Jim Kennerly Autumn Proudlove

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2 Jim Kennerly Autumn Proudlove NC Clean Energy Technology Center (Formerly the NC Solar Center) NC State University Special Thanks to: Henry Tsai and Tommy Cleveland of the NC Clean Energy Technology Center, as well as Brian Lips, Ethan Case, Heather Calderwood, Kate Daniel, Benjamin Inskeep, Achyut Shrestha & Fan Li of the Center s Database of State Incentives for Renewables and Efficiency (DSIRE) team DISCLAIMER This material is based upon work supported by the U.S. Department of Energy under Award Number DE- EE The guide was produced by the NC Clean Energy Technology Center (formerly the NC Solar Center) with the support of ICLEI-Local Governments for Sustainability USA (ICLEIUSA) and International City/County Management Association (ICMA) along with their teams of organizations as part of the SunShot Solar Outreach Partnership. This guide was prepared as an account of work sponsored by an agency of the United States Government. Neither the United States Government nor any agency thereof, nor any of their employees, makes any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of any information, apparatus, product, or process disclosed, or represents that its use would not infringe on privately owned rights. Reference herein to any specific commercial product, process, or service by trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply its endorsement, recommendation, or favoring by the United States Government or any agency thereof. The views and opinions of authors expressed herein do not necessarily state or reflect those of the United States Government or any agency thereof.

3 INTRODUCTION: EMPOWERING & EDUCATING CONSUMERS Until recently, many Americans have given little thought to where their energy comes from. However, as utility rates have increased, distributed energy resources, like rooftop solar photovoltaics (PV), have become more popular and affordable. Many Americans are not aware of the degree to which solar costs have declined, and the emerging value that solar offers purely as a savings and investment opportunity. Even if the readers of this guide choose not to invest in solar at this time, we hope this information will help them understand their options and become educated, confident, and empowered potential solar consumers. Solar is not merely a symbol of wealth or success, but can be a prudent and practical investment. This guide provides information for individual consumers looking to begin a journey towards going solar, a decision that will save them money and benefit their communities.

4 A GLOSSARY OF TECHNICAL TERMS USED IN THIS GUIDE TERM DEFINITION Avoided Cost Buy-All, Sell-All Demand Charge Kilowatt (or kw) Kilowatt-Hour (or kwh) Net Metering Net Present Value (NPV) Retail Rate Tariff The cost that the utility would have to pay to purchase another unit of energy based on their current generation portfolio; avoided cost is lower than the retail rate because it does not include delivery (transmission and distribution) or customer charges. An arrangement in which a PV owner sells all of the electricity produced by their system to the utility and purchases all of the electricity they consume from the utility. A charge on a customer s utility bill for the maximum level of power (kw) used during the month; this reflects how much energy was being used on a customer s premises during a specific hour or 15 to 30 minute time interval. A unit of power; amount of power being consumed or produced at a single instant in time. One kilowatt represents one thousand watts (W) of power. A unit of energy; amount of power used or generated over time. One kilowatt-hour represents one thousand kilowatts of power over one hour. A utility billing arrangement in which a homeowner with solar panels uses the energy produced by his or her system and sells excess energy back to the utility at the retail rate for other utility customers to use. A formula used to determine the present value of an investment by the discounted sum of all cash flows received from the project. The money earned from an investment, less the upfront costs and discounted by a specific discount rate. The discount rate represents the likely value of an alternative investment used for comparison purposes. Thus, the money earned later in the investment s life is discounted and therefore worth less in the present time because, if earned earlier, it could have been reinvested to earn even more. In this report, it represents the value of investing in a typical solar PV system in a typically-sized home in a given city relative to investing the same amount of money into an investment indexed to the Standard and Poor's (S&P) 500, a diversified stock index, over the system life. The price at which a kwh of energy is selling for on a given tariff. A public utility s publicly-posted schedule of rates for various types of customers.

