On Grid Long Proposal Examples

Ichiban Hibachi
(408) 111 1111H, (408) 222 2222C

Yaz's Solar Company is privileged to present
A personalized solar electric analysis for:
Harry and CJ Fair
Fax (989) 332 4447
April 8, 2010
cust@buyer.com, www.buyer.com
Site Address:
149 Elderwood Ave, #1
Pelham, CA 10803
of a
11.0 kW Residential PV System
prepared by:
Carl Yastrzemski
Yaz's Solar Company
Voice (989) 332 1332
carl@yaz.com
Yaz's Solar Company and/or OnGrid Solar
Presented by:
Carl Yastrzemski
Yaz's Solar Company
Notice
California Solar Initiative - Solar 101: http://www.gosolarcalifornia.org/solar101/index.html
The DSIRE Database of Incentives: http://www.dsireusa.org/solar
Carl Yastrzemski
This information is provided as an illustration of potential financial benefits stemming from ownership of a renewable energy
power system. This is not a production guarantee. A professional accountant or tax advisor should confirm these estimates.
Neither OnGrid Solar nor any authorized user of the tool used to produce these results warrants the applicability of these estimates
for particular business cases, and both disclaim all liability.
The estimates of production and other results can be independently validated at the following websites:
California Energy Commission: http://www.consumerenergycenter.org/renewables/estimator/index.html
PV Watts Solar Performance Estimator: http://www.nrel.gov/rredc/pvwatts
Sincerely,
I would be pleased to answer any questions. I will also follow up with you shortly.
Carl Yastrzemski
Yaz's Solar Company
Voice (989) 332 1332
Fax (989) 332 4447
carl@yaz.com
A cost analysis, including incentive programs, tax credits and other critical information leading to the economic
bottom line.
Please contact me at:
> If you finance the system, how much it will cost or save you on a monthly basis, both initially, and over time.
> As an investment, what its long-term Compound Annual Rate of Return will be (comparable to stocks, bonds,
savings, etc).
> An environmental analysis, showing how much benefit you'll be creating on top of the savings you'll enjoy.
Thank you for the opportunity to present you with a proposal for a solar electric system. Yaz's Solar Company is delighted
to be working with you.
This proposal covers the following areas:
How solar electric systems work
A summary of your site conditions
Our recommendation of a solar system to fit your needs
Dear Harry and CJ Fair,
Proposal for: Harry and CJ Fair, Ichiban Hibachi
> How much the solar system will save on your electric bill
> How much the system will increase your property's value
Your current usage profile and economic assumptions included in your customized analysis
Opportunities to save energy
A financial analysis of what the solar system will do for you economically, including:
Presented by:
Carl Yastrzemski
Yaz's Solar Company
The Tier pricing system is a progressive pricing system whereby the more you consume, the higher the rate becomes. The top of
Tier 2 represents the 'average' user in your geography who uses 130% of 'baseline'. Baseline for your geography is 16.5 kWh per
day in the summer, and 12.7 kWh per day in the winter. In a 30-day month, this translates to 495 kWh per month in the summer,
and 381 kWh per month in the winter.
This home is above average usage, with top usage in Tier 5. The top rate you pay for electricity is 49.9 per kWh. The average rate
was 34.3 per kWh. Solar will save electricity in the top tiers first.
1,500 kWh in the winter months (Oct thru Apr) and
This describes the historical usage of energy, a major factor in sizing a solar system
Your current electric rate is E1-SB, which is a Residential Tiered-kWh rate. TOU stands for Time-of-Use, which many times, is a
beneficial rate for solar. TOU rates value electricity differently depending on time of day. Solar can sell back best during the day,
which usually corresponds with the highest TOU rates. We suggest you switch to E6-SB, which is a Residential TOU Tiered-kWh
rate.
The total annual usage has been: 21,000 kWh
Based on our discussions, it looks like your usage will be about 98% of historic due to lifestyle changes. We anticipate your bill
will adjust to $558.65 per month when accounting for these lifestyle changes.
We are not anticipating that you will improve your building's efficiency. However, Energy Efficiency is a cost effective way to
improve the return on your solar investment, and do the right thing environmentally. There are federal tax credits that can make
energy efficiency even more attractive. More on this later.
This equates to an average electric bill of $576.66 per month.
Energy Usage Profile
2,000 kWh in the summer months (May thru Oct)
Your property has used, on average:
Residential Tiered Usage Before Solar
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Usage (kWh/mo at top of tier) & Tier
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Usage
Presented by:
Carl Yastrzemski
Yaz's Solar Company
Rate escalation plays a big factor in future energy costs, and magnifies the amount a solar system will save you. Historically,
escalation has been around 6.7% on average over 30 years from 1970-2001, much higher than the CPI. In this analysis, electric
rate escalation of 4.0% has been factored in over the long term. The CPI-U (Urban Consumer Price Index) has increased about
3.1% annually since 1982. In this analysis, general inflation on maintenance, etc. is assumed to be 3.0%.
In addition to shading & orientation, there are numerous system efficiency factors that must be included to make a reasonable,
conservative estimation of production. These include inverter efficiency, module heating, wire losses, dust & dirt, and module
mismatch factors. We expect that these will account for a total system efficiency factor of 74%. Normal loss factors for most
systems are estimated to be 69%-73% (from the CEC guidebook, see http://www.energy.ca.gov/reports/2001-09-04_500-01-
020.PDF).
Site Conditions & System Efficiency Factors
The anticipated orientation of your PV Array is 22 up from horizontal, and facing S. It will be mounted on your Foam roof.
Your site location in Pelham, CA receives about 5.5 hours of equivalent full noontime sun. This is based on 30-year annual average
data for nearby Sacramento, CA found in the NREL Redbook (http://rredc.nrel.gov/solar/pubs/redbook). This level of sunshine can
vary +/- 9% year to year due to weather.
System Efficiency Estimations
Accounting for shading & orientation factors, we anticipate your system will have 5.5 hours of effective equivalent full noontime
sun.
We've assumed the following tax brackets for factoring in certain tax implications:
28.0% Federal Income Tax Rate
9.3% State Income Tax Rate
34.7% Combined Net Fed & State Income Tax Rate (assuming itemized tax deductions)
Tax Assumptions:
Rate Escalation Factors
CA Electric Rates, 30 Years
Rates have risen on average,
6.7% per year since 1970
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1970 1975 1980 1985 1990 1995 2000
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Residential Small Business
Presented by:
Carl Yastrzemski
Yaz's Solar Company
The American Council for an Energy Efficient Economy produces excellent guides for home and building energy efficiency and
savings. More information is available at: http://www.aceee.org/consumer/consumer.htm
An energy efficiency audit can identify other ways to use less, and sometimes be even more comfortable.
Solar Electric System:
Opportunities For Saving Energy
Getting the same benefits and enjoyment, but in ways that require less input energy. These are often very cost effective, but less in
vogue than solar electricity. They include lighting upgrades and replacing refrigerator and other equipment or appliances with
more modern and efficient products.
Energy Efficiency:
Solar Electricity, or 'PV', is the most interesting, hottest new technology. Strongly supported by the state & federal governments.
Solar Electricity is one of the fastest growing energy technologies worldwide, growing over 35% each year for the last 8 years. Not
actually a 'new' technology, the first solar panel was put into use in 1954. Most of the bigger solar manufacturers have over 20
years experience in producing and refining their products. Some have over 40 years experience.
Conservation - simply using or doing with less. This is always the most cost effective, but not always doable. Can you turn off or
unplug an extra refrigerator in the garage, and only use it when it's really needed? Are there other things that are rarely used that
can be shut off without impacting your lifestyle?
Presented by:
Carl Yastrzemski
Yaz's Solar Company
When the solar system can put out power, it goes to reducing your usage at the time, or, if there is excess, to spinning the meter
backwards, counting down your electric use and bill. Special metering, such as Time-of-Use metering and billing arrangements can
help you take advantage of higher daytime rates, allowing you to sell power at a high rate, and buy it back at night at a lower rate.
This helps reduce the necessary size of your solar system, while still cutting your bill by the same amount.
At night and during cloudy weather, the solar system's output is reduced or stopped; however, your home then gets electricity
directly from the utility grid. You're always connected to the grid, so you can have as much power as you need, any time you need
it, regardless of whether the solar system is able to put out any power.
