the more things change.... by harry warren, wges

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Harry Warren Jr., President of Washington Gas Energy Services, speaks about the viability of solar energy in large-scale commercial projects as the Maryland, DC, Virginia region approaches grid-parity. This presentation was given December 4, 2009 at the Solar Energy Focus Conference: Fall 2009 hosted by the Maryland, DC, Virginia Solar Energy Industries Association (MDV-SEIA) in Gaithersburg, MD. To learn more please visit:www.mdvseia.camp7.org

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Page 1: The More Things Change.... by Harry Warren, WGES

Energy Services, Inc.

The more things change …

Presentation to the Solar Energy Focus Conference

by

Harry A. Warren, Jr.

President

Washington Gas Energy Services, Inc

December 4, 2009

Page 2: The More Things Change.... by Harry Warren, WGES

Energy Services, Inc.

1984

Page 3: The More Things Change.... by Harry Warren, WGES

Energy Services, Inc.

Page 4: The More Things Change.... by Harry Warren, WGES

Energy Services, Inc.

Page 5: The More Things Change.... by Harry Warren, WGES

Energy Services, Inc.

Solar PV Balance of System Costs

If solar panels are free, balance of

system costs are too high to make

solar PV grid competitive.

Theodore B. Taylor and Harry Warren - 1984

Page 6: The More Things Change.... by Harry Warren, WGES

Energy Services, Inc.

Page 7: The More Things Change.... by Harry Warren, WGES

Energy Services, Inc.

Page 8: The More Things Change.... by Harry Warren, WGES

Energy Services, Inc.

2009

Page 9: The More Things Change.... by Harry Warren, WGES

Energy Services, Inc.

Page 10: The More Things Change.... by Harry Warren, WGES

Energy Services, Inc.

Page 11: The More Things Change.... by Harry Warren, WGES

Energy Services, Inc.

Page 12: The More Things Change.... by Harry Warren, WGES

Energy Services, Inc.

Solar PV Balance of System Costs

If solar panels are free, balance of

system costs are too high to make

solar PV grid competitive.

Harry Warren - 2009

Page 13: The More Things Change.... by Harry Warren, WGES

Energy Services, Inc.

Tracking the Sun II, The Installed Cost of Photovoltaics in the U.S. from 1998-2008

Ryan Wiser, Galen Barbose, Carla Peterman, Naïm Darghouth

Lawrence Berkeley National Laboratory, October 2009

Page 14: The More Things Change.... by Harry Warren, WGES

Energy Services, Inc.

Tracking the Sun II, The Installed Cost of Photovoltaics in the U.S. from 1998-2008

Ryan Wiser, Galen Barbose, Carla Peterman, Naïm Darghouth

Lawrence Berkeley National Laboratory, October 2009

Page 15: The More Things Change.... by Harry Warren, WGES

Energy Services, Inc.

$3.00 per watt

isn’t grid parity

Mini Financial Analysis - Solar PV Project

1 Watt SystemNo incentives

Capital Cost 3.00$

Debt Ratio 50%

Pre-tax Cost of Debt 6%

System Life 20 yrs

Tax Rate 35%

Annual Output 1.2 kwhPower Price 0.40$ per kwh

Annual Revenue 0.48$ Operating Expenses -$

EBITDA 0.48$

Depreciation 0.15$

EBIT 0.33$

Debt Service 0.09$

EBT 0.24$

Taxes 0.08$

Net Income 0.16$

After Tax ROE 10.4%

Page 16: The More Things Change.... by Harry Warren, WGES

Energy Services, Inc.

BOS = Non-module costs

“Non-module costs (which may include items such as inverters, other

balance of systems hardware, labor, and overhead).”

“Average non-module costs (which may include such items as

inverters, mounting hardware, labor, permitting and fees, shipping,

overhead, taxes, and profit) shown in Figure 5 were calculated as the

difference between the average total installed cost and the module

price index in each year.”

Tracking the Sun II, The Installed Cost of Photovoltaics in the U.S. from 1998-2008

Ryan Wiser, Galen Barbose, Carla Peterman, Naïm Darghouth

Lawrence Berkeley National Laboratory, October 2009

Page 17: The More Things Change.... by Harry Warren, WGES

Energy Services, Inc.

Reducing Non-module Costs

• ??????????

• Standardization/modularization of design– Optimal component matching / economics

– Minimize design work

– Minimize runs

• Don’t oversize for roof

• Optimal tilt

• Project development efficiency– Client and site selection

Page 18: The More Things Change.... by Harry Warren, WGES

Energy Services, Inc.

Reducing Non-module Costs

• DC to AC to DC?

Page 19: The More Things Change.... by Harry Warren, WGES

Energy Services, Inc.

The more things change …

The closer we get to grid

parity!!

Thanks