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6 Residential Solar PV System Components A residential solar PV system consists of three major components: (1) solar panels (modules), (2) an inverter, and (3) racking. Today, there are many trusted brands of solar panels, with limited differences in quality, features, and performance between most typical-efficiency panels. All reputable panels will come with a power warranty that generally guarantees that the panels will still produce at least 80% of their initial nameplate rating 25 years from now. Traditionally, a group of solar panels are connected in a series (to form a string of panels), which can be combined with other strings and then connected to a string inverter. However, many customers are beginning to use microinverters, which are attached to each module. An inverter is used to convert the DC power produced by a solar system into usable AC power. Example of a residential roof-mounted PV system in Marlboro, MA. Photo Credit: grosolar. Available here. Solar PV systems do not work nearly as well as they could when they are shaded by a tree, building, or other large object. Even partial shading can be damaging to the financial value of a system. However, both microinverters and another product called a DC optimizer limit the effect of shade to only the shaded panel, instead of the entire string of panels. Example of a residential ground-mounted solar PV system in Florida. Photo Credit: US Solar Institute. Available here. 1

7 Efficiency First: Optimizing a Solar Investment While many regions of the country can claim low utility rates, the table to the right shows that lower rates (coupled with less efficient use of energy) can actually translate into higher average monthly bills. An investment in home energy efficiency increases the home s durability and comfort while reducing costs and environmental impacts. Residential Electricity Usage and Cost/kWh by Region (2012) U.S. Region Average Price (cents/kwh) Average Monthly Usage (kwh) Average Monthly Bill ($) South Atlantic ,079 $123 East South Central ,185 $122 West South Central ,171 $121 Thus, it is critical to consider other steps to save energy concurrently with (or even before) making the decision to go solar to maximize the PV system s impact on the owner s electric bill. Customers should consider having a full-spectrum home energy audit completed as they consider solar. Many, if not most utilities offer free energy audits to their customers. U.S. Average $107 Middle Atlantic $107 West North Central $100 New England $100 East North Central $97 Mountain $96 Pacific Contiguous $89 Source: EIA Form 861 (2012 is most recent full year of vetted data) 2

8 Residential Solar Energy Generation In general, south or southwest-facing rooftops are the best places to put a solar PV system on a residential rooftop, although a roof does not need to be ideally faced and sloped roof to produce enough energy to make solar a good investment. Selected Examples of Solar PV's Monthly Energy Usage (kwh) Offset Potential by City City Avg. Solar Production Avg. Usage % "Offset" by Solar Raleigh 598 1,073 56% Contrary to popular belief, solar PV can be a good investment in any region of the country. The value of solar to a customer is related to the degree to which solar can offset typical use of grid energy. Even in Chicago and Boston (not known for being sun-drenched places), homeowners with a 5 kw system can offset more of their energy (and thus their bill) than they could in Phoenix, a city well-known for having some of the best solar resource in the United States. Fresno % Chicago % Boston % Phoenix 735 1,077 68% Source: Calculations Using a 5 kw System on a "base" electricity usage home in each area using the NREL System Advisor Model The U.S. Department of Energy s National Renewable Energy Laboratory s PVWatts tool allows a homeowner to view their roof in a satellite photo and calculate the amount of energy a rooftop system that system could produce. 8

9 Options for Saving Money With Solar There are three primary ways a home can use the power generated by a photovoltaic (PV) system: (1) use the electricity on-site and selling excess back to their utility via net metering, (2) sell all the electricity produced via a special buy-all, sell-all or value of solar rate, and (3) use the PV system to supply an energy storage system (such as a battery backup system). Option One: Net Metering When the sun s rays strike a solar PV system, and a residential customer s home is wired to directly use the electricity generated by the system, the customer is able to avoid using that amount of energy from their utility. In the case of a net-metered system, a rooftop PV output may sometimes exceed the amount of energy the customer needs at that moment. This means that two things are happening: The PV system is still supplying the customer with the energy it needs; and The PV system is also exporting (selling) the excess energy back into the utility grid, which has the effect of supplying nearby customers with electricity. Net metering allows customers to power their homes with a solar PV system and receive credit at the retail rate for generating more energy than they use, which will offset their bill during 9

10 Options for Saving Money With Solar times when the sun is not shining- spinning the meter backwards in the process. The solar PV customer is billed for the net amount of electricity used, or the difference between the total amount of energy the customer consumed and what the customer s PV system generated. Excess generation is credited to the next month like rollover minutes for a cellular phone plan. Net excess generation credits can often be carried forward from month-to-month. A value of solar tariff is one option that requires a buy-all, sell-all arrangement. Under a value of solar rate option, the customer sells energy generated by his or her solar PV system at the value of solar rate, which is set at what the avoided cost value of solar energy is determined to be. This value can vary dramatically depending upon the methodology used to calculate it. Option Two: Buy-All, Sell-All Arrangements Under a buy-all, sell-all agreement between a customer and the utility, the customer agrees to sell all electricity generated by their PV system to the utility at a set rate and to continue to buy all of the electricity they will consume from the utility through their normal rate schedule. 10