Solar Electric systems generate electricity silently and without any moving parts. Sunlight falls on the solar array (blue, on the
roof), generating DC electricity. That DC electricity is converted into household 120V AC electricity by the inverter (blue & grey,
on the wall). The AC electricity is fed into your electric meter and circuit breaker panel (grey, on the wall). The electricity either
goes to your appliances and lights, or to the grid, or some to each. This all happens silently and automatically every day.
How Solar Electric Systems work
.
Presented by:
Carl Yastrzemski
Yaz's Solar Company
Another method is using the nameplate rating system, also known as STC (Standard Test Conditions) or DC rating of the system.
This rating system assumes standard, ideal factory conditions. Using this rating system, the modules have a rating of 215 watts.
The nameplate rating (STC) of this system is: 12.545 kW DC. These ratings are useful in comparing systems side-by-side.
Over time, solar systems lose a little bit of performance each year due to ageing of the solar modules. The annual module
degradation rate in your system is estimated to be 0.8% per year (normal ranges are from 0% to 1%). Solar modules typically have
a 20 or 25 year performance warranty, typically for 80% of their 'as new' performance, so you can rest assured that your system
will have long lasting high performance.
It will be mounted on your Foam roof.
This system, in this configuration (with the shading, orientation, tilt and other factors assumed) is estimated to produce 17,730
kWh per year of usable electricity to offset your electric bill.
That is about 1,615 kWh per year per kW CEC AC capacity rating, or 1,413 kWh per year per kW STC nameplate rating. This
might be useful to you for comparison, on a per kW basis, to estimations you might see in other tools or estimators, or in print
from government energy agencies. It's a way of checking the validity of the estimations and proposal being presented to you.
Recommended Solar Electric System
Based on the above usage, site conditions and system factors, we recommend a 10.977 kW (CEC rating) system comprising 43
Sanyo Electric HIT-N215A01 modules and 3 SMA America SB3000US (240V) inverters in the primary array, and a secondary
array comprising 15 BP Solar BP3220N modules and 1 SMA America SB7000US (240V) inverter. This system will offset about
97% of your electric bill.
Note: There are several ways of rating solar systems. One way is using the CEC AC rating system. The CEC AC rating system
takes account of system performance reductions due to inverter efficiency and module heating effects. Using this rating system, the
primary modules have a rating of 199.6 watts, and the inverters have an efficiency rating of 95.5%. The total system has a CEC AC
rating of: 10.977 kW.
Presented by:
Carl Yastrzemski
Yaz's Solar Company
Your new tier is now Tier 1. Your new marginal cost of electricity is 12.0 per kWh (that is, the new cost to switch on the lights.
Your old cost to do so was 49.9 per kWh). Note: it is not necessary to produce all the electricity you use, because you are taking
advantage of selling at higher rates, and buying at lower rates.
Your new average electric bill will be approximately $14 per month when averaged over a typical year. This is an estimate, and
will be affected by many factors including any unanticipated changes in your usage, variations in the weather in a particular year,
and excessive dirt build-up on the array.
Your net energy use will be substantially lower because of the production from the solar system. The total area in the chart below
shows your total usage, and matches the usage in the previous chart above. However, the area in green is the fraction that will now
come from solar.
This translates to a savings of approximately $544 per month when compared to what we expected your usage to adjust to
with anticipated lifestyle changes. Over a year, we expect you will save about $6,534 The Pre-Tax value of the first year
annual savings due to solar is $10,420. This is important for valuing the solar savings compared to other investments, which
are often taxable.
Electric Usage with Solar:
Residential Tiered Usage With Solar
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Net Usage Production
Presented by:
Carl Yastrzemski
Yaz's Solar Company
121,857 $
400 $
500 $
600 $
700 $
(3,722) $
120,336 $
(13,768) $
108,567 $
100 $
200 $
300 $
107,167 $
- $
107,167 $
560 $
(3,600) $
(32,750) $
- $
71,377 $
(16,768) $
61,945 $
ENERGY EFFICIENCY:
1,000 $
(500) $
64,745 $
Estimated Permit Fees NOT included in system contract price
Net System Cost after Tax Benefits, Rebates, Grants, and PBIs
Efficiency ROI improvement calculations based on cost of measure & savings on system size
Cost of Energy Efficiency improvements
Other Fees NOT included in system contract price
Utility Fees NOT included in system contract price
Cost After Rebate, non-Fed Grant, & Fees (may be the Tax Creditable Amount, see Tax Advisor)
State Tax Credit Benefit (net), after Federal Tax on the State Tax Credit
Net Cost Up Front (after Rebate, Grants, & Fees)
Federal Tax on Grant
Fed Tax Credits for Energy Efficiency improvements
Sales Tax (if not included above)
Total System Cost (includes full service, parts, delivery, installation, warranty)
Gross Top Line Cost ($10.96 per CEC AC Watt)
Net System Cost after Tax Benefits, Rebates, and Grants
TOTAL NET COST OF SYSTEM PLUS ENERGY EFFICIENCY IMPROVEMENTS (after all tax effects)
Incentives are reducing your cost of the system by approximately 46%, or about $55,590
Your solar system is eligible for incentives to help make it more affordable and attractive. The breakdown for the cost of your
system, from the top line, to the net cost, after all incentives is:
PBI Incentive after Federal Tax
Federal Investment Tax Credit (ITC)
Other Fees included in system contract price
Yaz's Solar Company 3.0% Discount
Rebate and non-Federal Grants (as applicable)
System Price after Rebate and non-Federal Grants
Estimated Permit Fees included in system contract price
Utility Fees included in system contract price
Solar System Capital Cost and Incentive Summary
Presented by:
Carl Yastrzemski
Yaz's Solar Company
Conclusion
Thank you again for the opportunity to present you with a proposal for a solar electric system. Yaz's Solar Company is delighted to
be working with you. Please let us know what we can do to win your business.
2,020 lbs of S02, which causes acid rain
137
Or planting 6.0 acres of trees.
lbs of particulates that cause asthma
1,131,338 miles driven in an average car, or 45,254 miles a year
These can also be thought of in other forms of avoided environmental impact:
It's like taking 3.7 cars off the road for 25 years.
2,231
Your solar system will generate substantial environmental benefits in the form of avoided emissions from power plants. Over 25
years, this solar system is estimated to offset:
lbs of NOx, which creates smog
695,310 lbs of CO2, the leading greenhouse gas
Environmental Analysis
Area of Equivalent Number of Trees Planted
Relative to a Typical 6000 sqft House Lot (.14 acre)
Equivalent Area of Trees Planted
Typical 6000sqf Residential Lot Area
11.0 kW Solar Electric System
Harry and CJ Fair
Ichiban Hibachi
Carl Yastrzemski
Solar Designer
By
Prepared For
Yaz's Solar Company
Presented by:
Carl Yastrzemski
Yaz's Solar Company
Design: 11.0 kW Residential PV System
Notice
Sincerely,
To start that process, enclosed are the documents that will need to be signed. Please review them carefully and let us know
of any questions. Once executed, we'll be able to submit them to reserve your incentives and begin the permitting and full
design process. I'll contact you shortly to follow up, and please be aware that this proposal is valid for 14 days, after which
we'll need to reconfirm the pricing and proposed schedule.
Thank you again for the opportunity to present you with a proposal for a solar electric system. Yaz's Solar Company is
delighted to be working with you.
Carl Yastrzemski
Yaz's Solar Company
Voice: (989) 332 1332, Fax: (989) 332 4447
carl@yaz.com
Quality and your satisfaction in every way are our primary foci. We will be contacting you regularly during the project to
ensure everything goes smoothly, but we also ask that you not hesitate to let us know if there's anything we can do to make
your experience going solar more positive.
Ichiban Hibachi
Pelham, CA 10803
We are delighted to present a proposal for your consideration of a solar electric system. Thank you for this opportunity.
Based on the site analysis we performed, we have designed a system that will offset a significant fraction of your electrical
usage via clean solar electricity, produce substantial savings on your electric bill, and provide you with a valuable long-
term investment. The pages that follow detail the important features and benefits of the system. Please don't hesitate to
contact me with any questions - I would be very happy to discuss any aspect of it with you.
Carl Yastrzemski
April 8, 2010
Harry and CJ Fair
Presented by:
Carl Yastrzemski
Yaz's Solar Company
120,336 $
(13,768) $
108,S67 5
600 $
107,167 5
360 $
(3,600) $
(32,730) $
- $
(16,768) $
61,94S 5
Cross 1op Llne CosL ($10.96 per CLC AC Wau)
System r|ce aher kebate and non-Iedera| Grants
LsumaLed lees nC1 lncluded ln sysLem conLracL prlce
Net System Cost w|th 1ax 8enehts & Incennves
lederal 1ax on 8ebaLe or non-lederal CranLs
SLaLe 1ax CredlL 8eneL (neL), aer lederal 1ax on Lhe SLaLe 1ax CredlL
8l lncenuve aer lederal 1ax
8ebaLe and non-lederal CranLs (as appllcable)
