Today at High Performance Building Magazine

20 Minute Lesson on Grounding and Bonding 101 for Commercial Solar PV Projects

What are the differences between grounding and bonding in solar design? What are the most recent codes? Where are the codes headed? What are some of the changes that have happened? What does it mean for you and your installations?

In this free 20-minute video lesson, Ryan Mayfield identifies the key 2014 NEC code sections for PV system grounding and bonding and outlines general requirements of Article 250 – beginning part of code for Grounding and Bonding (and what he considers one of the most difficult and fun discussions). He also begins outlining Article 690 Part V: Grounding and Bonding Requirements.

Watch the full video below to learn more. If you have any questions about the content, please leave it in the comment section. If you’d like to connect with other professionals focused on designing, commissioning, managing and installing large commercial solar projects, join our Megawatt Design Linkedin group.

By watching the video, you’ll learn the following

  1. Identify the key NEC standards for grounding and bonding
  2. Overview of article 250 as it related to solar pv
  3. Article 690 Part V on grounding and bonding requirements
  4. These code changes are based on 2014 NEC code
  5. How grounding and bonding changes will impact system design and installation

Watch the Lesson Here

Spend ten weeks learning from Ryan Mayfield, the Solar PV Technical Editor at SolarPro Magazine. Ryan, along with help from other industry leaders, has developed Megawatt Design, an online course to help experienced solar professionals get their projects permitted and installed faster and cheaper. This course goes beyond traditional solar training: it is technical, rigorous, and for experienced professionals only. We cover all types of large solar PV systems, with a heavy emphasis on commercial rooftop systems. Test-Drive Megawatt Design to access more free videos. The course starts on October 6th and is capped at 50 students with 30 discounted seats.

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About the Author

Ryan Mayfield has been working in the renewable energy field since 1999 and is the President of Renewable Energy Associates, a consulting firm providing design, support and educational services for electrical contractors, architectural and engineering firms, manufacturers and government agencies. Ryan serves as Photovoltaic Systems Technical Editor for SolarPro Magazine, regularly writing feature articles in SolarPro and Home Power magazines, and wrote PV Design and Installation for Dummies. Ryan was also a contributor and video team member for Mike Holt’s Understanding the NEC Requirements for Solar Photovoltaic Systems. Ryan teaches various PV courses across the nation for electricians, existing solar professionals, code officials, inspectors and individuals looking to join the solar industry. Class topics include National Electrical Code and PV systems, residential and commercial PV systems.

Posted in Geothermal and Solar Design and Installation Tips | Leave a comment

Learn in 60 Minutes: Conventional vs. Passive Floor Planning

If you don’t floor plan properly, you will fail.

During this free 60-minute lecture, Mike Duclos, Principal and Founder of DEAP Energy Group and expert instructor at HeatSpring, describes how Passive House floor planning differs from conventional floor planning. Mike provides a background on the Passive House movement, presents examples of Passive House designs and floor plans, and explains why floor planning is critical for energy efficiency, cutting costs, and meeting the rigorous (and non-negotiable) Passive House Space Heating and Primary Energy requirements.

Access the full lecture and archived discussion board here

Thoughtful floor plan design can make the experience of living in the home much more enjoyable, reduce construction costs, and be a substantial asset in ‘making the numbers.’

plan

During this free 60-minute lecture, Mike will teach you:

  • Why orienting the long axis of the home to face South will save you money
  • Why plumbing layout impacts DHW quality of service, Primary Energy use, recovery, and the challenges to optimization and implementation
  • Some not-so-obvious reasons for orienting rooms with respect to the sun
  • Alternatives to the suggestions in the floor plan to adapt the implementation of the ‘physics’ to the aesthetics and desires of your clients
  • How to think ‘outside of the box’ with respect to floor planning

Access the Free Lecture and Archived Discussion Board Today! 

Mike Duclos is a principal and founder of The DEAP Energy Group, LLC, a consultancy providing a wide variety of Deep Energy Retrofit, Zero Net Energy and Passive House related consulting services. Mike was an energy consultant on the Transformations, Inc. Zero Energy Challenge entry, and has worked on a variety of Zero Net Energy, DER and Passive House projects, including two National Grid DER projects which qualified for the ACI Thousand Homes Challenge, Option B, the first National Grid DER to achieve Net Zero Energy operation, and the first EnerPHit certified home in the USA. Mike is a HERS Rater with Mass. New Construction program specializing in Tier III design and certification, a Building Science Certified Infrared Thermographer, a Certified Passive House Consultant responsible for the design and certification of the second Passive House in Massachusetts, holds a BS in Electrical Engineering from UMass Lowell, and has two patents.