11 Options for Saving Money With Solar Currently, Austin Energy is the only utility serving any of America s fifty largest cities to have fully replaced net metering with a value of solar tariff. However, two other cities have moved in the direction of offering voluntary value of solar tariffs. In Atlanta, Georgia Power began offering the Georgia Power Advanced Solar Initiative (GPASI), a value of solar option that customers may choose as an alternative to net metering. The State of Minnesota approved a methodology that allows utilities, such as Xcel Energy, to offer a value of solar tariff. However, at this time, no Minnesota utility has chosen to offer such a tariff. It is also important to note that in the future, the Internal Revenue Service may classify money under the value of solar tariff option as income, and therefore subject to income tax. Option Three: Battery Storage Systems Connecting a PV system to batteries may make sense for customers in remote locations that are not connected to the grid, for those in locations prone to natural disasters and grid failures, or for customers whose utility does not offer net metering or an attractive buy-all, sellall option. Batteries can add significant cost to a system and require a level of maintenance that would be unattractive to most homeowners. In most cases, net metering or a value of solar tariff would be more advantageous ways to benefit from a PV system. However, as the cost of battery storage declines, this option is likely to become more appealing to customers. 11

12 Current Solar PV System Cost In general, the cost of PV systems includes hardware costs (the module, inverter, racking, etc.) and non-hardware soft costs, which often include (1) financing, (2) permitting, inspection, and interconnection of the system, (3) marketing and customer acquisition, and (4) the cost of installation labor. These soft costs likely explain much of the variation in system prices. Reducing these costs is the goal of the Department of Energy s SunShot Initiative, which funded this report. EnergySage provided the authors with solar companies quoted prices during the 3 rd Quarter of This data is summarized in the table to the right. DISCLAIMER: EnergySage is an Expedia.com-like solar marketplace (and similar to Geostellar, Pure Energies, and others) that provides information and online solar PV quotes. We are grateful to them for sharing this data with us. The authors and the Department of Energy do not endorse them or any other online solar marketplace. Quoted Costs For A 5 kilowatt (kw) Solar PV System During Q (July-September 2014, Before Rebates & Incentives) Region Estimated Installed $/W at 5 kw Implied 5 kw System Cost (Pre- Incentives) United States $3.95 $19,765 United States (exc. California) $3.96 $19,778 California $3.97 $19,865 West (Southwest & Northwest) $3.92 $19,603 Mountain West/Midwest $3.72 $18,578 Northeast $4.25 $21,228 Southeast/Mid- Atlantic $3.70 $18,501 Source: Derived from real quotes to interested solar customers from 3rd Quarter (July-September 2014) installers through the online solar marketplace EnergySage. ZIP code level pricing data was regressed against ZIP code level average system sizes to determine the price at 5 kw. 12

13 Commonly Available Rebates and Incentives There are several key types of federal, state, and utility incentives that help to reduce or buy down the upfront cost of a residential rooftop PV system and/or provide a short-term credit on a customer s utility bill. The full list of incentives available in America s fifty largest cities can be found in the Appendix. Federal & State Tax Credits The main upfront incentives for individuals trying to go solar are federal and state tax credits. The Federal Residential Renewable Energy Tax Credit is an investment tax credit (ITC) that provides a taxpayer with an income tax credit for 30% of his or her solar installation costs. There is no cap on the amount a residential customer can claim, and it is available for solar installations placed in service by the end of In addition, several states also offer personal tax credits of varying amounts. State, Local & Utility Rebates Rebates for solar installations are provided by some governments and many utilities. Rebate amounts are typically based on the size of a customer s system and help to reduce the upfront cost of going solar. State & Utility Performance-Based Incentives (PBIs) PBIs add to the financial value of the system over time as it produces energy, rather than reducing the upfront cost. Sales and Property Tax Exemptions Many states fully or partially exempt solar energy equipment from the state sales tax, and some municipalities extend this exemption to local sales tax. Some states and local governments also exempt solar PV systems from property tax assessment. For more detailed information on incentives offered by your state and utility, please visit the Database of State Incentives for Renewables and Efficiency (DSIRE) at which is administered by the NC Clean Energy Technology Center at NC State University. 13

