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Fannie Mae Agrees:  Solar is a MUST-DO for homeowners

Just last month, Mortgage Giant Fannie Mae announced their new mortgage option that allows solar energy projects to be rolled into the final mortgage amount.  Namely, the HomeStyle Energy Program is hot news for solar fans who use a Fannie Mae-approved lender for their mortgage; whether considering a first-time solar system purchase, or currently financing an existing solar system with an equity line of credit or unsecured loan.

Typical Solar Financing and Solar Energy

It’s no secret that solar energy system installations in Maryland and Washington DC have taken off like gangbusters.  In previous years, many Maryland homeowners were choosing to lease/rent solar panels in an effort to avoid upfront costs.  However, when compared with an outright solar purchase – a 20yr (or similar) solar lease proves to be quite expensive – as with most rental agreements.    Depending on whether the solar shopper lives in Washington DC or Maryland, the financial incentives (tax credits/SRECs) usually pay for between 40 – 80% of the system cost.  100% of this upfront solar cost needs to be sourced by the homeowner who usually use a financing vehicle such as an Equity Line of Credit or some sort of Unsecured Loan.

Fannie Mae’s Game-Changer…

As of June 2016, Fannie Mae borrowers have access to a new Energy Loan that allows them to simply add the cost of their solar system to their existing mortgage.  Here’s what makes this form of financing a game-changer:

• Super-Low APR:  HomeStyle Energy can be used for new projects or to take higher-interest unsecured loans/lines of credit and refinance them or roll them into a potentially lower-cost mortgage.   In all likelihood this will result in unprecedented low financing costs for solar energy.
• All Costs Covered:  Most financing vehicles have a non-negotiable cap on the loan amount, forcing some Homeowners to come up with a down payment.  With this program, lenders can finance up to 15% of the final property value.  For example, a typical single-family home located in Annapolis, MD may appraise for $350,000.  The available amount for the solar system on this Annapolis home would be $52,500.  In most cases, this amount would far exceed the amount of capital needed to complete the project, considering that most solar projects fall in the $24,000 – $34,000 range (before government incentives).
• Peace of Mind:  The improvements also have to come with an energy report, whether a Home Energy Score Report or a Home Energy Rating Systems report, and must specify the monthly savings to the borrower.   Homeowners can rest assured that their mortgager fully supports the home improvement investment.

Does Every Home Qualify?

At this point in time, only Fannie-Mae  homebuyers or refinancers qualify.  The program does not extend to new construction or manufactured housing.  The following are eligible to apply:

• New homebuyers
• Existing mortgage holders looking to refinance their new solar system
• Existing mortgage holders looking to refinance their existing financed solar system

All applicants have 180 days from close of mortgage note to complete the solar installation.  Bear in mind that refinancing homeowners may incur closing/additional fees in the transaction.

Contact your mortgage representative to see if the HomeEnergy Program is right for you.

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Press Statement
6-15-15

CBF Merrill Center to Install 106 kW Solar System

(ANNAPOLIS, MD) The Chesapeake Bay Foundation (CBF) and Solar Energy Services, Inc. (SES) announced an agreement today for SES to design and build a 106 kW, grid-tied solar photovoltaic system at the Philip Merrill Environmental Center, CBF’s headquarters.

The Merrill Center rooftop solar system will include more than 370 solar panels from US manufacturer SolarWorld, as well as inverter systems from Solar Edge. The panels will be installed primarily on the available roof tops, but the design also calls for some unique solar shade structures to provide additional benefits to the facility and its occupants.

SES president Rick Peters shared that SES is pleased to participate in this marquee project. “I know personally that CBF has led the way on sustainable initiatives in our region for a very long time. It is an honor to be selected to construct this project, which will help advance CBF’s message and their environmental stewardship.”

The solar system is projected to produce more than 133 MWh of electricity annually, enough to power more than 10 average Maryland homes. This will significantly offset the facility’s consumption of traditional electricity.

“While we have had solar panels at the Merrill Center in the past, we are adding this new capacity because it is now more affordable as well as more efficient,” said CBF Vice President Mary Tod Winchester. “The new array will generate enough electricity to provide one third of the power for heating, cooling, and other needs of the more than 100 staff who work here. As a non-profit, we will not benefit from the many tax incentives available, but we encourage other individuals and businesses to closely examine the costs and benefits of adding solar generation.”