Looking to gain solid knowledge and skills for Passive House construction or consulting work? Mike teaches “Passive House Design,” a six-week advanced online course that teaches students how to meet the rigorous (and non-negotiable) Passive House design criteria and make Passive House happen in the real world. Take a free test-drive of the course today. (There course is capped at 50 with 30 discounted seats.)

 

Posted in Building Efficiency, elearning, Inside the Classroom | Leave a comment

Calculate Heat Loss to the Ground with Marc Rosenbaum

Marc Rosenbaum, Director of Engineering, South Mountain Company and one of HeatSpring’s expert instructors, taught a free live lecture to more than 200 architects and builders last week. His focus: demonstrate how buildings interact thermally with the ground and teach people how to calculate heat loss to the ground.

Access Full Lecture and Additional Resources Here

During the live lecture, Marc started with a 2D THERM model of a basement, reviewed the U factor that THERM calculates for the foundation assembly, and used that to calculate the design heat loss of the basement. He showed the attendees how to estimate the annual heat loss as well.

heatloss

He then presented the simplified Los Alamos algorithms for calculating heat loss from basements and slab-on-grade foundations and used those to analyze the model and compare the result with the THERM calculation.

losalamos

At the conclusion of the lecture, Marc discussed how to apply the algorithms to a walk-out basement condition and how to estimate design heat loss in the case where the insulation is in the frame floor over a basement.

Learning Takeaways

  • Learn about relative conductivity and heat capacity of soils vs. air
  • Learn about variations in soil temperature with time and depth
  • See the results of a 2D THERM model of a basement, including the temperature distribution, direction of heat flow, and heat loss rates
  • Learn about using the U factor calculated by THERM to estimate foundation heat loss
  • Learn how to do simplified heat loss calculations for basements, slab-on-grade, and walkout basement foundations
  • Learn how to estimate design heat loss through an insulated floor to a basement below

Marc Rosenbaum is the Director of Engineering, South Mountain Company. He uses an integrated systems design approach to help people create buildings and communities which connect us to the natural world, and support both personal and planetary health. He brings this vision, experience and commitment to a collaborative design process, with the goal of profoundly understanding the interconnections between people, place, and systems that generate the best solution for each unique project. Marc teaches a 10-week course,Zero Net Energy Homes, where students walk away with a comprehensive understanding of all of the key components of a zero net energy home, do a full design of a Zero Net Energy Home, and earn NESEA’s ‘Zero Net Energy Homes Professional Certificate.’ The next course starts on September 15th.

Read the full course outline of Zero Net Energy Homes and learn more here.
The course is capped at 50 students with 30 discounts.

 

 

Posted in Building Efficiency, Q+A | Leave a comment

How to Handle Unknown Risk to Increase Solar Project Success

Known Knowns PNGImage: Universe of Issues, Risks, and Challenges

This is a guest article from Chris Lord, Managing Director at CapIron, Inc. He’s a former lawyer with extensive banking experience who now consults with solar developers and investors. I’ve never met anyone else who can, seemingly, answer any financial or legal questions about financing commercial solar projects.

In the article, Chris shares some of his experiences about how to understand and mitigate the risks that you don’t know exist in commercial solar development. Unknown unknown risks are extremely important to understand because they can have large negative impacts on profits and relationships with investors and clients. These risks are especially important for firms that are experienced in solar but new to financing larger commercial solar projects.

I found this article extremely interesting and if your work revolves around selling or financing commercial solar projects, I’m sure you’ll love it. If you have questions about the article, please leave a comment. If you’d like to connect with other professionals focusing on best practices for financing commercial solar projects, join our LinkedIn group on Best Practices for Financing Mid-Market Solar Projects.

Chris Lord also teaches our 6-week Solar Executive MBA that starts on Monday, September 15th. In the course, you’ll work a commercial solar deal from start to finish with expert guidance. The course includes financial models, legal contracts, and development tools that are indispensable.

Enter Chris Lord

Not long ago, I spoke with an experienced developer who told me about a small utility-scale project undertaken by a team within his company. Although experienced with distributed generation projects, the team and its leader had never developed a third party financed, utility-scale project. They knew that they had to learn more about the technical and procedural requirements for interconnection with the local utility and delivery of the solar power to the grid. Over the course of development, the project hit many roadblocks and challenges before finally arriving successfully at COD. Throughout the process, the team modeled the project early and often, generally showing a tight but acceptable profit margin for the project. At COD, the company collected its profit and moved on. Less than a year later, the third party investor in the project made a call on the developer’s tax indemnity required as part of the close. It turned out – to the utter surprise of the project manager and his team – that they had incorrectly assumed the federal ITC would apply the interconnection costs paid to the local utility for equipment on the utility’s side of the transformer. The error – when finally caught – cost the company more than its small profit margin on the project and constrained the company’s cash flow.