14 Commonly Available Financing Options for Customers Financing options include loans, leases, and power purchase agreements (PPAs). Solar Loans allow homeowners to borrow money for the upfront cost of solar and pay it back over time. In contrast to leases and PPAs, financing a solar PV system through a loan gives the customer direct ownership of the system. Loan sources include local and national banks and credit unions. Another loan option is a home equity loan, which allows customers to take advantage of home interest federal tax credits. Advantages & Disadvantages of Loans While a loan can reduce or eliminate the upfront costs of solar, it is important to note that taking out a loan will increase the total cost of owning the system, due to interest on the loan. However, loans make solar accessible to more people, including people without spotless credit histories. Third-Party Leasing is a type of third-party ownership, where (usually) a solar company owns the solar panels and is responsible for installation and maintenance. A homeowner pays the third-party a monthly fee to use the solar panels and the energy produced from them. The homeowner receives a financial benefit from the system through either net metering or a buy-all, sell-all arrangement. Advantages & Disadvantages of Leasing The 100% financed case in this report s analysis is intended to have terms that are somewhat similar to a lease.* However, while leases (and some loans) allow customers to save immediately on their bill with no money down, the customer cannot take the Investment Tax Credit, available only to PV system owners, not lessees. The value of the tax credit may be passed along to the lessee in form of lower lease payments, though. 14

15 Commonly Available Financing Options for Customers Advantages & Disadvantages of PPAs While the financial value of a PPA and a lease are very similar, the difference is that the price paid per month under a PPA depends upon the system s production (kilowatt-hours), while a lease payment is constant every month. Third-party ownership (leasing and PPAs) is allowed in some states, and not in others. Power Purchase Agreements (PPAs) are a third-party ownership option in which a customer purchases the power the solar panels produce directly from the owner of the panels (often a solar company). The customer purchases the power at a set price per kwh for the length of the agreement (typically years), which often increases over the term of the agreement. *Given the significant variation we have observed in the terms offered by leasing companies nationwide and the varying credit histories of borrowers, we have elected to not characterize the typical monthly costs associated with solar leases & PPAs. In addition, erring on the side of conservatism, we did not exclude O&M costs typically handled by a third-party when the customer does not own the system. For more detailed cost data on solar lease and PPA options, visit an online marketplace such as the ones mentioned on page

16 DISCLAIMER: The results in this section (and other sections) of the report are based on a typically-sized solar home, a typically-sized solar PV system, and the default financing options built into the National Renewable Energy Laboratory s System Advisor Model (SAM). The value to any given consumer of solar PV may vary under different system sizing (and size of customer s home), or any other factors.

17 Future Utility Rate Increases The U.S. Energy Information Administration estimates that, depending on the region of the country, residential utility rates are likely to increase between 33 and 83 percent over the next 25 years, which is the estimated life of a solar PV system. Note: Some cities are excluded from the map in order to avoid overlapping labels due to their sharing a metropolitan area with another city. For detailed statistics for each city, please see the appendix. Assuming that a customer has a $100/month bill and uses the same amount of energy, their bill would likely increase to between $133 and $183/month in 25 years. 17

18 Potential Immediate Savings for Residential Customers Monthly utility bill savings is calculated as the difference between the customer s bill with a 5 kw solar PV system and without solar. The amount homeowners can save in different areas can bill savings can vary significantly from the estimates provided, as this analysis used simulated energy usage patterns of the average-sized homes in each city. Note: Some cities are excluded from the map in order to avoid overlapping labels due to their sharing a metropolitan area with another city. For detailed statistics for each city, please see the appendix. While customers with a 5 kw system could expect to save a substantial amount of money on their monthly bills, customers in cities where they can offset more of their usage can immediately expect savings up to $100-$200/month before a PPA or loan payment. 18

