owners and become a permanent 10% for commercial owners. The 5-yr accelerated write-off is equivalent to a 25% cash donation by government available only to commercial owners.

Decreasing Federal Subsidies: Federal subsidies for wind, solar, and other renewable sources will be decreasing in future years. Table 2 shows:

 

- The Investment Tax Credit, ITC, and Production Tax Credit, PTC. Vermont has a solar ITC, which is about 15.6% of the federal ITC.

- A decreasing wind ITC and wind PTC.

 

Investors in wind turbines on Vermont’s ridgelines have a choice of either the 30% upfront ITC or the PTC for the first 10 years of project operation, plus the tax savings due to rapid asset depreciation. Owners use the tax credits to offset federal and state taxes on any other business.

 

The “accelerated depreciation" subsidy (within 6 years) remains for commercial owners after ITCs have expired. It reduces the income taxes of multi-millionaire investors.

 

No wonder pro-RE interests are crowing about wind and solar being so competitive with traditional electricity sources, such as coal, gas, nuclear and hydro. With enough subsidies and hiding/fuzzing various costs, anything can be made to look successful.

 

https://www.novoco.com/sites/default/files/atoms/files/path_act_sum...

http://www.seia.org/research-resources/impacts-solar-investment-tax...

 

Table 2

Wind ITC

 Wind PTC

Solar ITC Res’l

Solar ITC Com’l

 

%

c/kWh

%

%

2015/2016

 30

2.3

30

30

2017

24

 1.8

30

30

2018

18

1.4

30

30

2019

12

0.9

30

30

2020

Expired

Expired

26

26

2021

 

 

22

22

2022, etc.

 

 

Expired

10

NOTE: Warren Buffett, considered one of the outstanding investors of all-time, has stated: “On wind energy, we get a tax credit if we build a lot of wind farms. That’s the only reason to build them. They don’t make sense without the tax credit”. Buffett has investments in multiple wind sites, as do many other multi-billion dollar entities. Buffett and his cohorts hire tax accountants/lawyers to refine the subsidy-milking art form, as well as PR pros and RE lobbyists to continually increase the milking, via higher RPS targets and renewed subsidy periods.

Economic Viability of the Project: The maximum net income would be about $1000/unit/mo. x 14 units = $14,000/month (rent) - 3,000/mo., (operation and maintenance + real estate taxes + insurance) = $11,000/mo. A private investor would want to make about 8%/y on his capital investment.

Even if 50% of the turnkey cost were a tax-free cash grant, amortizing the remaining $1.835 million over 40 years would require payments of $12,759/mo. to the private investor. The batteries and inverters would need to be replaced at least 2 times and the solar panels at least once during these 40 years. No private investor would undertake such a project. No bank would provide a standard mortgage. Various subsidies would need to be equivalent to about 75% of the turnkey cost as a tax-free cash grant to attract private investors. As such “free” funds are in short supply, more such projects would be unlikely.

https://www.nytimes.com/2017/07/29/business/energy-environment/verm...

http://www.cesa.org/assets/Uploads/McKnight-Project-Data.pdf

http://www.ncsl.org/Portals/1/Documents/energy/energy_Todd_Olinsky_...

Description of Housing Unit: The development is for low-to medium income households. Each housing unit costs about $3.67 million/14 = $262000, including land, septic system, well, grid connection, etc. Each housing unit, 12’ x 60’ = 720 sq. ft., includes:

 

- Twenty PV solar panels, 300 watt each = 6 kW of panels at $3500/kW = $21000, turnkey cost

- One heat pump = $5000, turnkey cost 

- Centralized control of mechanical and electrical systems

- One 6 kWh/4 kW AC battery unit by Sonnen, a German company = $7000, unit + $2000, installation = $9000, turnkey cost, or $1500/stored kWh, which is extremely expensive

 

Battery and PV System Subsidies: The below table indicates the discounts and subsidies for the battery systems. The business owning the PV solar/battery system combos (not the tenant) receives the 30% ITC, plus the 5-year accelerated depreciation, which is equivalent to a 25% tax-free capital grant. The GMP savings are hard to quantify, as they would consist of:

 

1) Buying less electricity at higher wholesale prices during peak hours (typically about 2 c/kWh higher than during off-peak, sometimes more), and

2) Having less demand on the NE grid, which would reduce the forward demand and transmission charges imposed by ISO-NE on GMP. See table.

 

Sonnen battery discount

 25%

Investment tax credit, ITC

 30%

5-year accelerated depreciation

 25%

GMP savings over 10 years

 ?

 

The subsidies for the batteries total about 80%. Artificially creating such a project with huge subsidies, for demonstration purposes, does not mean such projects are economically viable.

 

Economic Viability of Batteries Without Subsidies: GMP does not have time-of-day rates, so charging at midday for consumption during late afternoon/early evening would not save money for the ratepayer. Homeowners would be out of their minds to store their solar energy in expensive batteries during midday for consumption during late afternoon/early evening and have that exercise cost at least 0.435/kWh, if there were no battery subsidies to reduce the battery cost to near zero*. See table at bottom of article.