This articles focuses on the most dangerous and difficult threat to successful project development: the risks, issues, and challenges that you don’t know that you don’t know. These “unknown unknowns” are not the items that you know you don’t know. When you know you don’t know enough about a risk, issue, or challenge, you can remedy that ignorance by focusing on the problem and calling on experts – colleagues, advisors, consultants or lawyers – to help you learn what you must learn to overcome, hedge, or eliminate it. In the example above, the team knew it had to learn more about the technical and procedural requirements for interconnection with the local utility, and they did so successfully. What the team did not know was that it did not know enough about the ITC’s definition of “eligible equipment” and its application to their project.

Understanding the Challenge of Unknown Unknowns

Developers by nature have to be optimistic and confident souls, if they are to make their way through the minefield of project development. Without that optimism and confidence, a developer would never get started on the daunting task of taking a green field site from start to finish. In fact, the persistence that everyone tends to think of as the critical ingredient in developer success is actually just a manifestation of optimism and confidence.

Known Knowns (PNG)

But as life shows us, our greatest strengths are also our greatest weaknesses. That very same optimism and confidence necessary for successful project development often blinds a developer to the biggest risks of all. These are the risks – that through optimism, confidence, and ignorance – are simply not on the developer’s radar screen. These are not the known or expected risks. A successful developer manages a known risk by minimizing and staging investments of time and money until more about the risk is known or its threat neutralized. There are a lot of surprises in the life of a development project, and, because developers are an optimistic lot, it is rare that these surprises add to a project’s upside. More often than not, these “upside” events were already incorporated into project economics as “good to average assumptions.”

So what really can kill projects are the unknowns and the unexpecteds. We will just call them the “unknown unknowns.” These items consist of issues, events, or results that a developer does not even know that he does not know. And while a wealth of experience and education can reduce the potential unknown unknowns, they are always there. Nassim Nicholas Taleb (author of The Black Swan and several other books on risk) and many other investors specialize in investment strategies designed to capitalize on unexpected and dramatic events, such as the mortgage meltdown crisis of 2008. These strategies involve multiple small bets on a wide variety of extreme outcomes. But a project developer is betting on not having unknown unknowns occur, and that is a lot harder to do.

Tackling the Problem of Unknown Unknowns

The image above illustrates the problem. If we begin with the blue box, then that is the complete universe of all issues, risks or challenges. At the very center of the box is the yellow circle that illustrates what we know (sometimes called the “known knowns”). These are the items that, through education and experience, we know how to handle and are comfortable wrestling with them. The orange cloud surrounding the yellow circle represents the items that we know we don’t know. Within this nebulous cloud are the issues, risks, and challenges that we know just enough about to know we must anticipate and manage them, but we don’t know enough to define them and consider the solutions, hedges, or alternatives. In other words, we know that we can expect the item to arise, and that to manage that item we must either educate ourselves, find an expert to manage it for us, or some combination of the two. For example, most developers know that they must consider whether a project will be subject to property tax over the course of its existence. Property taxes are a set of arcane rules that vary not just from state to state but also from county to county. Moreover, solar PV projects may be characterized and taxed as real property in some jurisdictions, but they may also be taxed as personal property in jurisdictions that make the distinction. In this case, when a developer begins a new project in a new state or county, he or she knows to consult local counsel early – before even meeting with local taxing authorities to discuss abatements or PILOT agreements.

Known Knowns PNG

Image: Universe of Issues, Risks, and Challenges

Specific Actions to Address Unknown Unknowns

So, turning back to our unknown unknowns, how does a developer guard against something that by its very nature is unknown and unexpected? Not easily, of course. But a couple of options come to mind. The key to all of these options is to work on expanding the known knowns and the unknown knowns. If you look at the illustration above, we are talking about expanding our knowledge and leveraging the experience of others to make the yellow circle as large as possible and grow the orange cloud outwards as well. In effect, we want to shrink the blue portion of the box – the unknown unkowns – by expanding the circle and cloud. Of course, we can never eliminate the blue, and should not imagine that is where our efforts should focus, but the faster we can grow the yellow circle and orange cloud, the better hedged against the unknown unknowns we will be.

Continue reading

Posted in Financing, Solar Photovoltaics | Tagged , , | Leave a comment

Free 65 Minute Lecture on Biomass Thermal Storage + Free Invitation to Maine Alternative Energy Expo 2014

Interphase Energy, a Maine-based leader in supplying central pellet heating equipment throughout North America, is hosting Alternative Energy Expo 2014 at their Portland, Maine facility this Friday, September 12th, 2014 from 2:00 – 8:00 p.m. EDT. Free to the public, the expo will showcase a variety of alternative energy organizations providing information and demonstrations as well as speakers, workshops, panels, food trucks and more.

We wanted to join the expo remotely, so we’re sharing a free lecture about alternative energy that we hosted in August with John Siegenthaler, one of our expert instructors with over 32 years of experience in designing modern hydronic heating systems.