19 Solar As a Financial Investment In many of America s fifty largest cities, the net present value (NPV) of a dollar invested in a rooftop solar PV system yields a greater value than a dollar invested in the stock market. In this analysis, the authors assumed a customer looking to save for the long-term would likely invest in stocks because stock ownership is a common and well-known discussion in wealth and retirement management. For comparison, the authors chose the Standard & Poor s (S&P) 500 stock index. Even though past performance of stocks does not guarantee future performance, such a method is not unlike the methodologies used by major wealth and retirement management firms to arrive at a return projection for clients. Charles Schwab Investment Advisors, for example uses 7.4% for U.S. equities when discussing allocation to equities. Other major firms have projections within about a 1% range of this report s methodology. It is worthwhile to note that our methodology can be considered relatively conservative in that the comparison sets up solar, which has low risk variables in arriving at its returns (electricity price escalation rates), against the higher risk and more volatile projected returns of the S&P. Cities see NPVs as high as $14,987 for a PV system purchased with cash upfront and $21,859 for a fully financed (at a 5% interest rate) system. This difference is largely due to the fact that under the financed scenario, future payments are discounted, and this money could be otherwise invested in the short term to generate a return. Disclaimer About Investment Analysis: Stock market returns are highly variable, and future deviations from the rate of return used in this analysis may significantly alter the results. Thus, nothing in this analysis should be construed as investment advice. 19

20 Solar As a Financial Investment While solar PV has the potential to offer similar returns as the S&P 500 stock index in a plurality of cities when a customer purchases the system upfront. However, the financial picture for most residential solar PV customers improves dramatically when a customer finances a solar PV purchase with a loan. NOTE: Some cities are excluded from the map in order to avoid overlapping labels due to their sharing a metropolitan area with another city. For detailed statistics for each city, please see the appendix. Overall, net present value analysis shows that when a customer purchases it upfront, a 5 kw solar PV system could perform better than a 25-year investment in the S&P 500 stock index in 20 of America s 50 largest cities. 20

21 Solar As a Financial Investment This is because from the customer s perspective, when they do not purchase the system fully with cash upfront, the amount of short-term income they receive from federal and/or state tax credits (net of the cost of the system) increases significantly. Also, as previously mentioned, payments made in the future are discounted. Money that would otherwise be used to purchase a system out-of-pocket can instead be invested to yield returns in addition to those of the PV system. NOTE: Some cities are excluded from the map in order to avoid overlapping labels due to their sharing a metropolitan area with another city. For detailed statistics for each city, please see the appendix. Overall, net present value analysis shows that if a customer finances a system at a 5% interest rate for 25 years, a 5 kw solar PV system could perform better than a 25-year investment in the S&P 500 stock index in 46 of America s 50 largest cities. 21

22 How Close is Rooftop Solar to Grid Parity? CITY CITIES NOT AT GRID PARITY (100% FINANCED CASE) Solar LCOE (cents/kwh) Avg. Utility Rate (cents/kwh) Dist. To Grid Parity When compared to the cost of electricity from their local utility, using solar PV to meet a portion of residential energy needs with a fully-financed 5 kw solar PV system costs less per kilowatt-hour (kwh) in 42 of America s 50 largest cities. Seattle, WA Oklahoma City, OK CITIES AT GRID PARITY (UPFRONT PAYMENT CASE) Omaha, NE Indianapolis, IN CITY Solar LCOE (cents/kwh) Avg. Utility Rate (cents/kwh) Dist. To Grid Parity Memphis, TN Tulsa, OK Nashville, TN Louisville, KY When compared to the cost of electricity from their local utility, using solar PV to meet a portion of residential energy needs with an upfront-purchased 5 kw solar PV system costs less per kilowatthour (kwh) in 14 of America s 50 largest cities. *Negative numbers represent the amount (in cents/kwh) by which solar costs less than grid energy in each city. New York, NY Boston, MA Washington, DC Colo. Springs, CO San Diego, CA Miami, FL Arlington, TX Dallas, TX Fort Worth, TX San Jose, CA Kansas City, MO Austin, TX Los Angeles, CA Albuquerque, NM

23 How Close is Rooftop Solar to Grid Parity? CITIES AT GRID PARITY (100% FINANCED CASE) CITY Solar LCOE (cents/kwh) Avg. Utility Rate (cents/kwh) Dist. To Grid Parity City Solar LCOE (cents/kwh) Avg. Utility Rate (cents/kwh) Dist. To Grid Parity New York, NY Philadelphia, PA Boston, MA Las Vegas, NV Washington, DC Milwaukee, WI San Diego, CA Phoenix, AZ San Jose, CA El Paso, TX Arlington, TX Portland, OR Dallas, TX Mesa, AZ Fort Worth, TX Baltimore, MD Fresno, CA San Antonio, TX Oakland, CA Charlotte, NC San Francisco, CA Atlanta, GA Colorado Springs, CO Tucson, AZ Albuquerque, NM Chicago, IL Austin, TX Houston, TX Long Beach, CA Detroit, MI Los Angeles, CA Sacramento, CA Miami, FL Wichita, KS Kansas City, MO Jacksonville, FL Denver, CO Columbus, OH Minneapolis, MN Cleveland, OH Raleigh, NC Virginia Beach, VA *Negative numbers represent the amount (in cents/kwh) by which solar costs less than grid energy in each city. 23