The project is expected to be completed before the end of this summer.

About Solar Energy Services, Inc.

Solar Energy Services, Inc. (solarsaves.net) designs, builds and services solar power systems for institutional, commercial, and residential customers. The firm was founded by 37 year solar industry veteran Roger Perry who has longstanding ties to the communities served by SES. Based in Millersville Maryland, the 21 person firm operates in Maryland, DC, and Virginia.

About Chesapeake Bay Foundation

Founded in 1967, the Chesapeake Bay Foundation (www.cbf.org) is the largest independent conservation organization dedicated solely to saving the Bay. Serving as a watchdog, we fight for effective, science-based solutions to the pollution degrading the Chesapeake Bay and its rivers and streams. Our motto, “Save the Bay,” is a regional rallying cry for pollution reduction throughout the Chesapeake’s six-state, 64,000-square-mile watershed, which is home to more than 17 million people and 3,000 species of plants and animals.With offices in Maryland, Virginia, Pennsylvania and the District of Columbia and 15 field centers, CBF leads the way in restoring the Bay and its rivers and streams. Over the last four decades, we have created broad understanding of the Bay’s poor health, engaged public leaders in making commitments to restore the Chesapeake, and fought successfully to create a new approach to cleanup that features real accountability-the Chesapeake Clean Water Blueprint

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Some Positive Trends:

• System prices continue to drop
• Maryland meeting its solar energy goals
• Maryland Solar Industry exceeding 2200 jobs

The Challenges:

Industry consolidation can be disruptive

Residential solar leasing is fast outpacing cash sales in many of the more developed states, like Maryland. It’s what many Americans want so it will continue to drive the market. It seems to work for more of America.   After all, we do like instant gratification and if I can save $10/month immediately, and feel good about it, where do I sign? While SES is typically strongly advocates for cash sales to our customers who are able, no one can argue the enormous impact and value that the various residential and commercial financing options have delivered. Getting solar access to the mainstream will be the most critical piece to advancing the development of distributed solar. It really has been transformational so far.

There’s other good news. System Pricing, though leveling off somewhat, has dropped dramatically in the past 5 years. While incentives decline as planned, the industry continues to drive down installation costs to maintain the impressive paybacks and internal rates of return.

Beneficiaries of solar price reductions include states like Maryland, who had the foresight to seed this industry over the last 6 years. Government and industry partnership in Maryland has built an economic environment that supports solar development and as a result, it is sustaining 2200 jobs while Maryland continues to meet its solar RPS goals. That’s right, our industry delivers over 2200 paychecks in Maryland. In fact, there is now a solar thermal equipment manufacturer in Baltimore. Much to be pleased about.

There’s also a darker side. Bankruptcies and consolidation of solar companies have carried the headlines quite a bit in the last year especially. While a natural part of the tech/business evolution cycle, consolidation and shake out are always disruptive, not only to industry members, but also to consumers of these solar energy products and services. As a result, all of the solar “investors” are asking lots more good questions – particularly about the longevity of the manufacturer and the installer. Popular questions, particularly in the solar PV panel world, are “Who will be here to support my warranty?” and “What is the design track record of these systems?”

The beneficiaries of these trends will be those with a proven commitment to the industry either through time or capital. It’s that commitment that gives customers confidence of future support if and when it is needed. Whether it’s an installer with 35 years experience or a manufacturer like SunPower that has 25 years in business, longevity is a key indicator of future availability to support the install base.

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[vc_row][vc_column][vc_column_text]Solar Thermal not Solar PV: When talking about solar and space heating, it’s worth mentioning that the panels used for this type of solar application are not the same panels that power a house, a light, or any other electrically powered appliance. In fact, the only similarity between a PV (photovoltaic/electric) solar panel and a Thermal Solar Panel is that they both absorb solar energy. However, how each panels processes and distributes that energy is entirely different.

Enlarged Domestic Hot Water System: In order to make a solar space heating system cost-effective, most space heating systems are designed to include the home’s domestic hot water supply – thereby offsetting the gas/oil/electric bill and returning the solar system’s investment. Therefore, any space heating system is basically an enlarged solar water heating system. These systems that combine solar water heating and space heating are often referred to as combisystems. This combination is achieved with a solar storage tank that comes equipped with two separate heat exchangers; one for the domestic hot water loop and one for the space heating loop. The cooler water returning from the heating system passes through the upper heat exchanger on it’s way back to the boiler where it does one of two things: It picks up some heat that was generated by the solar system or, if the tank is cooler than the returning water, acts as a buffer tank allowing the boiler to have fewer on / off cycles thereby making it more efficient.