FREE LECTURE: TEMPERATURE STACKING IN THERMAL STORAGE FOR BIOMASS HEATING SYSTEMS

This free lecture describes a unique method of managing the operation of biomass-fueled as well as auxiliary boilers for optimum system performance. Beginning with an explanation of why thermal storage is critically important in many systems using biomass boilers, Siegenthaler goes on to describe how temperature stacking is accomplished using multiple temperature sensors mounted in different vertical locations within a thermal storage tank and off-the-shelf controllers. He then explains how to use the temperature stacking technique in systems using multiple biomass boilers as well as systems that combine a biomass boiler with an auxiliary boiler.

The lecture covers:

  • The need for proper thermal storage in systems using wood-fired heat sources
  • The rationale of temperature stacking within thermal storage tanks
  • How to configure standard controls to manage temperature stacking
  • How temperature stacking differs when an auxiliary boiler is used

Check out the full free lecture and access the archived discussion board! 

John Siegenthaler, P.E., is a mechanical engineer and graduate of Rensselaer Polytechnic Institute, a licensed professional engineer, and Professor Emeritus of Engineering Technology at Mohawk Valley Community College. “Siggy” has over 32 years of experience in designing modern hydronic heating systems. He’s teaching two courses about biomass with us this fall: Mastering Hydronic System Design and Hydronic-Based Biomass Heating Systems. Both courses are capped at 50 students with 30 discounted seats.

Did you like that free lecture? Check out another free lecture taught by John: Low Temperature Heat Emitter Options in Hydronic Systems  

Interact with other professionals in the biomass industry in our LinkedIn Group: Hydronic-Based Biomass Heating Professionals

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Two Free Tools: ASHRAE Standards 55 and 62.2 Calculators

Registered engineering technologist and expert HeatSpring instructor Robert Bean has developed two calculators to help designers meet ASHRAE Standards 55 and 62.2: “Thermal Environmental Conditions for Human Occupancy” and “Ventilation and Acceptable Indoor Air Quality in Low-Rise Residential Buildings.”

Considered one of the leaders and most knowledgeable professionals in his field, Robert’s research and teaching enables designers to determine how indoor environmental quality affects human comfort, productivity, and health.

Free Download: ASHRAE Standard 55 Calculator

Free Download: ASHRAE Standard 62.2 Calculator

For a full description of the free downloadable tools, please see below. 

Free Tool: ASHRAE Standard 55 Calculator
This free tools allows designers to calculate the inside surface temperature for the purpose of determining the mean radiant temperature in calculating the operative temperature as per ASHRAE Standard 55 – Thermal Environmental Conditions for Human Occupancy.

ashrae 55.5

Download this calculator for free today!

Free Tool: ASHRAE Standard 62.2 Calculator 
This free tool allows designers to select floor area and modify number of bedrooms, duct size and duct length, and quantity of duct fittings for the purposes of calculating CFM, duct velocity, and friction. It works for both the 2011 and 2013 versions of ASHRAE 62.2 – Ventilation and Acceptable Indoor Air Quality in Low-Rise Residential Buildings. Output includes differential comparison in CFM, friction loss, and duct size as a result of CFM change from the 2011 to the 2013 version.

ashrae 62.2

Download this calculator for free today! 

Robert Bean, R.E.T., P.L.(Eng.) is a registered engineering technologist in building construction and a professional licensee in mechanical engineering. He is president of Indoor Climate Consulting Inc. and director of HealthyHeating.com. He is a volunteer instructor for the ASHRAE Learning Institute and serves ASHRAE TC’s 6.1, 6.5, 7.4 and SSPC 55 Thermal Environmental Conditions for Human Occupancy; and is a special expert on IAPMO’s new Uniform Solar Energy and Hydronics Code committee. He has developed and teaches numerous courses related to the business and engineering of indoor climates and radiant based HVAC systems. He will be teaching an online, advanced 10-week course, Integrated HVAC Engineering, this fall. The course is capped at 50 students with 30 discount seats. Read the full course outline here.

ASHRAE, the American Society of Heating, Refrigerating and Air-Conditioning Engineers, is a global society focused on building systems, energy efficiency, indoor air quality, refrigeration and sustainability within the industry. Through their research, standards writing, publishing and continuing education, ASHRAE helps shape today’s built environment.