A turn-key system that includes all design, parts, sales tax, $500 in estimated permit fees, and labor, including:
Electrical Work: labor, permitting & inspection labor, wiring, conduits, breakers, disconnects, and any other needed
materials.
Stamped Engineering drawings or Architectural Review drawings or labor, if required.
Ground rod and grounding conductor wiring, if required.
Proposed System:
30 lederal 1ax CredlL (l1C) or 1reasury CranL
Cost Summary:
Roofing & Mechanical Work: labor, permitting & inspection labor, racking and mounting hardware.
Excluded items:
Secondary Array: 15 BP Solar BP3220N modules and 1 SMA America SB7000US (240V) inverter.
Included items:
10.977 kW (CEC rating) system producing 17,730 kWh/year, consisting of:
Primary Array: 43 Sanyo Electric HIT-N215A01 modules and 3 SMA America SB3000US (240V) inverters.
System & ro[ect Cverv|ew:
For:
Harry and CJ Fair
Ichiban Hibachi
Pelham, CA 10803
(408) 111 1111H, (408) 222 2222C
Cost Aher kebate, non-Ied Grant, & Iees (may be the 1ax Cred|tab|e Amount, see 1ax Adv|sor)
Presented by:
Carl Yastrzemski
Yaz's Solar Company
020.PDF).
sun.
Recommended System:
rate.
Site Conditions & System Efficiency Factors:
improve the return on your solar investment, and do a good thing environmentally. There are federal tax credits that can make
S|te & System erformance Ana|ys|s:
Energy Usage:
Presented by:
Carl Yastrzemski
Yaz's Solar Company
are often taxable.
System Performance:
Presented by:
Carl Yastrzemski
Yaz's Solar Company
We strongly recommend you including system monitoring. Monitoring helps ensure your system performs continuously and
provides you immediate notification if there is a problem, allowing it to be addressed right away. Monitoring improves your peace
of mind and enhances your customer experience so that you are sure you are getting what you paid for. Finally, if you include
building load monitoring, several studies have found that consumer tend to use up to 10% less electricity, which further adds to
your savings.
Our customers feel that monitoring the system and their building more than pays for itself several ways. We would be happy to
discuss monitoring choices with you.
It will be mounted with leak-free attachment methods on your Foam roof so that it can withstand up to 90 mph winds and won't
add more than 4 lb/sqft, which is well within your roofs design capabilities and follows the requirements of the Uniform Building
Code. Our designers will reconfirm each of the design choices.
Conduit to protect the systems conductors will be used and will be routed in the most attractive pathway. Conduit can sometimes
be hidden in false downspouts or in other ways. This may be available at an extra charge if you are interested.
Electrical:
Your system will use Sanyo Electric HIT-N215A01 modules, which are an attractive, well-built, high-quality module. All the
modules we provide have at least a 20-year performance warranty, assuring you they will put out at least 75% or more of their
rated power during the warranty period. We will provide you with specific warranty documents with your Owner's Manual.
Your system will also include SMA America SB3000US (240V) inverters. These are top-quality inveters that are widely
recognized for their high performance, converting 95.5% of the solar array's DC power to utility-compatible AC power.
The power produced from the solar system will be feed into your property's existing electrical system with all the required
interconnection and safety gear to ensure safe, long-lasting, high performance. Any power your existing loads don't absorb will be
sent back to the utility under the Net-Metering laws that allow you to get retail savings on your electric bill.
Monitoring:
System Des|gn:
The designed system balances performance and aesthetics, but always keeps safety and structural integrity paramount.
Roofing, Structural, and Mechanical:
The anticipated orientation of your PV Array is 22 up from horizontal, and facing S to ensure good performance.
Presented by:
Carl Yastrzemski
Yaz's Solar Company
559 $ Previous Average Adjusted Monthly Electric Bill
14 $ Estimated New Average Monthly Electric Bill
545 $ Average Monthly Electric Bill Savings
6,534 $ Average Annual Electric Bill Savings
97.5% Percentage Of Bill Offset
22.3% Pre-Tax Compound Annual Rate of Return (IRR) over 25 years
204,218 $
231,717 $ Net Savings over 25 years including bill savings,
sRECs, maintenance, & inverter replacement (net after-tax values)
3.7x Total Lifecycle Payback (25-year Net Savings divided by Net Cost)
8.7 years Payback (after-tax $ - not a good measure)
126,128 $ Theoretical Initial Increase in Property Value
Sav|ngs & I|nanc|a| Ana|ys|s:
Tax & Rate Escalation Assumptions:
Presented by:
Carl Yastrzemski
Yaz's Solar Company
121,857 $
400 $
500 $
600 $
700 $
(3,722) $
120,336 $
(13,768) $
108,567 $
100 $
200 $
300 $
107,167 $
- $
107,167 $
560 $
(3,600) $
(32,750) $
- $
71,377 $
(16,768) $
61,945 $
ENERGY EFFICIENCY:
1,000 $
(500) $
64,745 $
Presented by:
Carl Yastrzemski
Yaz's Solar Company
New average monthly electric bill:
Monthly savings:
Annual savings: 6,534 $
Home resale/appraisal value increase
Current and future cash flow if financed
The Total Lifecycle savings is $231,717, including bill savings, sRECs, maintenance, & inverter replacement (net after-tax values)
over 25 years compared to a system cost of $61,945. This yields a Total Lifecycle Payback of 3.7x. Payback occurs at Year 8.7.
Total Lifecycle Payback
Payback is often looked at as a measure of financial soundness of an investment. However, for long-term investments such as
stocks, bonds, homes, and solar systems, payback isn't easily found or comparable to other investments to determine which
investments form the best options for a diversified portfolio. 'Payback' has several other drawbacks as well, including the difficulty
in accounting for escalation and inflation, time-value-of-money, one-time expenses such as inverter replacement cost, or the
savings available after 'payback' has been achieved.
Compound Annual Rate of Return (comparable to stocks, bonds, savings, etc)
The savings will increase over time due to escalation, which we've agreed to anticipate being 4.0% for electricity over the long
term. Historically, electric escalation has been 6.7% in California for the 30 years from 1970-2001, even though the CPI has only
been 3.1% since 1982.
544 $
14 $
Direct, Immediate & Future Savings
Other ways of looking at Payback include analysis of the Total Lifecycle Payback over the 25-year warranted life of the solar
modules. In the graphic below, the steadily increasing steps reflect each year's savings from the solar system affected by 4.0%
escalation. The red area in the graphic below shows the needed accumulation of savings before payback. The green area shows
additional savings received after payback. As you can see, savings after payback are substantial.
These immediate and future savings will immediately reduce the operating expenses of your home and improve your cash flow:
Financial Analysis & Payback
Your solar system will generate substantial savings on your electric bill. These savings can provide a variety of direct and future
economic benefits. Some of the ways these economic benefits are measured include:
Direct, immediate & future savings on your electric bill creating improved cash flow
$0.00
$2,000.00
$4,000.00
$6,000.00
$8,000.00
$10,000.00
$12,000.00
$14,000.00
$16,000.00
1 3 5 7 9 11 13 15 17 19 21 23 25
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s
Annual Savings Before Payback
Annual Savings After Payback
Payback Year (Occurs at 8.7 Years)
Annual Savings Before and After Payback
Presented by:
Carl Yastrzemski
Yaz's Solar Company
The maximum resale value of $158,382 based on estimated remaining savings to 25 years occurs at year 10.
Because savings increase over time due to electric rate escalation, the increase in resale value will increase as well. However, the
limit to this increase will be the anticipated remaining savings left in the system before it's 'end of life', which has been
conservatively estimated at 25 years (the module warranty life). The actually design life is much longer, but to be conservative,
we'll use this shorter time horizon.
This home's annual savings of $6,534 translate to an immediate theoretical increase in resale value of $126,128. This
translates to 195% of the system's net cost.
Home Resale/Appraisal Value Increase
Solar systems increase home values by reducing operating costs. The Appraisal Institute published a study in the Appraisal Journal
in 1998 & again in 1999, that stated that if a home's operating costs can be reduced through an energy efficiency measure that
reduces its operating costs, those savings have a tangible connection to increasing the home's value. The rationale is, that instead of
paying the utility, a future buyer could take a larger mortgage, and instead pay the bank and their operating costs would remain
unchanged.
The article established that a homes resale value increases $20 for every $1 saved in operating costs. This is based on a 5% after-
tax long-term average for mortgage costs. For more information see www.ongrid.net/AppraisalJournalPVValue10.98.pdf which is
from The Appraisal Journal, Oct '98. While this may sound dated, it is based on solid math that doesn't vary with time, only long
term averages in mortgage interest rates.
Resale Value Over Time
$0.00
$50,000.00
$100,000.00
$150,000.00
$200,000.00
$250,000.00
$300,000.00
1 3 5 7 9 11 13 15 17 19 21 23 25
R
e
s
a
l
e

