Energy Solutions Part 3: Reducing the Costs of Energy Upgrades

Energy Solutions Part 3: Reducing the Costs of Energy Upgrades

At CalCom Energy we understand that as a business, you have a lot of equipment to purchase and maintain and that investing in renewable infrastructure can seem like just another cost.  The truth is that there has never been a better time to go solar, particularly in California with its numerous incentives, credits, and programs available to help reduce the upfront costs for solar PV systems and/or energy storage systems as well as opportunities to generate additional revenue streams after installation. Transform your operations from an energy liability into a long-term asset that pays you dividends. CalCom Energy can help walk you through the opportunities that may be available to you and your business including:

Programs to Help Reduce the Initial Costs of Energy Upgrades 

Tax Credits

The Federal Investment Tax Credit (ITC) enables for-profit entities to deduct a % of the cost of installing solar, and energy storage systems tied to a solar PV system, from their federal taxes. Now is the time to take advantage of this credit, as starting in 2023 the ITC will be reduced from the current 26% to 22%, and then after 2023 will drop to a permanent 10%.

Self-Generation Incentive Program (SGIP)

California’s SGIP program provides incentive payments to utility customers who install energy storage systems that reduce on-site electrical demand and greenhouse gas emissions.  Depending on program eligibility, customers can receive incentives of $250 to upwards of $1000 per kilowatt-hour of energy storage installed resulting in thousands of dollars of savings to offset the up-front cost of the battery. CalCom Energy is an SGIP-approved developer and can help walk you through the application process.

Power Purchase Agreement (PPA)

As solar technology has improved, prices have come down and options for financing have expanded. For many businesses interested in on-site solar, particularly those that do not have the initial capital for direct purchase or the tax liability to benefit from other incentives and programs, the best option may be a PPA. With a PPA, you “host” the solar system on your land or facility. You pay only for the electricity the system generates, at a fixed price lower than what you pay for energy today.

Advantages of a PPA include: 

  • No Money Down: Unlike a direct system purchase, there are no up-front costs, such as utility interconnection application costs, associated with enjoying the immediate savings from the system.
  • Immediate Savings:  The instant your system is energized, you start saving on your electricity bill. In addition, PPAs can increase your savings over time as grid electricity prices rise.
  • Pay Only for the Energy Your System Produces:  With a PPA, if your system doesn’t perform, you don’t pay. You buy the electricity that is produced at a guaranteed low rate every month.
  • Predictable Long-Term Costs:  Utility rates are increasing every year. In California, electricity rates increase faster than any other state in the nation. With a PPA you get long-term predictability and a hedge against rising electricity costs for the next 20 years or more.
  • No Maintenance Costs or Worry:  As a business, you have a lot of equipment to maintain. Your PPA partner will maintain the system and will have a vested financial interest in making sure the system runs efficiently.
  • Off-Balance Sheet:  If you are not in a position to take advantage of tax incentives, a PPA is an ideal way to reduce your energy costs without an impact to your balance sheet. A PPA is not a loan; it is a long-term service contract that qualifies as off-balance sheet.
  • Buy-Out Flexibility:  Options are available to purchase the solar PV system during the PPA term at a reduced cost.

CalCom Energy and our PPA partners have proven and simple agreements to build and maintain solar PV systems while selling you electricity at a guaranteed rate for 20 years or more.

Opportunities for Additional Savings After Installation 

Solar and StorageFriendly Utility Rates

To encourage solar and energy storage adoption, certain utilities offer specific rates for customers who install solar PV and/or energy storage systems. For example, some California utilities offer an “Option R” which provides lower demand charges (which are harder to offset with solar) in exchange for higher energy rates (which can be reliably offset by solar).

PG&E’s “Option S” promotes energy storage by assessing demand charges on a daily basis vs. a monthly basis as they are for non-Option S customers. Demand charges measure the “high water mark” grid demand in a given month, so a single momentary spike in load can incur a full demand charge for that entire billing period. Under Option S, when demand charges are assessed daily, a period of elevated load will result in higher demand charges only for that particular day and won’t be penalized for the entire month.

Opportunities to Generate Additional Revenue Streams After Installation 

Renewable Energy Credits (RECs)

RECs are rights to claim the environmental benefits of renewable energy generation. In effect, renewable generation has two products: energy and environmental attributes.  The energy is credited on utility bills, and environmental attributes are credited via marketing campaigns, corporate sustainability goals, or a combination of both.

A single REC is defined as one megawatt-hour of renewable energy that is generated and delivered by an eligible renewable energy resource.  If you have not otherwise marketed the environmental benefit of your solar generation, your RECs may be eligible for sale in the REC markets.

CalCom Energy works with partners to help customers enroll in the REC program and monetize their Renewable Energy Credits (RECs) in order to earn additional income revenue from solar production.

Demand Response (DR)

DR programs offer customers direct payments to reduce their electricity use during peak demand times.  CalCom Energy leverages strong partnerships with demand response providers to design a DR program that works for our customers, minimizing disruptions to operations while providing a significant recurring income stream.

To participate in DR, customers must commit to having their electric loads available to curtail (partially or fully) at certain times of day, usually in the evening. Customers are typically required to curtail their usage for 2-4 hours, a few times per year, but can opt to curtail more frequently if additional income is desired.

For customers that don’t have this operational flexibility, adding an energy storage system makes demand response possible by deploying the battery during DR events allowing for a reduction in utility-supplied electricity and participation in the DR incentive programs, without impacting normal facility operations.

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