Space Heating Infrastructure: Radiant floor heating systems are highly compatible with solar thermal energy. This is mainly because these systems are designed to operate at low temperatures and thus the solar system can contribute energy more of the time. Hot water baseboards, radiators and other hydronic heaters can also benefit, especially if an outdoor reset control is installed. The outdoor reset control adjusts the boiler’s target temperature according to the outdoor temperature.
Forced air systems can also be modified to accommodate solar by placing a fan coil inside the existing duct work. A controller senses when the fan needs to be activated and, again, a conventional back up system kicks on as needed.

Heat Dissipation in the Summer: Of course here in Maryland/Washington DC,  in our Mid-Atlantic climate, solar energy for space heating is being summoned at a time of year when insolation (sunshine) levels are much lower than the rest of the year. Therefore more solar panels are required to meet the quota. A family of four would realistically need two, 4′ x 8′ flat plate collectors for their home’s hot water supply. Depending on the required space heating square footage, this collector size may be increased anywhere between 30 – 100%. To avoid overheating in the summertime when space heating is no longer required, there needs to be a mechanism to dispose of the excess heat. This can usually be achieved with anti-stagnation functions on the controller or by installing a heat dissipater on the roof. An ideal situation is to redirect this excess heat to a pool or hot tub, thereby creating a year round triple-application system that provides the largest return on investment.[/vc_column_text][/vc_column][/vc_row]

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Solar water heating has quite a long history. In the United States alone, the industry has boomed and busted 3 times in the last 130 years – each time displaced by cheap energy. Many are surprised to know that the first US patent for a residential solar water heater was issued in 1891 to Clarence Kemp, a Baltimore inventor. That’s right, 1891.  In the 1920’s, 30% of the homes in Pasadena, CA had solar water heaters.  With the discovery of natural gas resources in the region, the industry evaporated almost overnight.  Solar thermal technology is mature and efficient; the problem lies with allowing our commitment to solar to dissolve in favor of decreasing natural gas prices.

In these previous industry “busts”, energy became cheap and we were lulled into a false expectation of stable prices. Each time, not long after the industry was dismantled, energy prices began to creep back up, making us long for that clean and cheap solar energy again. So today Solar Water Heating is on the rise again. Will it be different in the 21^st century or are we doomed to repeat the same cycle? What was it that Winston Churchill said about failing to learn from history….?

The recent surge in US solar water heating deployments began in 2008. This resurgence, especially at the commercial scale, has helped to drive up adoption rates while scaling down installation costs. Several factors are converging in recent years to bring about this renaissance:

• Engineers, architects, and contractors are becoming increasingly familiar with this mature technology – improving costs with increasing experience
• Regional incentives are bolstering the existing federal incentives to reduce the capital investment.
• The federal government has mandated that a minimum of 30% of water heating must come from solar for new construction or major renovations on federal buildings.
• Project Developers like Skyline Innovations (http://www.nextility.com/) have introduced new business models to help deploy these systems for those without available capital.
• Property owners increasingly want to have more control over their energy budget
• Various societal pressures continue to reward solar adoption
• An improving economy has allowed property owners finally to reinvest in their buildings

Remarkably, much of this has occurred despite a backdrop of rapidly falling natural gas prices (the primary heating fuel for commercial water heating), decreasing drastically from 2008 to 2012. However, in the last 18 months, natural gas prices are climbing again in a trend that is likely to continue: gas exportation; deployment of energy intensive manufacturing in the US; diversion of more natural gas to transportation (locomotives, trucks, fleet vehicles and eventually automobiles); conversion of more power plants and residential heating to natural gas.In light of these trends, property owners are rapidly moving forward to install solar water heating systems before the financial incentives expire. Business owners with substantial hot water loads in Washington DC and Maryland are able to achieve simple ROIs of 2-7 years. This approach requires them to take a slightly longer perspective, recognizing that they are buying 30+ years of energy up front for a fixed price (with generous subsidies). Whether financed independently or through the bank, building owners are able to lock in their energy prices and hedge the inevitable increase in fuel costs while leveraging all of the other benefits of renewable energy.

