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Llorens: Unproven claims
Llorens: will it catch on?

Anyone considering solar power probably has a green outlook. If the deal you do is good for the planet yet not so good for your pocket book, will that slow the spread of green homepower?

Companies like solar-installation organizer One Block Off the Grid (1BoG), aggregates the buying power of consumers to get the best deal, but that is not necessarily the cheapest deal. 1BoG arrives in an area and offers to install a minimumof 100 solar households, at a cost 10-20%  below the rate you would pay on your own, and it makes sure you are hooked up with a reputable supplier.

At the moment the business is active in Arizona,Colorado and California, from where the example prices below are sourced. A house with a power bill of $150 per month that installs a 3 kilowatt system (a common size) will spend $9,639 –says 1BoG – after state and federal subsidies are subtracted — to install it, and save $97 a month under current pricing.
Using those savings, and assuming a 2 percent annual increase in the utility price of electricity, the system will be paid for in eight years. But if the $9,639 would have been in a savings account with a 2.5 percent interest rate, the system would pay off in 10 years.

Of course, the path to those numbers is a little twistier than that. The average San Diego Gas & Electric winter bill for electricity is $85, and for Southern California Edison the annual average is $90.

But the way professionals evaluate solar power is the cost per kilowatt. 1BOG and its installer, HelioPower, now offer to install a system for $5.29 a watt, not the lowest price but “each market is very nuanced,” says 1Bog founder Dave Llorens who cites numerous code differences,as well as different state and county subsidies, making it hard for non-experts to evaluate deals.

In any case, analysts, advocates and utilities all agree that by far the cheapest way to lower that bill is to become more energy-efficient: Install better windows, unplug appliances on standby, and add weatherstripping to doors to generate savings at far lower cost than solar panels.

Setting efficiency aside, the timing is good for solar purchases. Installers say that several major panel factories worldwide ramped up production just before the economy crashed, leaving a glut on the market

Calculating the break-even point for home power generation relies on making some crucial bets against rising power prices.

But the price of solar panels is just one side of the equation.The other is the cost of the electricity you would have consumed if you did not have solar.

Electricity prices in California rise the more a user consumes. The first 320 kilowatt-hours cost 12.4 cents apiece. The next batch costs a little more. But the 416th kwh jumps to 31 cents per kwh. Thus, heavy users of electricity have the best chance to save with solar.

Dave Llorens said he assumes a 6 percent annual increase in electricity rates for calculating the break-even point, and 5 or 6 percent is a common assumption among installers.

But the California Energy Commission projects no increase in 2010, then 1 percent a year for the next 15 years. Using a model developed by the University of San Diego, the consumer advocacy group Utility Consumers’ Action Network argued there will be no increase next year, and a growth rate of 2 percent a year after that.

Complicating matters, recent legislation allows the utilities to raise the rates on the bottom two tiers and lower them at the top tiers. And in 2010, the utilities are hoping to lower the baseline by about 8 percent, which will push more users into higher tiers.

Severin Borenstein, director of the Energy Institute at UC Berkeley, thinks the shift in tier pricing bodes poorly for the finances of solar power.

“You’re betting on something that public policy is already moving away from,” he said.

Also, no one really knows whether solar panels will make houses more valuable. Llorens said there just haven’t been enough sales of homes with solar power to make any comparisons.

Residents in unincorporated San Diego County and the city of San Diego have another option: They can apply to finance their solar installations through the government, with the repayment plan becoming an add-on to property taxes. In this way, the debt for the solar system transfers with the property, rather than staying with the original installer.

Still, rough calculations suggest that at today’s prices — plus hefty government subsidies — a solar system pays off eventually. It’s just a question of how long it will take, and whether homeowners will have the patience to wait.


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7 Responses to “Slow spread of 1BoG”

  1. Tommy Wi

    I’m curious about how Jeff W knows that 1BOG companies are losing money. It certainly seems like they would be based on what I know, but there must be a reason they’ve chosen to get involved with 1BOG.