24 How Close is Rooftop Solar to Grid Parity? CITIES NOT AT GRID PARITY (UPFRONT PURCHASE CASE) CITY Solar LCOE (cents/kwh) Avg. Utility Rate (cents/kwh) Dist. To Grid Parity City Solar LCOE (cents/kwh) Avg. Utility Rate (cents/kwh) Dist. To Grid Parity Fresno, CA Atlanta, GA San Francisco, CA Philadelphia, PA Oakland, CA Sacramento, CA Las Vegas, NV Wichita, KS El Paso, TX Detroit, MI San Antonio, TX Jacksonville, FL Long Beach, CA Houston, TX Denver, CO Virginia Beach, VA Mesa, AZ Cleveland, OH Raleigh, NC Oklahoma City, OK Minneapolis, MN Columbus, OH Phoenix, AZ Indianapolis, IN Tucson, AZ Seattle, WA Portland, OR Tulsa, OK Baltimore, MD Memphis, TN Chicago, IL Nashville, TN Milwaukee, WI Omaha, NE Charlotte, NC Louisville, KY

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26 Good Questions To Ask When Considering Solar PV Have I gotten a home energy audit and considered efficiency improvement? Do I have a suitable roof space or space on my property for a solar PV system? Is it a good long-term investment that matches my personal or family s financial goals? What financing option is best for me (cash upfront, partial or full loan, lease, or PPA)? Who should I select as my installer? 26

27 Key Resources for Consumers Considering These Questions Home Energy Audits/Efficiency Improvements Just like it makes sense to see your doctor before starting a new diet or exercise routine, it makes good sense to have an energy checkup too. A full-spectrum energy audit done can help to diagnose (and suggest steps to correct) energy leaks or other inefficiencies that would undermine the value of your solar PV investment. A good resource for checking to see if a utility offers energy audits is the Database of State Incentives for Renewables and Efficiency (DSIRE) at dsireusa.org. There, customers can find a largely comprehensive list of utilities offering audits, as well as rebates for installing efficient appliances, lighting or other measures. Determining Site Suitability We also recommend that customers use the PVWatts tool to calculate the size of PV system a given roof or yard can support, and calculating its energy output. You can find that tool at pvwatts.nrel.gov. Finding an Online Marketplace: The Value of A One-Stop Shop As clean energy professionals, we understand most people who do not work on solar PV all day want a simple, user-friendly approach to evaluating their options. That s why we recommend that you visit an online solar marketplace like EnergySage, Geostellar, Pure Energies or another e-commerce platform that can help you evaluate whether going solar is right for you. On many of these one-stop shops, you can find: Easy-to-use tools to calculate energy usage, current and future monthly bills, and thus the right size of system for a given budget; Quotes from pre-screened local solar installers; Quotes and information on available financing options; and A wide variety of ways to contact installers and financiers to get started. 27

28 Looking Ahead: Growing Local Communities With Solar PV Solar energy has much to offer Americans from financial savings to environmental improvements to energy independence. And, with the financing options and incentives available today, rooftop solar is more affordable than ever. With targeted actions to reduce soft costs, these costs can come down even further and allow an even greater portion of the American public to choose solar energy if they so desire. Photo Credit: Wikimedia Commons This guide should help Americans realize the current state of solar costs today, as well as the financial value that solar can offer the typical customer in the nation s largest cities. With properly informed citizens, solar can be a key strategy for saving money, growing a local economy, achieving energy independence, and a reaching a cleaner energy future. Photo Credit: DOE/NREL 15623/Clarum Homes 28