Posted in Building Efficiency, elearning | Leave a comment

Free 25-Question Practice Test for the Upcoming NABCEP Installer Exam

HeatSpring NABCEP Prep Test DriveFor the next month, we’re offering a free 25-question practice test for the upcoming NABCEP PV Installation Professional certification exam. All of the questions are here. For hints, answers, explanations, and a free lesson on battery systems, follow this link to the “Test Drive”:

  1. Fill in the blank: NEC section ________ shows the requirements for working spaces around live electrical equipment.
  2. What is the maximum latitude at which the sun can achieve a 90º altitude angle?
  3. If the open circuit voltage of a polycrystalline silicon PV module is 37.0V, the module Vmp is 29.9V, the inverter max voltage is 600VDC and its MPPT voltage range is 300 to 480VDC, and the minimum temperature is -24°C. What is the maximum number of modules per source circuit according to the NEC? List the NEC section where the answer is found.
  4. A PV array of Suniva 300 Watt modules consists of 3 rows and 10 columns of racked modules mounted in landscape and facing south at latitude 30°. The modules are tilted at 20⁰. The mounting posts are installed 3 ft. deep. How long must the posts be? Module dimensions are 77.6” x 38.7”.
  5. At 43⁰ North latitude on the winter solstice, the solar altitude angle at noon is____.
  6. An array is comprised of 22 modules. Each module is 64.5” x 38.7” and weighs 44.1 lbs. The site will experience 50 psf. of uplift force. What is the approximate total uplift on the array?
  7. What is the temperature correction factor if the module correction factor is -0.335 %/⁰C and the cell temperature is 54⁰C?
  8. A module has dimensions of 64.5” x 38.7” and is in a landscape orientation on a flat roof. The position of the sun at 9am on Dec 21 is 11° elevation and 130° azimuth. What is the maximum tilt angle the modules can have so that there is no inter-row shading? (A 2 foot walkway is required between adjacent rows)
  9. Where no overcurrent protection is provided for the PV dc circuit, an assumed overcurrent device rated at the PV circuit Isc is used to size the equipment grounding conductor in accordance with NEC ____.
  10. There are to be two critical loads on a PV system. Your analysis shows that one uses 1900 Wh/day and operates for 6 hrs. per day and the other uses 1200 Wh/day and operates for 3.5 hrs. What is the weighted average operating time?
  11. What is the combined effect in wattage of the 2 loads in the previous question?
  12. The critical design month is the worst case scenario where the load and the _____________ are used to design the PV system.
  13. Active means of charge control is required by the NEC unless the maximum array charge current for 1 hour is less than ____ % of the rated battery capacity measured in amp/hours.
  14. When battery temperature is high, temperature compensation ________ the VR set point to minimize the excessive over charging and reduce electrolyte losses.
  15. A 48 volt battery bank is used to provide power for critical loads requiring 7458 Wh/day. Three days of autonomy are required. What is the required capacity of the battery bank?
  16. Critical loads operate for 12 hours. Three days of autonomy are required and the preferred depth of discharge of 50%. What is the average discharge rate?
  17. A battery bank of 500 Ah is required. The depth of discharge is 50%, the minimum operating temperature is -10ºC and the average discharge rate is C/128. According to the manufacturer’s specs. this yields a temperature and discharge rate derating factor of approximately 73%. What is the required battery bank capacity?
  18. A battery bank must supply 1200 Ah and will operate at 48V. The battery selected is an 800 Ah battery. How many 6V batteries will be required in this battery bank?
  19. A PV system needs to supply 5834 Wh per day. The daily average insolation is 4.8 peak sun hours. The battery system charging efficiency is 0.9. The nominal voltage is 48V. What is the required array current not including any additional deration factors?
  20. You are an installer called to move a residential two-axis tracker system from Yuma, AZ to Duluth, MN. Before reinstalling the system what should you check?
  21. For a PV array to directly face the sun at 11 AM solar time on June 21st at 30⁰N latitude, at what tilt and azimuth angles should the modules be mounted? Use the sun-path chart provided.
  22. The purpose of a linear current booster is to:
  23. Where the removal of the utility-interactive inverter or other equipment disconnects the bonding connection between the grounding electrode conductor and the photovoltaic source and/or the photovoltaic output circuit grounded conductor, a____ shall be installed to maintain the system grounding while the inverter or other equipment is removed.
  24. In addition to NEC Article 690. where else in the NEC are over-current devices are addressed?
  25. An array located at 30⁰N latitude consists of two rows racked facing south. Both rows are on a level surface and the height from the ground to the highest point on the module is 39.7”. Calculate the minimum distance in feet needed between rows so the modules will not be shaded at 9AM on December 21. Use the sun chart provided.

Click here to take this free NABCEP practice test. You’ll receive a full score report, including correct answers. You can take it as many times as you like. It’s being offered as part of a “Free Test Drive” of our NABCEP Solar PV Installer Exam Prep course that runs through September up until the next exam on October 4th. The course is a structured study group, and it’s led by ISPQ Certified Master Trainer Ken Thames. It includes over 20 hours of video lectures by Ken as well as 50 additional practice questions.