    And, Ron W, how do you know that it’s a “hefty fee” that is being paid to 1BOG?

    Because here in NJ, the 1BOG prices are coming in about $5.45 W for SunTech which is a pretty good price but seems unrealistic long term for the installers.

    Reply
  2. Jeff W

    I’m going to have to agree with Ron.

    Most of the major companies who win the 1BOG gig are losing money fast. Which doesn’t bode well for long term stability.

    I think most customers can get better pricing, service and equipment if they solicit 3 bids, pick an installer they like with good references and negotiate the price with them. A good installer will be honest about pricing and do their best to match the next guys bid. You can even point out the most recent pricing of a 1BOG program.

    Reply
  3. Ron Winton

    1 Bog doesn’t arrange for the lowest prices nor do their chosen dealers offer the highest performance products available for the money. That might be because 1Bog charge the dealers that they’ve choose a pretty hefty fee for each customer that buys a system. (Guess who pays that fee in the end ?) If consumers spent a little bit of time educating themselves on the Internet they can easily find better deals on higher performance systems that can give them a much higher return on their investment. Community purchases are just another gimmick that far too many people are falling for. Shop around and you can easily find far better deals on high performance name brand solar equipment and have the piece of mind of knowing that YOU made your own decision about which product was best for YOUR home instead of some GROUP. Kinda reminds me of the BORG on Star Trek . Resistance is futile.

    Reply
  4. Karsrten

    Hi Techstar

    I am a Washington DC area 1BOG subscriber. I also called local solar companies and ran the numbers for doing it myself. Doing it myself came in at $4.83, the cheapest solar company came in at $6.56 a KW. Of course I have no clue how to install them myself. So I really would appreciate the Name and Number of the Solar company you spoke to that will install at $4 a KW. Quoting you “With a little ringing around you should be able to get it down to a shade over $4 per watt”

    Reply
  5. DavidC

    Why even bother leasing to own or buying at all when Citizenre offers systems for about the same as you pay your power company or less, and lock that rate for up to 20 years? With no purchase of equipment or maintenance.

    http://www.SolarEvolutionUSA.com

    Reply
  6. rebecca

    Hi Techstar,

    You have obviously read several pieces of press coverage about 1BOG but I wanted to clarify a few details about what we do and the value we offer to homeowners.

    First and foremost – as you know, 1BOG organizes homeowners into communities, provides vendor-agnostic support and negotiates a group discount from a pre-selected installer partner for solar. Yes, we negotiate a discount for this community that is below market rate, but more importantly, we select an installer partner with a proven track record of quality installations, products and warranties, provide transparent pricing for the entire community as well as support and information about going solar and what to expect. This saves homeowners time and offers the type of support (rather than a hard sell) to help them decide whether solar is indeed right for their home.

    1BOG prides itself on providing a framework in which we can rapidly boost solar adoption by making the process easier and more affordable. Therefore, getting the cheapest price per watt of solar is not our end goal and we don’t claim to offer this. We have extensive processes in place to select an installer partner for each campaign to build consumer confidence in the technology and the industry. 1BOG’s web tools are industry leading and our mission to make going solar easy is inherent in everything we do. We never charge consumers for our services.

    Regarding how solar impacts the value of a home: according to the U.S. Department of Housing and Urban Development, home values rise an average of $20 for every $1 reduction in annual utility bills. Here’s another study about home values and solar: learn.1bog.org/files/2009/03/black_home_value.pdf

    Please feel free to contact me – rebecca@1bog.org if you have any questions or would like additional information.

    Thanks!

    Reply
  7. Jason Morrison

    Those are pretty bold claims. Where is your evidence? The good people at 1bog are kind enough to put all their info on their site for everyone to see. If you can cite a single source that will provide a fully installed, metered and inspected solar system for $3/watt I will personally buy systems for my entire block.

    Reply

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