V
a
l
u
e
Effective Resale Value
20 times Annual Savings
Remaining savings within 25 years
Years
Presented by:
Carl Yastrzemski
Yaz's Solar Company
Year 5
Solar Cost w/ Smart Financing $2,887
Old Electric Bill with inflation $5,438
Cash Flow (Annual) $2,551 $2,632
$2,700
$4,977
$2,277
$3,272
$6,304
$3,033
Year 1 Year 10 Year 2
$2,200
$4,832
Proposal for: Jeff Sun
Option 2: Fully amortized 'Optimistic Loan' of the above interest rate and term; the initial principal is the net system cost after
all near-term incentives (rebates, grants, tax credits, tax deductions, PBI's, and depreciation) except SRECs if any (SRECs are
excluded because their value is usually uncertain) are received. This loan is optimistic (for the salesperson) because it has the
lowest payments, but requires the customer to get a bridge loan or provide their own cash until some of the near-term
incentives are received (tax credits, tax deductions, PBIs, depreciation).
The payment amount for this loan is $281/mo on $39,791 borrowed.
Current and Future Cash Flows if Financed
If the system is financed, a cash flow analysis compares the cost of the loan (principal, interest and tax effects) to the savings
on the electric bill (minus maintenance and other costs). For this analysis, we've assumed a financing interest rate of 7.5%, and
a term of 30 years. Here we present 3 options for financing the system; what we'll call the 'Inefficient Loan', the 'Optimistic
Loan', and 'Smart Financing' using a Line of Credit:
Option 1: Fully amortized 'Inefficient Loan' of the above interest rate and term; the initial principal is the net system cost after
up-front incentives (such as rebates and grants) are received. This requires no out-of-pocket costs to the consumer to acquire
the solar system, but as other incentives and benefits are received (such as tax credits, tax deductions, PBI's, and depreciation,
each as applicable), the consumer ends up with cash on hand which they also are paying loan interest on, so this loan ends up
costing unnecesary interest, making it inefficient and expensive.
Option 3: Fully amortized 'Smart Financing' of the above interest rate and term, usually using a line of credit; the initial
principal is the net system cost after up-front incentives (such as rebates and grants) are received. This financing method is
both Efficient and Realistic in terms of true consumer cost because it borrows exactly the amount needed so that the consumer
never needs a bridge loan, but also pays no unnecessary interest because it applies any near-term incentives received towards
the principal owed.
The calculation is complex, but the Smart Financing with a Line Of Credit cost falls between the Optimistic and Inefficient
loan costs. It requires the customer to be disciplined to apply any depreciation, tax credits, PBIs and other near-term incentives
to pay down the principal owed as taxes are filed and benefits are received. Note: in the first year, the principal and therefore
the interest is large, so the interest tax deduction is large; sometimes the interest exceeds the payment, allowing for a large tax
benefit but also temporarily increasing the principal amount. This situation is temporary as long as any tax credits and
depreciation are applied to reducing principal as they are received.
The monthly payment is $289/mo on $56,845 borrowed. The net annual payments or solar cost with Smart Financing (after
tax deduction of interest paid) in the 1st, 2nd, 5th, and 10th years is:
Please see the 25 Year Financing Timeline table for details on the principal, interest, tax benefit, and payment amount, etc for
each year in details.
Presented by:
Carl Yastrzemski
Yaz's Solar Company
The bottom graphic shows the accumulated savings. Note that this is pure savings, with no out-of-pocket costs. All system costs
came from financed sources. This is the accumulation of excess savings above what was needed to pay off the principal and
interest for the loan.
As in the Appraisal/Resale calculation above, electric escalation will increase the electric bill savings over time. The Smart Loan's
cost is affected by the factors previously mentioned. The top graphic below illustrate the loan cost vs. net bill savings over 25
years. The middle graphic represents their difference and hence the the net cash flow.
Annual Costs:
Solar plus Loan vs. No Solar
$0.00
$2,000.00
$4,000.00
$6,000.00
$8,000.00
$10,000.00
$12,000.00
$14,000.00
$16,000.00
$18,000.00
1 3 5 7 9 11 13 15 17 19 21 23 25
Years
A
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C
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s
t
Old Utility Bill w/ 4.0% inflation Solar Cost w/ Financing
Net Annual Savings When Financed
$0.00
$2,000.00
$4,000.00
$6,000.00
$8,000.00
$10,000.00
$12,000.00
$14,000.00
$16,000.00
1 3 5 7 9 11 13 15 17 19 21 23 25
A
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S
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Net Annual Savings (Old Bill minus Solar with Financing)
Years
Accumulated Net Savings
When Financed
$0.00
$20,000.00
$40,000.00
$60,000.00
$80,000.00
$100,000.00
$120,000.00
$140,000.00
$160,000.00
1 3 5 7 9 11 13 15 17 19 21 23 25
A
c
c
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e
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S
a
v
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s
Accumulated Net Annual Savings (with Financing)
Years
Presented by:
Carl Yastrzemski
Yaz's Solar Company
Annual savings:
Pre-Tax value of the annual savings:
Pre-Tax Compound Annual Rate of Return (IRR) over 25 years:
22.3%
Compound Annual Rate of Return
The Compound Annual Rate of Return (CARR) is an analysis method that makes the solar investment comparable to other interest-
rate-based investments, such as stocks, bonds, CDs, money markets, savings, etc. The goal is to include all the cost and benefit
components in a multi-year timeline and look for the effective annual rate of return using Internal Rate of Return analysis (the IRR
tool in most spreadsheets).
In residential solar analysis, it's important to treat and view the system properly with respect to taxes. A solar system saves the
homeowner after-tax expense. However, most of the other investment opportunities provide pre-tax returns, and are usually
thought of in a pre-tax context. Therefore, in order to make a good side-by-side comparison of the two, it is then appropriate to
translate one to the other's realm.
When comparing analyses, it is also important to look at the compound annual rate of return (CARR), rather than an annual
average, which can also appear misleadingly high. More information on financial analyses for solar systems is available at:
http://www.ongrid.net/papers/PaybackOnSolarSERG.pdf
Please see the attached 25-year financial timeline analysis for details of the amounts and timing of items included in the CARR
analysis.
Looked at another way, if the system were substantially financed, such that there was no initial outlay, and only a cash positive
result, what is the rate of return on that - infinite. While it may be true in this specially created case, it does not produce a useful
result for purposes of comparison. Hence, this analysis assumes an all cash transaction.
Loan costs do not get included in this analysis as that muddies the waters and can create excessively optimistic looking results. The
CARR analysis should be done in pure form as if the choice were between investing in this opportunity vs. another. It is irrelevant
in comparing the two choices what the source of funds might be, and only creates confusion.
10,420 $
6,534 $
All relevant cost components must be included to ensure completeness of the analysis. These include; system capital cost, rebate,
tax credits, performance based incentives, REC sales, maintenance costs, tax consequences of any incentives and state credits,
depreciation and the tax consequences of depreciation, electric bill savings, tax consequences for the loss of deductibility of such
savings (commercial analyses only), and inverter replacement cost at an appropriate year in the future.
Because most people think of their investments in pre-tax terms, the attached analysis translates the solar Compound Annual Rate
of Return analysis to it's pre-tax equivalent (note, all other analyses in this pro forma are unaffected by this translation). This
requires that most amounts be converted based on the purchasers tax bracket. The amounts that do not get converted are the
system's net capital costs (top line, rebate values, etc) and any state tax credit amount.
Presented by:
Carl Yastrzemski
Yaz's Solar Company
137
Lnv|ronmenta| Ana|ys|s:
1,131,338
2,231 lbs of NOx, which creates smog
miles driven in an average car, or 45,254 miles a year
Presented by:
Carl Yastrzemski
Yaz's Solar Company
We would be happy to provide references for your review.
Instructions on how to monitor your systems performance
Yaz's Solar Company has quality control procedures in place for design, installation, and sales of grid-tied solar electric systems.
These practices allow Yaz's Solar Company to carefully control the quality of any work done within the company.
Our staff has received training on and installed many types of grid-tied inverter.
This system is designed to require the minimum of maintenance. PV systems are simple, and require no moving parts, and
therefore few mechnical failures. It is designed for a 30 year lifetime, using components chosen to match this lifespan.
Recommended system maintenance consists of:
Periodic rinsing of modules with water to get the thick layer of dust off (no scrubbing required or recommended).
Yaz's Solar Company has the capability to perform virtually any type of residential grid-tied installation. We have project managers
and installation crews in the Pelham area. Yaz's Solar Company has the general construction experience required to develop and
implement mechanical solutions to most installation issues. We have the electrical experience required to work with commercial &
residential electrical systems.
In our many years of experience we have performed custom mechanical installations on many types of surface. We have installed
penetration systems on a variety of commercial and residential roofs. We have worked with various non-penetration systems. We
have designed and installed a number of ground mounted systems.
Checking the monthly and annual electric bills and statements to ensure the savings expected is being enjoyed.
Upon completion of the project Yaz's Solar Company will provide the following:
As built drawings of the roof layout
Owner manuals for the modules and inverter
Yaz's Solar Company provides a 1 year warranty for all materials and workmanship which covers all parts and installation. In the
event of a problem with your system, Yaz's Solar Company guarantees that it will be fixed in three days. If we are unable to fix
your system in three days, we will pay you for your lost production until it is fixed. In addition to our warranty, your system is also
backed by Sanyo Electric who warrants the production of the solar modules for 25 years and SMA America who provides a 10
year warranty for the inverters.
az's So|ar Company's Lxper|ence:
Warranty:
As built electrical diagram
Checking the display on the inverters or monitoring system to ensure there are no error warning indicators and that the
production seems to be in the right range for the time of day, day of year, and current conditions
Cperanon & Ma|ntenance:
Presented by:
Carl Yastrzemski
Yaz's Solar Company
Project Milestone
Sign contract, submit rebate paperwork
Order materials
Submit application and design package for permit
Delivery of Materials, Begin construction
May 9, 2010
July 25, 2010
August 1, 2010
August 8, 2010
August 11, 2010
Note, all dates above are estimates and may change depending on how soon we put an agreement in place, the supply of modules
and inverters at the time of ordering materials, and any local permitting delays.
September 5, 2010
Complete construction
Receive permit final signoff
Submit Incentive Claim Form
Receive utility signoff and interconnection, Commission system
Approximate Date
April 18, 2010
May 2, 2010
Based on our current backlog, we estimate we will be able to work towards the following approximate timeline:
Phase 1: Initial system design and incentive application paperwork.
Insta||anon Schedu|e:
Phase 4: System final check, permit inspection, utility inspection and interconnection, and commissioning.
Phase 2: Final system design and permit application
Phase 3: Electrical and mechanical construction
The project will be completed in four phases:
Presented by:
Carl Yastrzemski
Yaz's Solar Company
Compound Annual Rate of Return Detail
Year:
0 1 2 3 4 5 6 7 8 9 10 11 12
10,420 10,551 10,788 10,815 11,166 11,529 11,904 12,291 12,690 13,103 13,529 13,968
848 842 836 1,382 1,372 1,362 1,352 1,342 1,864 1,850 1,837 1,823