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30 Solar Savings & Investment Value In America s 50 Largest Cities POPULATION RANK CITY FORECASTED UTILITY RATE INCREASES OVER 25 YEARS (SOURCE: EIA) SOLAR VALUE ABOVE/BELOW STOCK MARKET (FINANCING) SOLAR VALUE ABOVE/BELOW STOCK MARKET (CASH PURCHASE) FIRST-YEAR AVG. MONTHLY BILL SAVINGS DISTANCE TO GRID ENERGY COST (CENTS/kWh, FINANCED)* DISTANCE TO GRID ENERGY COST (CENTS/kWh, UPFRONT PURCHASE)* 1 New York, NY 83% $12,219 $8,239 $ Los Angeles, CA 45% $9,367 $4,151 $ Chicago, IL 68% $4,244 ($512) $ Houston, TX 65% $4,071 ($2,683) $ Philadelphia, PA 58% $7,801 $682 $ Phoenix, AZ 68% $9,594 $2,837 $ San Antonio, TX 65% $4,032 ($176) $ San Diego, CA 45% $17,224 $10,399 $ Dallas, TX 65% $6,626 $730 $ San Jose, CA 45% $23,171 $16,299 $ Austin, TX 65% $2,578 ($2,425) $ Jacksonville, FL 60% $2,104 ($3,785) $ Indianapolis, IN 68% $389 ($5,962) $ San Francisco, CA 45% $21,859 $14,987 $ Columbus, OH 68% $2,615 ($3,305) $ Fort Worth, TX 65% $6,626 $730 $ Charlotte, NC 50% $2,728 ($3,588) $ Detroit, MI 48% $5,408 ($549) $ El Paso, TX 68% $5,520 ($40) $ Memphis, TN 33% ($1,389) ($7,023) $ Boston, MA 58% $11,830 $6,275 $ Seattle, WA 53% $2,368 ($3,871) $ Denver, CO 60% $4,482 ($1,828) $ Washington, DC 58% $9,588 $4,157 $ Nashville, TN 33% $948 ($4,623) $ *Negative number indicates amount by which solar costs less than grid energy.

31 Solar Savings & Investment Value In America s 50 Largest Cities POPULATION RANK CITY FORECASTED UTILITY RATE INCREASES OVER 25 YEARS (SOURCE: EIA) SOLAR VALUE ABOVE/BELOW STOCK MARKET (FINANCING) SOLAR VALUE ABOVE/BELOW STOCK MARKET (CASH PURCHASE) FIRST-YEAR AVG. MONTHLY BILL SAVINGS DISTANCE TO GRID ENERGY COSTS (CENTS/kWh, FINANCED)* DISTANCE TO GRID PARITY (CENTS/kWh, UPFRONT PURCHASE)* 26 Baltimore, MD 58% $5,763 $193 $ Louisville, KY 33% ($1,417) ($7,847) $ Portland, OR 53% $2,461 ($2,266) $ Oklahoma City, OK 63% ($2,984) ($9,745) $ Milwaukee, WI 68% $3,971 ($2,281) $ Las Vegas, NV 68% $8,333 $2,567 $ Albuquerque, NM 68% $11,253 $4,577 $ Tucson, AZ 68% $5,578 ($661) $ Fresno, CA 45% $12,526 $5,687 $ Sacramento, CA 45% $3,383 ($3,155) $ Long Beach, CA 45% $16,759 $9,871 $ Kansas City, MO 48% $2,185 ($1,843) $ Mesa, AZ 68% $4,537 ($1,613) $ Virginia Beach, VA 50% $643 ($5,600) $ Atlanta, GA 43% $2,896 ($3,464) $ Colorado Springs, CO 60% $5,738 $2,204 $ Raleigh, NC 50% $2,890 ($2,601) $ Omaha, NE 50% $115 ($6,220) $ Miami, FL 60% $5,542 $2,837 $ Oakland, CA 45% $21,839 $14,951 $ Tulsa, OK 63% ($2,402) ($9,173) $ Minneapolis, MN 50% $4,200 ($1,774) $ Cleveland, OH 68% $1,264 ($5,086) $ Wichita, KS 48% $1,784 ($4,526) $ Arlington, TX 65% $6,626 $730 $ *Negative number indicates amount by which solar costs less than grid energy.