Posted in Solar Photovoltaics | Tagged , , | Leave a comment

[Free Lecture] Mastering the Outdoor Reset Curve

Plumbing and hydronics expert, Dave Yates has mastered the outdoor reset curve: boosting the value of his work, maximizing fuel savings, and increasing the comfort of his clients’ home. He wants you to master it, too.

In this 60-minute free lecture, Dave uncovers everything you need to know to master the outdoor reset curve. He explains how to set up a reset curve, tailor it for any application, and present it to your customers in a way that will separate you from your competition.

You will learn:

  • How to integrate the outdoor reset curve into retrofit systems
  • Why an accurate heat loss calculation is the rock-solid foundation
  • Why measuring existing radiation reveals the ECV (Energy Conservation Value) potential
  • Why low-temperature systems have higher ECV
  • How to put it all together for peak performance, ECV, and ROI

Watch the free lecture here and enroll in the HeatSpring event Free Lecture: Mastering the Reset Curve to access all of the materials, including downloadable presentation slides, and the event discussion board. 

About Dave Yates: In February of 2014, Contractor Magazine named Dave  one of the most influential people in plumbing and hydronics by Contractor Magazine. Born and raised in York, Pa., Dave began his career in the PHVAC trades in 1972. After serving his apprenticeship and working up to Master Plumber status, Dave struck out on his own in 1979. In 1985, Dave returned to the company where he had served his apprentice years and purchased F.W. Behler, Inc., a third-generation PHVAC firm that is celebrating 114 years of service in 2014. Dave’s company has won numerous awards for its work and Dave was the first recipient of the international Carlson-Holohan Industry Award of Excellence. Dave Yates is an expert instructor at HeatSpring and will be teaching an advanced, 6-week online course Fundamentals of Radiant Design for the third time starting September 8th. The course is capped at 50 students with 30 discounts. Read the full course outline here.

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Why Performance and Not Price Is the Most Important Factor In Finding an Investor or Buyer for Your Solar Projects

executionrisk

Question or comments? If you’re a solar developer or investor and have a story to share that relates to this article or a question about the content, please leave it in the comment section below the article. 

This is a guest article by Chris Lord of CapIron Inc. Chris also teaches our Solar Executive MBA. The next Solar Executive MBA session starts on September 15th. In the course, students will work a commercial solar project from start to finish with expert guidance from Chris along the way. The class is capped so to provide maximum student attention, but there are a limited number of discounted seats. You can get your $500 discounted seat here.

In the Solar Executive MBA, one of the most common topics students have questions about is about identifying, screening, and closing investors or buyers of their solar projects.

Most commonly, students focus exclusively on getting investors who pay the highest price per watt for their projects. In the article on the three keys to defining bankability, we discussed why this is not the best strategy. The investor actually wants the best returns on a project. The best returns means the project is economically strong and reliable.

From the developers’ perspective, there is risk in selecting the right investor. This article will address why it’s critical to address the competence of investors and how developers can screen investors to find the best ones.

Enter Chris Lord from CapIron, Inc

In today’s highly competitive solar PV market, project developers looking for an investor or purchaser for their projects tend to focus almost exclusively on finding those with the lowest project return requirement or willing to pay the highest price for a project.

But is this the best measure to use when locking in your solar project upside?

This article examines the importance of purchaser performance in selecting a project purchaser and outlines ways to collect data that will enable you to assess purchaser performance.

Here is an example of how a developer lost a lot of value in a very short time by ignoring the importance of performance or execution risk when selecting a purchaser for his solar PV projects.

The developer had a mid-sized distributed generation project for sale, largely shovel-ready. The developer asked outside consultants to conduct an auction process among a select group of purchasers. With the bids in, the results were arranged in a matrix to show dollar price against execution risk.

In the matrix, shown below, execution risk was estimated based on a variety of due diligence and market intelligence assessments. The highest execution risk was assigned a ten, and the lowest execution risk assigned a one.

executionrisk

One of the parties added late in the process by the developer offered the highest price at $3.18 a kW, almost $0.35 a kW higher than the average of the other six bidders, and $0.26 a kW higher than the next highest bidder. Based on market experience, the consultants interpreted that as a strong sign that rumors of financial distress at the high bidder were true. The prospective high bidder was desperately trying to bolster a weak pipeline in order to attract a badly-needed infusion of capital.

The consultants recommended a bidder offering a price of $2.85 a kW bolstered by the lowest likely execution risk. Focused solely on price, the developer ignored the recommendation and proceeded with the highest bidder.

After thirty days of intense negotiation on an LOI, and days before execution of the LOI, the purchaser’s parent filed for bankruptcy and the purchaser followed suit. Worse yet, when the developer turned back to the other bidders in an effort to salvage value, he found that they knew of his predicament and were inflexible on terms and soft on their original price bids. Ultimately, the developer settled for $2.82 a kW, but this did not account for the lost legal fees and time spent negotiating a deal that never closed.