If you have any doubts about this trend, visit our commercial solar water heating page and take a look at the photos of just a subset of the projects we’ve been deploying in the region (https://solarsaves.net/commercial-solar-water-heating/).

If you want to know more about the history of solar water heating, check out this excellent book: The Golden Thread: 2500 Years of Solar Architecture and Technology, coauthored by Ken Butti and John Perlin.

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[vc_row][vc_column][vc_column_text]Many of our prospective customers have been waiting to buy their panels in the hopes of significant advancement. “I want the technology to mature ” they say, “ and be state-of-the-art”. Well, the closest you can get to those standards with a production panel is with SunPower.

Ask around, do some Google searches. You’ll learn quickly that SunPower is considered the best with very little debate. In fact, it’s by far the best. This American born company launched out of the US university research system (the founder was a Stanford professor) has sustained a 23 year run to be acquired recently by a global energy company.

At Solar Energy Services we’re excited to report that we are now a SunPower certified dealer. We’ve always wanted to offer the very best PV product and now we can. SES is proud to tie our 35 year commitment to the industry to the world leader in solar panel manufacturing.

Many are aware that the cost efficiency of installed solar has improved dramatically in the last 5 years due to efficiencies gained through price competition, distribution improvements, development of installation techniques, and other process improvements. However, the physical efficiency of solar cells has advanced more slowly than most have hoped. The standard Chinese panel being installed by the majority of installers today (especially the large leasing firms) are in the 14-15% efficiency range. A few solar manufacturers have been able to stay notably ahead of the pack. SunPower remains out front with their standard 327 W panel (E20) at 20% efficieny. Sunpower’s new “X” (E21) is 21% efficient! That’s right, over 40% more efficient than the average panel out there. The X begins to ship in April 2013 – next month.

SunPower’s Maxeon cells are the industry leader in reliability and durability also. They’ve had only180 defects out of 7 million panels. That’s right, 1 in 39000! The Maxeon cell has redundancy in contacts, accommodating wear from thermal expansion. It has backside contacts that provide increases collection on the sunny side. They are highly durable with the best impact resistance ratings. They are backed by a solid company with great support and a bright future.

To recap, the physical efficiency of solar cells has been relatively stagnant, with the exception of a few leaders that have developed slow and steady progress. SunPower has led the way. The company has been around for over 23 years. They have the most durable solar cell in the industry and the highest performing. I must confess, the 3 year old solar PV system on my roof has panels made in China. If I were installing today, there is no doubt I’d choose SunPower…

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Slowly but surely the skyline on Annapolis’ State Circle is starting to change. First, the Governor’s Mansion in 2009 and just this month, the ever-popular Harry Browne’s Restaurant (http://www.harrybrownes.com) has joined the ranks of businesses jumping on the solar bandwagon. Not only an enthusiastic and self-professed carbon footprint reducer, Rusty Romo, Harry Browne’s owner since 1979, is a savvy businessman, “Although I have a vested interest in reducing my carbon footprint, there’s no question that the solid Return on Investment was the final straw in deciding to install a solar water heater.” This viewpoint extends throughout Rusty’s business dealings, particular with regards to his restaurant’s waste production. Prior to January of 2012, annual trash pick up was costing the restaurant around $13,000 per year. That cost has now been reduced to $4000 due to Rusty’s implementation of two recycling solutions: 1) Veterans Composting visits several times per week to pick up all of the restaurant’s food waste turning it into compost for farmers, gardeners and landscapers. 2) A Cardboard baler compresses all of the restaurant’s cardboard, hugely reducing the bulk for taking to a dumpster storage facility where it is pulled and weighed. Harry Browne’s averages at least two tons every twenty eight days. Depending on the market cost, cardboard reclamation pays him from $30 – $100 per ton. Restaurants have a large hot water load, and Harry Browne’s is no exception. The 250-seat restaurant easily consumes the 160 gallons of hot water per day provided by the solar water heating system installed by Millersville based Solar Energy Services, Inc. (solarsaves.net) The system includes two, 30-tube solar collectors, (approved by the Historic Commission), mounted on a flat roof in the back of the restaurant. These panels are joined, via a copper pipe run and pump control unit to two, 80g stone-lined water tanks in the basement. The solar system acts as a pre-heat to Harry Browne’s conventional gas system, offsetting around 50% of his annual hot water load.

ABOUT SOLAR WATER HEATERS and SES, Inc.