(120,936)
13,768
4,242 4,210 4,178 4,147 4,116
(500)

(362) (373) (384) (396) (408) (420) (433) (445) (459) (473) (487) (501)

(399) (411) (423) (436) (449)

(107,667) 14,749 14,818 14,994 15,513 15,798 12,471 12,823 13,187 14,096 14,481 14,878 15,290

(2,042) (1,471) (1,460) (1,641) (1,629) (473) (469) (465) (647) (642) (637) (633)

109,167
52,233

107,167
7,974
(2,233)

(107,667) 72,915 11,115 13,535 13,872 14,170 11,999 12,354 12,722 13,449 13,839 14,241 14,657
(107,667) (34,752) (23,638) (10,103) 3,769 17,938 29,937 42,291 55,013 68,462 82,300 96,542 111,199
|
<----- <----- <----- next 13 years follow below <----- <----- <----- <----- <----- <----- <-----
v
Year:
13 14 15 16 17 18 19 20 21 22 23 24 25
14,422 14,891 15,375 15,875 16,391 16,923 17,473 18,041 18,627 19,233 19,858 20,503 21,170
1,809 1,796 1,783 1,769 1,756 1,743 1,730 1,717 1,705 1,692 1,679 1,667 1,654

(516) (532) (548) (564) (581) (599) (617) (635) (654) (674) (694) (715) (736)
(7,684)

15,715 16,155 8,926 17,080 17,565 18,068 18,587 19,123 19,678 20,251 20,843 21,455 22,088

(628) (623) (619) (614) (609) (605) (600) (596) (591) (587) (583) (578) (574)

15,087 15,532 8,307 16,466 16,956 17,463 17,986 18,527 19,086 19,664 20,261 20,877 21,514
126,287 141,818 150,126 166,591 183,547 201,010 218,997 237,524 256,611 276,274 296,535 317,412 338,926
ANNUAL RATE OF RETURN
Pre-Tax Annual Rate of Return
22.3% IRR (Pre-Tax Rate of Return)
For comparison with other investments
Additional value as a hedge against future electric rate increases
Operating Profit (loss):
Pre-Tax Cash Flow, Cumulative
Avoided Electricity Purchases / Annual Savings
Operating Expenses:
Inverter Replacement at $700 per kW in Year 15
System Maintenance at 0.25% of gross system cost per year
System Cost & Incentives:
Performance Based Incentive
Energy Efficiency Net Expense
REC (Green Tag) Income
Pre-Tax Net Annual Profit/Loss for IRR
Pre-Tax Cash Flow, Cumulative
Operating Savings:
System Maintenance at 0.25% of gross system cost per year
.
.
.
.
.
.
Pre-Tax Net Annual Profit/Loss for IRR
Monitoring Cost
Federal & State Tax Effects:
.
.
Federal Tax on Grant & PBI. Federal and State Tax on RECs.
.
.
State Tax Credit Basis
35.0% State Tax Credit
Fed Tax on State Tax Credit
.
.
.
Harry and CJ Fair, Ichiban Hibachi
Operating Savings:
Avoided Electricity Purchases / Annual Savings
REC (Green Tag) Income
.
Federal Tax on Grant & PBI. Federal and State Tax on RECs.
Rebates & Grants
Operating Expenses:
Inverter Replacement at $700 per kW in Year 15
Monitoring Cost
Federal & State Tax Effects:
Operating Profit (loss):
Federal Tax Credit Basis
30% Federal Tax Credit
Residential Pre-Tax Analysis: After-Tax amounts are adjusted to pre-tax equivalents. Pre-Tax amounts are not adjusted
System Cost & Incentives:
System Capital Cost with Fees, before Rebates
Performance Based Incentive
Energy Efficiency Net Expense
Presented by:
Carl Yastrzemski
Yaz's Solar Company
Financing & Resale Value Annual Detail
FINANCING: Year:
0 1 2 3 4 5 6 7 8 9 10 11 12
107,667 107,667 67,581 63,694 58,188 52,366 46,209 41,540 36,591 31,345 25,785 19,890 13,643
(620) (620) (620) (620) (620) (620) (620) (620) (620) (620) (620) (620)
(538) (338) (318) (291) (262) (231) (208) (183) (157) (129) (99) (68)
201 126 119 109 98 86 77 68 58 48 37 25
(419) (494) (501) (512) (522) (534) (543) (552) (562) (572) (572) (595)