1.    Pricing vs. Performance

a.     Why the focus on Pricing?

It is not surprising that project developers zero in on price when selecting a project purchaser. Particularly for small and mid-size developers, finding every possible dollar on the sale price is critical to covering the economic uncertainties inherent in a project’s development and construction phases and generating enough capital to fund continued growth.

The overriding problem facing developers is that there is a complete and natural disconnect between project costs (development and construction) on one side, and the valuation that an investor or purchaser might place on the project.

In the real world, purchasers look solely to the net cash and tax benefits that a project is expected to generate over the 15 to 25 years of its life. By discounting those net cash and tax benefits back to the present using their target return, a purchaser arrives at a price that he or she is willing to pay today for the project and related benefits.

For the capital costs of developing a project, the investor or purchaser is completely indifferent. If a developer spent more than the purchase price, then the developer will lose money. Any amount over the developer’s costs is how the developer generates a return on the development capital invested in the project.  Either way, it has no impact on the value of a project to investors or purchasers.

This sounds simple enough but, given that most developers must find an investor or project purchaser before construction begins, and – worse yet – the actual costs of development and construction may not be known at this point, developers naturally steer to the highest price offered by a purchaser because there appears to be no downside. A higher price gives the sense of security – more margin to cover development and construction unknowns – and, should costs come in at or below projections, more profit to fund future growth.

b.    What’s the downside?

By focusing solely or primarily on price, developers overlook other critical factors including investor or purchaser performance that can dramatically and sometimes adversely impact price. Sometimes this risk is characterized as “execution” risk. Whatever we call it, we are talking about the likelihood and cost of actually closing the specific, targeted transaction with a particular investor or purchaser on terms and conditions (including price) reasonably close to those the parties originally expected when they executed an LOI or otherwise first “shook hands” on the deal.

Performance is important because the ability of an investor or purchaser to follow through and close a transaction in a timely and cost-effective manner can have a bigger impact on a developer’s realized value than the promise of an incrementally higher purchase price from an investor or purchaser who fails to close.

In any financing, there is always a risk that a closing fails. There are at least three main classes of these types of risk: market risk, developer risk, and investor risk.

Market Risk

Market risk is the risk that arises from adverse changes in general market conditions. An example of a market failure, well known to most veterans of solar development, occurred in 2008 with Lehman’s collapse that fall and the onset of the Great Recession. Most project purchasers suddenly lost their tax appetite. Almost all major banks took economic hits to income that saddled them with substantial losses, wiping out the very profits that they were counting on to create their tax appetite. As a consequence, there was very little tax appetite among investors nationwide for the balance of 2008 and much of the first half of 2009. Even when investors did return to the market, tax-drive transaction volume in 2008 was substantially below pre-Lehman projections. In fact, Congress created the Treasury’s Cash Grant program in lieu of the ITC precisely to address that issue.

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AC Coupling – How to Cost Effectively Add Battery Back-up to Existing Grid-Tied Solar PV systems

This is a guest article by Chris LaForge.

Chris is teaching an in-depth 6-week technical training on designing battery based solar PV systems that starts in September. You can read the full description and get a limited-time discount here. If you need to learn how to design, quote, and commission a battery based solar PV array, this is the best course for you.

In the past three years, three trends have converged to create higher demand for battery-based solar arrays: battery prices are declining, the penetration of grid-tied systems is exploding, and homeowners are becoming more interested in backup power.

Retrofitting existing solar PV arrays to include batteries is becoming an opportunity for added revenue for contractors.

Enter Chris LaForge –

AC Coupling

Since the advent of high-voltage battery free (HVBF or grid-direct) solar electric systems, some clients have been frustrated by not being able to use their systems during power outages. The re-work necessary to move to a grid-intertied system with battery back up is costly (GTBB or DC coupled system), inefficient, and, in some cases, unworkable.

Ac coupling can be used in both utility-intertied systems and in off-grid applications. This article will discuss the utility-intertied aspects of AC coupling.

With the advent of AC coupling as a means to introduce battery back-up to an existing HVBF system, an efficient and more workable solution has come to the fore.

AC-coupled systems use the HVBF system while adding a battery-based inverter that works in tandem with the HVBF inverter. It maintains the efficient operation of the PV system while the utility is available and then allows for its operation during power outages by having the GTBB inverter disconnect from the grid, power the back-up load panel and use the power from the HVBF system to power the critical loads in the back-up load panel. It also provides power to the GTBB inverter to charge its battery bank.  If this sounds a bit complicated, well, it is.


sneider

Courtesy of Schneider Electric

AC coupling provides the following advantages over traditional DC-coupled GTBB system designs:

  • Retrofit-able with existing HVBF systems (within manufacturer requirements and limitations)
  • Allows for employing the efficiencies of HVBF equipment while achieving back-up power for utility outages
  • Can reduce the number of components used in DC coupling
  • Can reduce losses do to low-voltage aspects of DC-coupled systems
  • Can provide for more flexible and efficient wiring configurations
  • For designs requiring long distances between the renewable energy resources and the balance of system components

As with any innovation, AC coupling has some notable challenges, especially when the design utilizes multiple manufacturers.