The cost/kWh would be increase due to the cost of financing and amortizing; return on investment; O&M and disposal, and because the:

 

- Solar panels degrade over time, i.e., less kWh production/y

- Inverters often operate at part load, which is less efficient, i.e., increased losses

- Batteries degrade over time due to cycling, i.e., increased losses.

*GMP has finally realized that and now offers to install Powerwall 2.0 units (14.0 kWh nominal, 13.5 kWh available at 5 kW, steady, or 7 kW, peak) at ratepayer premises, whether that ratepayer has a PV system or not, at $15/month/unit, or a $1500 one-time payment.

 

- GMP has the right to drain the battery every day for 10 years for its business purposes, as below described.

- GMP would be draining in areas where there is not a power failure. GMP would NOT be draining in areas where there is a power failure.

- The homeowner has about one day of electricity in case of a power outage, which typically is sufficient for just about all outages, except extended outages.

- If the battery is fully charged when the outage occurs, the 13.5 kWh gives most people about one day of electricity, except when that outage occurs within a few hours after GMP has drained the battery.

Battery System Services: The battery systems act as shock absorbers for the variable solar energy, and act as energy storage devices for shifting energy from midday to late afternoon/early evening hours, and act to provide electricity for several hours during a power outage.

 

The batteries could be discharged every day by GMP during peak demand hours (about 5 to 8 pm), which would reduce GMP demand, as seen by the ISO-NE, and would reduce the forward demand and forward transmission charges imposed by ISO-NE on GMP.

https://www.greentechmedia.com/articles/read/Sonnen-Launches-a-Home...

Tenant Electricity Bills: Tenants likely would have near-zero electricity bills for heating, cooling and electricity, because each PV system produces about 7500 kWh AC/y, or 20.5 kWh AC/d. Each tenant likely would use about 7500 kWh/y. The PV system would produce less as the years go by. At some point, the PV solar production may be less than tenant requirements. Tenants would have NO EQUITY in the project. They would depend on the landlord for O&M and replacements of systems.

A Small Power Plant Supplemented by the Grid, as Needed: The 14 PV solar and battery system combos act as a small power plant on the grid. The PV solar systems provide the electricity, with the grid receiving and supplying energy throughout the year, as needed.

 

Because the housing units are connected to the grid, there would always be adequate electricity for heating and cooling, etc., except during a power outage, when several hours of electricity would be available from the 6 kWh batteries.

 

Without the grid, this setup would not be feasible, i.e., the housing development is not “weaned off the grid”, as stated in the above New York Times article. GMP has no intention of weaning ratepayers of the grid, as that would be detrimental to its business prospects.

 

Grid Connection Cost: In case of snow on the panels, the units likely would draw electricity from the grid. The means the cost and capacity of the grid connection to the housing units would be the same, with or without PV solar and battery systems.

 

Sonnen Battery Unit: The Sonnen unit, 6 kWh, has an efficiency of about 0.89 AC to AC. The efficiency and turnkey cost is about the same as of a Powerwall 2.0 unit, 13.5 kWh.

 

If 6.614 kWh DC of the solar energy is converted to 6.349 kWh AC, fed into the battery unit, about 6 kWh will be stored, which upon withdrawal makes available a maximum of 5.560 kWh AC to a tenant, enough for a few hours of operation during a power outage.

 

Low-load efficiencies of batteries and inverters are less than at rated load, i.e., the 5.560 kWh AC would be less on a year-round basis, plus it would be further reduced due to battery and PV panel degradation over time. See table, which assumes a charging cost of 20 c/kWh (rooftop PV solar energy is not for free) and assumes, for demonstration purposes, a 30 c/kWh avoided on-peak cost, even though GMP does not have time-of-day rates.

 

An Estimate of Battery Economics: A quick analysis of energy storage cost = $ per daily cycle / daily kWh AC to housing unit = 2.466/5.670 = $0.435/kWh, which is extremely uneconomic. See table.

http://www.seacoastenergy.com/new_items/Resources/sonnen_eco_US Dat...

 

Even if the difference between on-peak and off-peak electricity were 30 - 20 = 10 c/kWh, shifting the solar energy from midday to late afternoon/early evening would yield only $0.43/d. The battery unit costs $2.466/d, about 5.7 times the shifting gain. This appears to be an extremely unwise use of valuable resources.

An Estimate of PV Solar Economics: The National Renewable Energy Laboratory, NREL, prepared an easy to use computer program to determine the levelized cost of energy, LCOE, c/kWh, of PV solar.

 

Ignored items: subsidies, such as cash grants, tax credits, accelerated depreciation, etc.; inverter replacements; panel degradation; and variable O&M. In Vermont, the CF = 0.15.

 

https://www.nrel.gov/analysis/tech_lcoe.html

https://www.nrel.gov/analysis/tech_lcoe_documentation.html

https://www.nrel.gov/analysis/tech_lcoe_re_cost_est.html

 

Period

 30 y

Discount rate

 3%/y

Capital cost

 $3500/kW

Capacity factor

15%

Fixed O&M

21 $/kW-y

Variable O&M

0

Utility electricity price

 19 c/kWh

Escalation

 2.5%/y

LCOE utility

27.0 c/kWh

LCOE PV solar

15.2 c/kWh

Conclusions:

- Various entities and stakeholders chipped in to get the project build for demonstration purposes. However, this rural project appears to have no economic viability. 