39,105 500 1,886 1,872 1,858
6,920 7,058 7,270 7,343 7,636 7,942 8,260 8,590 8,934 9,291 9,663 10,049
864 935 1,012 1,083 1,172 976 1,067 1,163 1,264 1,372 1,485 1,605

5,548 6,519 6,686 6,656 6,880 6,826 7,025 7,236 7,241 7,478 7,729 7,995

1,372 540 584 687 757 1,116 1,234 1,354 1,693 1,813 1,933 2,054
114 45 49 57 63 93 103 113 141 151 161 171

1,372 1,912 2,496 3,182 3,939 5,055 6,290 7,644 9,337 11,149 13,082 15,136
126,128 127,625 130,462 130,655 134,914 139,312 143,852 148,541 153,383 158,382 163,544 168,875
241,149 232,830 224,461 215,975 207,277 198,393 190,870 183,124 175,147 166,715 158,038 149,109
126,128 127,625 130,462 130,655 134,914 139,312 143,852 148,541 153,383 158,382 158,038 149,109
|
<----- <----- <----- next 13 years follow below <----- <----- <----- <----- <----- <----- <-----
v
Year:
13 14 15 16 17 18 19 20 21 22 23 24 25
7,020
(620)
(35)
13
(607)

10,451 10,869 11,304 11,756 12,226 12,715 13,224 13,753 14,303 14,875 15,470 16,089 16,733
1,732 1,866 9,691 2,156 2,314 2,480 2,655 2,839 3,034 3,239 3,454 3,682 3,921

8,275 1,131 8,961 1,432 1,595 1,766 1,946 2,136 2,336 2,546 2,767 2,999 3,243

2,176 9,739 2,342 10,324 10,632 10,949 11,278 11,617 11,967 12,329 12,703 13,090 13,489
181 812 195 860 886 912 940 968 997 1,027 1,059 1,091 1,124
17,312 27,051 29,393 39,717 50,349 61,298 72,576 84,192 96,159 108,489 121,192 134,282 147,771

174,379 180,062 185,931 191,991 198,248 204,710 211,381 218,271 225,384 232,730 240,315 248,147 256,234
139,918 130,459 120,720 118,378 108,054 97,422 86,473 75,195 63,579 51,612 39,282 26,579 13,489
139,918 130,459 120,720 118,378 108,054 97,422 86,473 75,195 63,579 51,612 39,282 26,579 13,489

FINANCING & RESALE:
Net Monthly Financing Cost
INCREASED RESALE VALUE:
Increased resale value factor: 20
Net New Annual Cost (Line of Credit plus New Net Energy Cost)
Line of Credit Balance
Maximum Resale Value: $158,382 occurs at Year 10
25-Year Accumulated Net Positive Financed Cash Flow: $147,771
Net New Annual Cost (Line of Credit plus New Net Energy Cost)
ACCUMULATED FINANCING CASH FLOW:
Cash Flow (annual) (Old less New Net Costs)
Cash Flow (monthly)
Effective Resale Value (lesser of 20x annual or remaining 25yr savings)
INCREASED RESALE VALUE:
Line of Credit Balance
New Net Annual Energy Cost (including new electric bill with tax effects,
maintenance, inverter replacement
Payment (monthly)
Interest (portion of payment)
Net Benefits Received (put towards paying down the next year's principal)
Annual Electric Bill without Solar (including Lifestyle changes, but not
Energy Efficiency)
Tax Deduction Benefit (monthly)
Payment (monthly)
ACCUMULATED FINANCING CASH FLOW:
Net Monthly Financing Cost
Net Benefits Received (put towards paying down the next year's principal)
Effective Resale Value (lesser of 20x annual or remaining 25yr savings)
Interest (portion of payment)
Cash Flow (annual) (Old less New Net Costs)
Cash Flow (monthly)
Tax Deduction Benefit (monthly)
Annual Electric Bill without Solar (including Lifestyle changes, but not
Energy Efficiency)
New Net Annual Energy Cost (including new electric bill with tax effects,
maintenance, inverter replacement
Harry and CJ Fair, Ichiban Hibachi
Harry and CJ Fair
Yaz's Solar Company is privileged to present
A personalized solar electric analysis for:
Ichiban Hibachi
(408) 111 1111H, (408) 222 2222C
Site Address:
Pelham, CA 10803
of a
Yaz's Solar Company
11.0 kW Residential PV System
prepared by:
Carl Yastrzemski
April 8, 2010
Voice (989) 332 1332
Fax (989) 332 4447
carl@yaz.com
OnGrid Tool v4.03
Presented by:
Carl Yastrzemski
Yaz's Solar Company
Notice
California Solar Initiative - Solar 101: http://www.gosolarcalifornia.org/solar101/index.html
Carl Yastrzemski
California Energy Commission: http://www.consumerenergycenter.org/renewables/estimator/index.html
Sincerely,
I would be pleased to answer any questions. I will also follow up with you shortly.
Carl Yastrzemski
Yaz's Solar Company
Voice (989) 332 1332
Fax (989) 332 4447
carl@yaz.com
A cost analysis, including incentive programs, tax credits and other critical information leading to the economic
bottom line.
> If you finance the system, how much it will cost or save you on a monthly basis, both initially, and over time.
> As an investment, what its long-term Compound Annual Rate of Return will be (comparable to stocks, bonds,
savings, etc).
> An environmental analysis, showing how much benefit you'll be creating on top of the savings you'll enjoy.
Thank you for the opportunity to present you with a proposal for a solar electric system. Yaz's Solar Company is delighted
to be working with you.
This proposal covers the following areas:
How solar electric systems work
A summary of your site conditions
Our recommendation of a solar system to fit your needs
> How much the solar system will save on your electric bill
> How much the system will increase your property's value
Your current usage profile and economic assumptions included in your customized analysis
Opportunities to save energy
A financial analysis of what the solar system will do for you economically, including:
Presented by:
Carl Yastrzemski
Yaz's Solar Company
The Tier pricing system is a progressive pricing system whereby the more you consume, the higher the rate becomes. The top of
Tier 2 represents the 'average' user in your geography who uses 130% of 'baseline'. Baseline for your geography is 16.5 kWh per
day in the summer, and 12.7 kWh per day in the winter. In a 30-day month, this translates to 495 kWh per month in the summer,
and 381 kWh per month in the winter.
This home is above average usage, with top usage in Tier 5. The top rate you pay for electricity is 49.9 per kWh. The average rate
was 34.3 per kWh. Solar will save electricity in the top tiers first.
This describes the historical usage of energy, a major factor in sizing a solar system
rate.
improve the return on your solar investment, and do the right thing environmentally. There are federal tax credits that can make
Energy Usage Profile
Your property has used, on average:
Residential Tiered Usage Before Solar
0
5
10
15
20
25
30
35
40
45
50
55
4
4
4
,