For several years, system integrators have completed AC-coupled designs using one manufacturer’s equipment or by using multiple brands of inverters.

SMA pioneered the AC coupled concept with its “Sunny Island” Inverter. Initially built to provide for the creation of microgrids on islands and other non-utility environments. The design lends itself to grid-intertied AC-coupled systems as well.

As shown in the diagram below, SMA’s design allows for multiple HVBF inverter outputs to be combined with the Sunny Island inverter to connect to the utility and have battery back-up.

sma

Courtesy of SMA America

SMA’s design provides for an elegant method of regulating the battery state of charge as long as all the inverters can be networked with cat-5 cable. In this design the HVBF inverters can have their outputs incrementally reduced as the battery reaches a full state of charge. If the distance between the HVBF components and the Sunny Island is too great to network with cat-5 cable, the Sunny Island controls the output by knocking out the output of the HVBF inverters with a shift in the frequency of the inverter’s AC waveform.  The HVBF inverter senses an out-of-spec frequency and disconnects until the frequency is back in spec for five minutes.

This frequency shift method of regulating battery state of charge is often used when different manufacturers’ inverters are used to create the AC-coupled design. This has several drawbacks that we will discuss.

Several other battery-based inverter manufacturers have developed designs for using their inverters with other HVBF inverters to create AC-coupled designs. These include OutBack Power, Magnum Energy, and Schneider Electric. Both SMA and Schneider provide for single manufacturer AC-coupled systems because they manufacture both HVBF inverters and GTBB inverters. This presents the basic advantage of having one manufacturer provide and support the entire AC-coupled design.

OutBack Power and Magnum Energy manufacture only battery-based inverters and therefore require the mixing of manufacturers in AC coupling in order to bring in HVBF inverters.

Both companies provide design information and support for AC-coupled designs.

Schneider’s regulation

With Schneider Electric’s AC coupling, the battery is regulated by the frequency shift method. Schneider itself recognizes the drawback of this method in its AC-Coupling Application Note (see appendix): “Unlike its normal three-stage behavior when charging from utility grid, the Context XW does not tightly regulate charging in a three-stage process when power is back fed through AC inverter output connection to the battery. In this mode charging is a single-stage process, and the absorption charge and float stage are not supported. Charging is terminated when the battery voltage reaches the bulk voltage settings, which prevents overcharging of the batteries. Repeated charging of lead acid batteries in this way is not ideal and could shorten their useful lifetime.”

This can be improved by employing a diversion load controller added to the design.  The diversion load controller will limit the battery voltage by “dumping” excess power into a DC load during times of excess generation for the PV system. While this re-introduces the 3-stage charge regulation into the design it negates some of the benefit of AC coupling because it re-introduces the cost of a charge controller and adds the cost of the DC diversion load(s).

Magnum’s regulation

Magnum Energy also provides for frequency shift method battery regulation but in their White Paper titled “Using Magnum Energy’s Inverters In AC Coupling Applications” (see appendix) they indicate that frequency shift regulation should only be used as a back up to the employment of a diversion load controller. They are developing an innovative addition to their product line the ACLD-40, which will provide for diversion control using AC loads. One aspect of using diversion load controllers is that DC loads are often difficult to find and expensive. Magnum intends the ACLD-40 to be a solution to this issue by allowing the use of more common AC loads for diversion controlling such as AC water heaters or air heaters. This product is under beta testing at this time and is due for release in late 2014.

outback

OutBack’s regulation

OutBack Power’s design provides for frequency shift method battery regulation. The disadvantages to this method can again be overcome by the introduction of a diversion load controller and this comes with the same issues as with the other manufacturers.   OutBack Power’s AC coupling white paper discusses both on and off grid applications for AC coupling (see appendix).

Disadvantages to AC coupling:

  • Frequency shift methods of regulating the battery state of charge are coarse and may create significant power loss if there is a miss-match of equipment leading to nuisance tripping of the HVBF inverter
  • Battery optimization may not be possible without re-introducing a charge controller as a diversion load controller
  • Complexity in systems mixing manufacturers can create systems that are difficult to operate
  • Care must be take not to void warrantees by using equipment that is not designed for this application

Conclusion

In many ways, AC coupling is a good tool for working with both the difficulties of retrofitting battery storage in existing HVBF systems and systems with long distances between resources and loads. As with any innovation in this field, be sure to get the right design and make sure that the application does not void product warrantees.

 

 

 

 

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