- Compared to the turnkey capital cost, the rental income, very generously assumed at $168,000/y, is grossly insufficient for any return on investment. No private investor would be interested, even if at least 50% of the turnkey cost were to be provided as a tax-free cash grant.

- Vermont has about 260,000 households of which about 78,000 (30%), are low-income. At least 25,000 of the low-income households would qualify for such a project. The turnkey capital cost would be at least 25,000/14 x 3.67 = $6.55 billion.

- A much more economical approach would be multi-story, multi-household apartment buildings in urban areas to house lower-income people.

- GMP likely passed some of the costs not borne by tenants onto other ratepayers in one way or another.

- GMP, as a regulated utility, is allowed to earn 9%/y on any assets it owns in the project.

- GMP likely obtained state and federal cash grants and subsidies, and fast depreciation write-offs to reduce its state and federal taxes.

 

kWh

$

6.614

DC from PV system

7000

Sonnen

0.960

Inverter eff, DC to AC

2000

Install

6.349

AC from PV system

9000

Turnkey

0.945

Sonnen charge eff, AC to DC

1500

$/kWh

6.000

DC stored in battery

0.945

Sonnen discharge eff, DC to AC

5.670

AC out to house

0.679

AC energy loss per cycle

10.70

AC loss = 100 x (1 - 5.670/6.349), %

14.27

Total loss = 100 x (1 - 5.670/6.614), %

3650

Cycles

2.466

Cost, $/d

0.20

Charging cost, $/kWh

0.435

$/kWh

0.30

Avoided cost, $/kWh

0.43

Energy shifting gain, $/d

5.7

Times

1573.73

Gain, $/10y

7426.27

Loss

 

NOTE: The percent losses in the table are greater on a year-round basis and due to degradation of PV panels, batteries and inverters over time.

 

Ignored items: Financing and amortizing; 2) Return on investment; 3) Cash grants, tax credits and accelerated depreciation; 4) O&M and disposal; 5) Battery capacity degrading over time due to cycling; 6) PV panels degrading over time; 7) Efficiency reductions of frequent low-load operation of inverters; 8) Battery and inverter replacements about every 10 years; 9) PV panel replacement in about year 25.

 

GMP, PUC and DPS Promoting Expensive RE: It is harmful to the Vermont economy for the PUC and DPS to encourage such wasteful projects, so GMP can play its “islanding / microgrid / batteries” games. GMP, which has 77% of the Vermont electricity market, is using its market dominance to saddle Vermonters with expensive energy for its own business purposes.

Hydro-Quebec A Much Better Alternative: Hydro-Quebec has about 5600 MW of spare hydro plant capacity, and has under construction and in planning stages an additional 5000 MW of hydro plant capacity. Here a list of the benefits of hydro energy:

 

- Clean (no particulates, no SOX, no NOx)

- Low-cost (5 - 7 c/kWh, plus 1 c/kWh for transmission), much less than wind and solar

- Very low CO2/kWh emissions, much lower than wind and solar

- Steady, 24/7/365 energy, i.e., NOT variable and NOT intermittent, unlike wind and solar, which are weather dependent, variable cloudiness dependent, night and day dependent, and season dependent

- NO federal and state subsidies and investment tax credits

- NO capital outlays by Vermont’s government

- NO enriching of multi-millionaires and their lucrative, risk-free, tax shelters

- NO additional environmental impact in Vermont

- Private entities would own the transmission lines from Quebec to New England

- RECs would not be sold to out-of-state entities so they would be wearing the green halo, instead of Vermonters.

- Much less social discord than controversial wind on pristine ridgelines and solar in fertile meadows

NOTE: Anti H-Q folks often mention the plight of the Cree who needed to be relocated, due to the H-Q reservoirs.

Quebec Province: 595,391 sq. miles
NY State: 54,556 sq. miles
H-Q 5 largest reservoir area: 3145 sq. miles holding 129.7 billion cubic meter
H-Q all reservoirs holding 176 billion cubic meter
H-Q total reservoir area: 3145 x 176/129.7 = 4268 sq. miles, about 0.7% of Quebec province.

How many of the 19000 Cree were living on that 0.7% that needed to relocate?
http://www.hydroquebec.com/learning/hydroelectricite/gestion-eau.html

 

Here are some URLs about increased hydro energy from Hydro Quebec.

 

http://vtdigger.wpengine.com/2015/01/28/utilities-want-flexibility-...

https://finance.yahoo.com/news/eversource-hydro-qu-bec-offer-170400...

http://www.windtaskforce.org/profiles/blogs/increased-canadian-hydr...

http://www.windtaskforce.org/profiles/blogs/more-energy-from-hydro-...

http://www.windtaskforce.org/profiles/blogs/gmp-refusing-to-buy-add...

 

 

 

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