California Solar Initiative 1 Revising CSI Cost Data Reporting Ben Airth, CSI Program Manager California Center for Sustainable Energy

California Solar Initiative Revising CSI Cost Data Reporting 2 Since program inception, the CSI Program has looked at cost data via $/Watt

California Solar Initiative CSI Residential Third Party Owned Systems 3 The increase in third party owned residential systems has grown substantially since 2007: 2007 = 7% 2008 = 15% 2009 = 15% 2010 = 32% 2011 = 54% 2012 = 69% Lifetime of Program = 32%

California Solar Initiative CSI Non-Residential Third Party Owned Systems 4 The increase in third party owned non-residential systems remain fairly steady but significant since 2006: 2006 = 50% 2007 = 40% 2008 = 24% 2009 = 20% 2010 = 34% 2011 = 22% 2012 = 43% Lifetime of Program = 33%

California Solar Initiative Revising CSI Cost Data Reporting 5 has allowed program participants to compare cost data among many different years, customer sectors, Program Administrators, and system ownership types Residential Cost Distribution: Host Customer vs. Third-Party Owned

California Solar Initiative Revising CSI Cost Data Reporting 6 has allowed program participants to compare cost data among many different years, customer sectors, Program Administrators, and system ownership types Non-Residential Cost Distribution: Host Customer vs. Third- Party Owner

California Solar Initiative Revising CSI Cost Data: What is the Issue? 7 With the infusion of third party owned systems, an issue in project cost data collection and reporting now exists How can policy makers and consumers make sense of cost data when they represent different information? Creating a sustainable solar market: how does California know this is being achieved? Reduction in $/W costs? How can consumers effectively compare a cash system vs. a third party owned system? How can CSI data help in this equation?

California Solar Initiative Evaluating Different Approaches James Loewen Energy Division

California Solar Initiative Background Third Party Owners (TPOs) have a hard time providing Project Cost for CSI reporting. High Cost Justification forms are required when $/W are above a certain threshold. We want to ensure fair and equal treatment among the different ownership arrangements.

California Solar Initiative Policy goals Make “apples-to-apples” comparison among the different ownership arrangements. Requires either $/W or $/kWh Allow for better comparison between rooftop PV and other energy sources Requires $/kWh

California Solar Initiative Additional data needed to report $/W and $/kWh for TPOs Energy production: fairly simple New inputs: capacity factor, annual degradation, term Present value of host customer’s payment stream (for TPOs): more complicated New inputs: discount rate, salvage value, term, etc.

California Solar Initiative How do / how could applicants report “Project Cost”? 1.Cash price to host customer 2.TPOs – Sale price from Contractor to Third Party Owner 3.TPOs – Cost to contractor 4.TPOs – Fair Market Value (used for tax reporting) 5.Proposal – sum of discounted payment stream from host customer

California Solar Initiative 1) Project Cost reporting: Cash Price to host customer This would be the definitive method, except it does not include: Inverter replacement Roof replacement

California Solar Initiative 2) Project Cost reporting: Sale price from contractor to TPO Does not include: Inverter replacement Roof replacement TPO’s overhead and profit (but does include contractor’s overhead and profit)

California Solar Initiative 3) Project Cost reporting: Cost to contractor Does not include: Inverter replacement Roof replacement TPO’s overhead and profit

California Solar Initiative 4) Project Cost reporting: Fair market value This method is entirely different from the Cash Price Empirically/statistically, are its values close to the Cash Price (Approach #1)? Do all TPOs calculate this value for each installation? If this is close to the Cash Price, and involves no extra work for applicant, maybe it’s good enough ?

California Solar Initiative 5) Project Cost reporting: Proposal – Sum of Discounted Payment Stream This would include all projected payments – for leases and PPAs – discounted appropriately. Is it too burdensome for TPO applicants? Would reported #s be trustworthy? Would spot checks of these calculations be needed? Is the added cost to the program administration, and to applicants, and to policy makers, worth it?