32 Rebates and Incentives Available in America s 50 Largest Cities POPULATION RANK CITY STATE TAX CREDIT STATE GRANT/ REBATE/PBI UTILITY REBATE/ PBI SALES TAX EXEMPTION PROPERTY TAX EXEMPTION 1 New York, NY # 2 Los Angeles, CA 3 Chicago, IL # 4 Houston, TX 5 Philadelphia, PA 6 Phoenix, AZ 7 San Antonio, TX 8 San Diego, CA 9 Dallas, TX 10 San Jose, CA 11 Austin, TX 12 Jacksonville, FL 13 Indianapolis, IN 14 San Francisco, CA 15 Columbus, OH 16 Fort Worth, TX 17 Charlotte, NC # 18 Detroit, MI 19 El Paso, TX 20 Memphis, TN # 21 Boston, MA 22 Seattle, WA 23 Denver, CO 24 Washington, DC 25 Nashville, TN # # Indicates a Partial Tax Exemption ^Indicates no sales tax reported in this jurisdiction

33 Rebates and Incentives Available in America s 50 Largest Cities POPULATION RANK CITY STATE TAX CREDIT STATE GRANT/ REBATE/PBI UTILITY REBATE/ PBI SALES TAX EXEMPTION PROPERTY TAX EXEMPTION 26 Baltimore, MD # 27 Louisville, KY 28 Portland, OR ^ 29 Oklahoma City, OK 30 Milwaukee, WI 31 Las Vegas, NV # 32 Albuquerque, NM # 33 Tucson, AZ 34 Fresno, CA 35 Sacramento, CA 36 Long Beach, CA 37 Kansas City, MO 38 Mesa, AZ 39 Virginia Beach, VA 40 Atlanta, GA 41 Colorado Springs, CO 42 Raleigh, NC # 43 Omaha, NE 44 Miami, FL 45 Oakland, CA 46 Tulsa, OK 47 Minneapolis, MN 48 Cleveland, OH 49 Wichita, KS 50 Arlington, TX # Indicates a Partial Tax Exemption ^Indicates no sales tax reported in this jurisdiction

34 Tools, Data and Assumptions 1. Savings and Rates Assumptions We assume most customers are on a utility s standard residential rate, and savings are based upon the assumption that the customer was previously on the same flat rate schedule prior to investing in solar. Savings are thus in relation to what the customer would be paying under the flat rate tariff with no PV system, all things being equal. Many rate records were culled from the Utility Rate Database, and were checked against current tariffs filed on utility websites, and modified as necessary in our models. 2. Solar PV Pricing Data ZIP code level pricing and system sizing data for July-September 2014 was generously provided to the authors by Vikram Aggarwal of EnergySage. Data was aggregated to super-regional levels to protect the sensitivity of the data. 3. Energy Usage in Average-Size Households Our analysis utilized the National Renewable Energy Laboratory s System Advisor Model (SAM), which uses simulated load data from various locations in the United States. We assumed, (given the findings in Hoen, et al. Exploring California PV Home Premiums. December 2013, Lawrence Berkeley National Laboratory (LBNL), Available at: that the average PV system owner would, if their market were more saturated, own a house similar to the base home in the set of simulated load data by city. Energy use (kwh) and monthly peak demand (kw) include monthly variation, but no annual variation. Future household energy use may decrease due to greater efficiency, or may increase due to new loads. As it is therefore uncertain in which direction energy use will move, constant usage and demand are assumed. 4. Escalation of Future Utility Rates cost escalator is assumed for utility rates. The escalator used for each city (save Austin and Atlanta) comes from performing a percent change calculation on the U.S. Energy Information Administration (EIA) s Annual Energy Outlook 2014 by grid reliability region of the United States. The escalator used for Austin & Atlanta s tariff comes from EIA s natural gas price data, as the value of solar is tied strongly to the avoided cost of the displaced marginal generating unit, which is commonly assumed to be natural gas. 5. Physical System & Financial Assumptions We assumed a PV system of 5 kilowatts in nameplate Direct Current (DC) capacity. The cash purchase scenario assumes that the system was purchased in full with cash upfront (no loan). The 100% financed scenario assumes that the system was purchased fully with a loan at 5% interest over 25 years. A 6.61% discount rate is assumed, which represents our calculation of the 25-year annual growth rate for the Standard and Poor's 500 (data maintained by Robert Shiller of Yale University). The assumed PV system life is 25 years. A 0.84 DC to AC derate factor is assumed, given the increasing commonality of microinverter technology. 6. Data for Policies, Incentives and Rebates We utilized the Database of State Incentives for Renewables and Efficiency (DSIRE) for the details on all net energy metering (NEM) policies, and assumed that the programs on the site as of late September that do not have specific plans to be unavailable in the next year would be available in the next year for customers. 7. Data Visualizations All data visualizations and maps were created with the free software program Tableau Public.

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