T
i
e
r

1
5
7
7
,

T
i
e
r

2
9
3
2
,

T
i
e
r

3
1
3
7
6
,

T
i
e
r
T
i
e
r

5
C
e
n
t
s

p
e
r

k
W
h
Usage
Presented by:
Carl Yastrzemski
Yaz's Solar Company
Rate escalation plays a big factor in future energy costs, and magnifies the amount a solar system will save you. Historically,
escalation has been around 6.7% on average over 30 years from 1970-2001, much higher than the CPI. In this analysis, electric
rate escalation of 4.0% has been factored in over the long term. The CPI-U (Urban Consumer Price Index) has increased about
3.1% annually since 1982. In this analysis, general inflation on maintenance, etc. is assumed to be 3.0%.
020.PDF).
Site Conditions & System Efficiency Factors
sun.
Tax Assumptions:
Rate Escalation Factors
CA Electric Rates, 30 Years
Rates have risen on average,
6.7% per year since 1970
0
2
4
6
8
10
12
14
16
1970 1975 1980 1985 1990 1995 2000
C
e
n
t
s

p
e
r

k
W
h
Residential Small Business
Presented by:
Carl Yastrzemski
Yaz's Solar Company
The American Council for an Energy Efficient Economy produces excellent guides for home and building energy efficiency and
savings. More information is available at: http://www.aceee.org/consumer/consumer.htm
An energy efficiency audit can identify other ways to use less, and sometimes be even more comfortable.
Solar Electric System:
Opportunities For Saving Energy
Getting the same benefits and enjoyment, but in ways that require less input energy. These are often very cost effective, but less in
vogue than solar electricity. They include lighting upgrades and replacing refrigerator and other equipment or appliances with
more modern and efficient products.
Energy Efficiency:
Solar Electricity, or 'PV', is the most interesting, hottest new technology. Strongly supported by the state & federal governments.
Solar Electricity is one of the fastest growing energy technologies worldwide, growing over 35% each year for the last 8 years. Not
actually a 'new' technology, the first solar panel was put into use in 1954. Most of the bigger solar manufacturers have over 20
years experience in producing and refining their products. Some have over 40 years experience.
Conservation - simply using or doing with less. This is always the most cost effective, but not always doable. Can you turn off or
unplug an extra refrigerator in the garage, and only use it when it's really needed? Are there other things that are rarely used that
can be shut off without impacting your lifestyle?
Presented by:
Carl Yastrzemski
Yaz's Solar Company
When the solar system can put out power, it goes to reducing your usage at the time, or, if there is excess, to spinning the meter
backwards, counting down your electric use and bill. Special metering, such as Time-of-Use metering and billing arrangements can
help you take advantage of higher daytime rates, allowing you to sell power at a high rate, and buy it back at night at a lower rate.
This helps reduce the necessary size of your solar system, while still cutting your bill by the same amount.
At night and during cloudy weather, the solar system's output is reduced or stopped; however, your home then gets electricity
directly from the utility grid. You're always connected to the grid, so you can have as much power as you need, any time you need
it, regardless of whether the solar system is able to put out any power.
Solar Electric systems generate electricity silently and without any moving parts. Sunlight falls on the solar array (blue, on the
roof), generating DC electricity. That DC electricity is converted into household 120V AC electricity by the inverter (blue & grey,
on the wall). The AC electricity is fed into your electric meter and circuit breaker panel (grey, on the wall). The electricity either
goes to your appliances and lights, or to the grid, or some to each. This all happens silently and automatically every day.
How Solar Electric Systems work
.
Presented by:
Carl Yastrzemski
Yaz's Solar Company
Another method is using the nameplate rating system, also known as STC (Standard Test Conditions) or DC rating of the system.
This rating system assumes standard, ideal factory conditions. Using this rating system, the modules have a rating of 215 watts.
The nameplate rating (STC) of this system is: 12.545 kW DC. These ratings are useful in comparing systems side-by-side.
Recommended Solar Electric System
Note: There are several ways of rating solar systems. One way is using the CEC AC rating system. The CEC AC rating system
takes account of system performance reductions due to inverter efficiency and module heating effects. Using this rating system, the
primary modules have a rating of 199.6 watts, and the inverters have an efficiency rating of 95.5%. The total system has a CEC AC
rating of: 10.977 kW.
Presented by:
Carl Yastrzemski
Yaz's Solar Company
Your new tier is now Tier 1. Your new marginal cost of electricity is 12.0 per kWh (that is, the new cost to switch on the lights.
Your old cost to do so was 49.9 per kWh). Note: it is not necessary to produce all the electricity you use, because you are taking
advantage of selling at higher rates, and buying at lower rates.
Your net energy use will be substantially lower because of the production from the solar system. The total area in the chart below
shows your total usage, and matches the usage in the previous chart above. However, the area in green is the fraction that will now
come from solar.
are often taxable.
Residential Tiered Usage With Solar
0
5
10
15
20
25
30
35
40
45
50
55
4
4
4
,

T
i
e
r

1
5
7
7
,

T
i
e
r

2
9
3
2
,

T
i
e
r

3
1
3
7
6
,

T
i
e
r
T
i
e
r

5
C
e
n
t
s

p
e
r

k
W
h
Net Usage Production
Presented by:
Carl Yastrzemski
Yaz's Solar Company
121,857 $
400 $
500 $
600 $
700 $
(3,722) $
120,336 $
(13,768) $
108,567 $
100 $
200 $
300 $
107,167 $
- $
107,167 $
560 $
(3,600) $
(32,750) $
- $
71,377 $
(16,768) $
61,945 $
ENERGY EFFICIENCY:
1,000 $
(500) $
64,745 $
Presented by:
Carl Yastrzemski
Yaz's Solar Company
New average monthly electric bill:
Monthly savings:
Annual savings: 6,534 $
Home resale/appraisal value increase
Current and future cash flow if financed
The Total Lifecycle savings is $231,717, including bill savings, sRECs, maintenance, & inverter replacement (net after-tax values)
over 25 years compared to a system cost of $61,945. This yields a Total Lifecycle Payback of 3.7x. Payback occurs at Year 8.7.
Payback is often looked at as a measure of financial soundness of an investment. However, for long-term investments such as
stocks, bonds, homes, and solar systems, payback isn't easily found or comparable to other investments to determine which
investments form the best options for a diversified portfolio. 'Payback' has several other drawbacks as well, including the difficulty
in accounting for escalation and inflation, time-value-of-money, one-time expenses such as inverter replacement cost, or the
savings available after 'payback' has been achieved.
Compound Annual Rate of Return (comparable to stocks, bonds, savings, etc)
The savings will increase over time due to escalation, which we've agreed to anticipate being 4.0% for electricity over the long
term. Historically, electric escalation has been 6.7% in California for the 30 years from 1970-2001, even though the CPI has only
been 3.1% since 1982.
544 $
14 $
Direct, Immediate & Future Savings
Other ways of looking at Payback include analysis of the Total Lifecycle Payback over the 25-year warranted life of the solar
modules. In the graphic below, the steadily increasing steps reflect each year's savings from the solar system affected by 4.0%
escalation. The red area in the graphic below shows the needed accumulation of savings before payback. The green area shows
additional savings received after payback. As you can see, savings after payback are substantial.
These immediate and future savings will immediately reduce the operating expenses of your home and improve your cash flow:
Financial Analysis & Payback
Your solar system will generate substantial savings on your electric bill. These savings can provide a variety of direct and future
economic benefits. Some of the ways these economic benefits are measured include:
Direct, immediate & future savings on your electric bill creating improved cash flow
$0.00
$2,000.00
$4,000.00
$6,000.00
$8,000.00
$10,000.00
$12,000.00
$14,000.00
$16,000.00
1 3 5 7 9 11 13 15 17 19 21 23 25
A
n
n
u
a
l

S
a
v
i
n
g
s
Annual Savings Before Payback
Annual Savings After Payback
Payback Year (Occurs at 8.7 Years)
Annual Savings Before and After Payback
Presented by:
Carl Yastrzemski
Yaz's Solar Company
The maximum resale value of $158,382 based on estimated remaining savings to 25 years occurs at year 10.
Because savings increase over time due to electric rate escalation, the increase in resale value will increase as well. However, the
limit to this increase will be the anticipated remaining savings left in the system before it's 'end of life', which has been
conservatively estimated at 25 years (the module warranty life). The actually design life is much longer, but to be conservative,
we'll use this shorter time horizon.
This home's annual savings of $6,534 translate to an immediate theoretical increase in resale value of $126,128. This
translates to 195% of the system's net cost.
Home Resale/Appraisal Value Increase
Solar systems increase home values by reducing operating costs. The Appraisal Institute published a study in the Appraisal Journal
in 1998 & again in 1999, that stated that if a home's operating costs can be reduced through an energy efficiency measure that
reduces its operating costs, those savings have a tangible connection to increasing the home's value. The rationale is, that instead of
paying the utility, a future buyer could take a larger mortgage, and instead pay the bank and their operating costs would remain
unchanged.
The article established that a homes resale value increases $20 for every $1 saved in operating costs. This is based on a 5% after-
tax long-term average for mortgage costs. For more information see www.ongrid.net/AppraisalJournalPVValue10.98.pdf which is
from The Appraisal Journal, Oct '98. While this may sound dated, it is based on solid math that doesn't vary with time, only long
term averages in mortgage interest rates.
Resale Value Over Time
$0.00
$50,000.00
$100,000.00
$150,000.00
$200,000.00
$250,000.00
$300,000.00
1 3 5 7 9 11 13 15 17 19 21 23 25
R
e
s
a
l
e

V
a
l
u
e
Effective Resale Value
Years
Presented by:
Carl Yastrzemski
Yaz's Solar Company
Year 5
Solar Cost w/ Smart Financing $2,887
Old Electric Bill with inflation $5,438
Cash Flow (Annual) $2,551 $2,632
$2,700
$4,977
$2,277
$3,272
$6,304
$3,033
Year 1 Year 10 Year 2
$2,200
$4,832
Proposal for: Jeff Sun
Option 2: Fully amortized 'Optimistic Loan' of the above interest rate and term; the initial principal is the net system cost after
all near-term incentives (rebates, grants, tax credits, tax deductions, PBI's, and depreciation) except SRECs if any (SRECs are
excluded because their value is usually uncertain) are received. This loan is optimistic (for the salesperson) because it has the
lowest payments, but requires the customer to get a bridge loan or provide their own cash until some of the near-term
incentives are received (tax credits, tax deductions, PBIs, depreciation).
Current and Future Cash Flows if Financed
If the system is financed, a cash flow analysis compares the cost of the loan (principal, interest and tax effects) to the savings
on the electric bill (minus maintenance and other costs). For this analysis, we've assumed a financing interest rate of 7.5%, and
a term of 30 years. Here we present 3 options for financing the system; what we'll call the 'Inefficient Loan', the 'Optimistic
Loan', and 'Smart Financing' using a Line of Credit:
Option 1: Fully amortized 'Inefficient Loan' of the above interest rate and term; the initial principal is the net system cost after
up-front incentives (such as rebates and grants) are received. This requires no out-of-pocket costs to the consumer to acquire
the solar system, but as other incentives and benefits are received (such as tax credits, tax deductions, PBI's, and depreciation,
each as applicable), the consumer ends up with cash on hand which they also are paying loan interest on, so this loan ends up
costing unnecesary interest, making it inefficient and expensive.
Option 3: Fully amortized 'Smart Financing' of the above interest rate and term, usually using a line of credit; the initial
principal is the net system cost after up-front incentives (such as rebates and grants) are received. This financing method is
both Efficient and Realistic in terms of true consumer cost because it borrows exactly the amount needed so that the consumer
never needs a bridge loan, but also pays no unnecessary interest because it applies any near-term incentives received towards
the principal owed.
The calculation is complex, but the Smart Financing with a Line Of Credit cost falls between the Optimistic and Inefficient
loan costs. It requires the customer to be disciplined to apply any depreciation, tax credits, PBIs and other near-term incentives
to pay down the principal owed as taxes are filed and benefits are received. Note: in the first year, the principal and therefore
the interest is large, so the interest tax deduction is large; sometimes the interest exceeds the payment, allowing for a large tax
benefit but also temporarily increasing the principal amount. This situation is temporary as long as any tax credits and
depreciation are applied to reducing principal as they are received.
The monthly payment is $289/mo on $56,845 borrowed. The net annual payments or solar cost with Smart Financing (after
tax deduction of interest paid) in the 1st, 2nd, 5th, and 10th years is:
Please see the 25 Year Financing Timeline table for details on the principal, interest, tax benefit, and payment amount, etc for
each year in details.
Presented by:
Carl Yastrzemski
Yaz's Solar Company
The bottom graphic shows the accumulated savings. Note that this is pure savings, with no out-of-pocket costs. All system costs
came from financed sources. This is the accumulation of excess savings above what was needed to pay off the principal and
interest for the loan.
As in the Appraisal/Resale calculation above, electric escalation will increase the electric bill savings over time. The Smart Loan's
cost is affected by the factors previously mentioned. The top graphic below illustrate the loan cost vs. net bill savings over 25
years. The middle graphic represents their difference and hence the the net cash flow.
Annual Costs:
Solar plus Loan vs. No Solar
$0.00
$2,000.00
$4,000.00
$6,000.00
$8,000.00
$10,000.00
$12,000.00
$14,000.00
$16,000.00
$18,000.00
1 3 5 7 9 11 13 15 17 19 21 23 25
Years
A
n
n
u
a
l

C
o
s
t
Old Utility Bill w/ 4.0% inflation Solar Cost w/ Financing
Net Annual Savings When Financed
$0.00
$2,000.00
$4,000.00
$6,000.00
$8,000.00
$10,000.00
$12,000.00
$14,000.00
$16,000.00
1 3 5 7 9 11 13 15 17 19 21 23 25
A
n
n
u
a
l

S
a
v
i
n
g
s
Net Annual Savings (Old Bill minus Solar with Financing)
Years
Accumulated Net Savings
When Financed
$0.00
$20,000.00
$40,000.00
$60,000.00
$80,000.00
$100,000.00
$120,000.00
$140,000.00
$160,000.00
1 3 5 7 9 11 13 15 17 19 21 23 25
A
c
c
u
m
u
l
a
t
e
d

S
a
v
i
n
g
s
Accumulated Net Annual Savings (with Financing)
Years
Presented by:
Carl Yastrzemski
Yaz's Solar Company
Annual savings:
Pre-Tax value of the annual savings:
Pre-Tax Compound Annual Rate of Return (IRR) over 25 years:
22.3%
Compound Annual Rate of Return
The Compound Annual Rate of Return (CARR) is an analysis method that makes the solar investment comparable to other interest-
rate-based investments, such as stocks, bonds, CDs, money markets, savings, etc. The goal is to include all the cost and benefit
components in a multi-year timeline and look for the effective annual rate of return using Internal Rate of Return analysis (the IRR
tool in most spreadsheets).
In residential solar analysis, it's important to treat and view the system properly with respect to taxes. A solar system saves the
homeowner after-tax expense. However, most of the other investment opportunities provide pre-tax returns, and are usually
thought of in a pre-tax context. Therefore, in order to make a good side-by-side comparison of the two, it is then appropriate to
translate one to the other's realm.
When comparing analyses, it is also important to look at the compound annual rate of return (CARR), rather than an annual
average, which can also appear misleadingly high. More information on financial analyses for solar systems is available at:
http://www.ongrid.net/papers/PaybackOnSolarSERG.pdf
Please see the attached 25-year financial timeline analysis for details of the amounts and timing of items included in the CARR
analysis.
Looked at another way, if the system were substantially financed, such that there was no initial outlay, and only a cash positive
result, what is the rate of return on that - infinite. While it may be true in this specially created case, it does not produce a useful
result for purposes of comparison. Hence, this analysis assumes an all cash transaction.
Loan costs do not get included in this analysis as that muddies the waters and can create excessively optimistic looking results. The
CARR analysis should be done in pure form as if the choice were between investing in this opportunity vs. another. It is irrelevant
in comparing the two choices what the source of funds might be, and only creates confusion.
10,420 $
6,534 $
All relevant cost components must be included to ensure completeness of the analysis. These include; system capital cost, rebate,
tax credits, performance based incentives, REC sales, maintenance costs, tax consequences of any incentives and state credits,
depreciation and the tax consequences of depreciation, electric bill savings, tax consequences for the loss of deductibility of such
savings (commercial analyses only), and inverter replacement cost at an appropriate year in the future.
Because most people think of their investments in pre-tax terms, the attached analysis translates the solar Compound Annual Rate
of Return analysis to it's pre-tax equivalent (note, all other analyses in this pro forma are unaffected by this translation). This
requires that most amounts be converted based on the purchasers tax bracket. The amounts that do not get converted are the
system's net capital costs (top line, rebate values, etc) and any state tax credit amount.
Presented by:
Carl Yastrzemski
Yaz's Solar Company
Conclusion
Thank you again for the opportunity to present you with a proposal for a solar electric system. Yaz's Solar Company is delighted to
be working with you. Please let us know what we can do to win your business.
137
1,131,338 miles driven in an average car, or 45,254 miles a year
2,231
lbs of NOx, which creates smog
Environmental Analysis

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