Solar water heaters are a time-tested, mature technology that are deployed every day by Solar Energy Services, Inc. (SES) of Millersville (solarsaves.net). In addition to restaurants, apartment buildings, universities, carwashes, detention centers and other government and institutional buildings continue to expand SES’s customer list. Roger Perry, a 35-year solar veteran and partner at Solar Energy Services, Inc., is still servicing solar water heating systems that he installed during the early eighties. Roger notes that “Given current financial incentives, solar water heaters are a no-brainer for any business in MD and DC that has a daily hot water load.”

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WASHINGTON, DC:  Solar Energy Services, Inc., in partnership with third party solar developer Skyline Innovations, recently finished the installation of a solar water heating system for Shoreham North, a condominium building in downtown Washington, DC.

The solar thermal system includes 26 collectors southerly mounted on the roof, closed-loop plumbed to a 1,500 gallon solar storage tank inside the building.  The system is expected to reduce the building’s water heating utility bill by about 30%.

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What Does the Future Hold?

Solar Renewable Energy Credits (SRECs) have played a large part in the financing of solar energy systems in Maryland since the RPS (Renewable Portfolio Standard) was enacted in 2005. These market-based, tradable credits are the property of the solar system owner to resell, typically to brokers who bundle them for final resale to competitive energy suppliers in the interest of meeting their solar compliance goals. In Maryland (as well as Washington DC), these credits are generated by both solar electric (PV) and solar water heating systems.

The price of SRECs is supposed to reflect the over or under supply of these credits in the marketplace. Both Maryland and DC have very aggressive solar goals (2% by 2020 in MD and 2.5% by 2023 in DC) with steep adoption curves so we need lots of SRECs to meet compliance.

Maryland:

That said, the solar industry boomed for several years recently and we are currently going into an oversupply phase in Maryland. This has the effect of pushing down prices on SRECs in the near term.   There are many contributors to the oversupply and the industry and legislators are frequently working hard to promote policies that help to smooth out the supply, but in the end, SRECs are a market mechanism that is subject to “animal spirits.”

As solar prices decline it is fitting that SREC prices are declining too – after all, we should need less incentives as solar costs come down to “grid parity.” When Maryland’s SREC market was conceived, the designers planned for a declining value as more solar got on to the grid. In fact, the Alternative Compliance Payment (ACP) schedule – the amount energy suppliers have to pay if they cannot buy SRECs – is designed to decrease over time. The ACP is considered to be the maximum that an SREC would cost in a rational market. Recently SRECs have traded on the order of 35% of the ACP, but as high as 75% a few years ago. In Maryland, the ACP is scheduled to drop from $400 to $350 in 2015 and then down to $200 in 2017, $150 in 2019, and so on.

DC

Washington DC is a different market and one that is much better insulated from the shocks of large utility scale systems that flood SRECs onto the market. The sheer geography in DC does not lend itself to 10 MW solar farms and thus the SREC supply curve is a little smoother due to the requirement being fulfilled primarily with many smaller systems. As a result, DC SRECs have shown more consistency and maintained a higher price, benefitting system owners and prospective system owners.

What now?

Regardless of the trends for solar return on investment (ROI), we all want to maximize our incentives for our own benefit. SRECs are no different. While there are many more new solar customers every day, there are also many solar system owners now approaching the end of 3 or 5 year SREC contracts (aka “strips”) and they too need to decide how to proceed going forward. Do I want to sign up for another strip (3 or 5 year term contract) and accept a large discount on my SREC price for that price security or do I want to maybe float with the market for a while? I’ve got no crystal ball, but I do know that there are many efforts underway in Maryland, some legislative and some not, to help to smooth the SREC supply and thus maintain a reasonable value for SRECs to continue to help incentivize solar. For that reason, I believe we will see some recovery of SREC prices in Maryland in the next year or two and thus maybe it is better to hold off on a term contract. In DC, I would personally opt for more surety and take a term contract with the discount price, but that is my risk averse nature. Others might like to bear more risk and float in hopes of higher SREC values in the future.

Either way, we are lucky to have these incentives in Maryland and DC. They are working to increase solar installations and jobs and they are also helping to drive down the installed price of solar in our region.

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Not quite so cut and dry…

Most of us who live here in Anne Arundel County appreciate our proximity to the Chesapeake Bay, changing seasons with spectacular Spring and Fall temperatures, and mature wooded areas. However, these pros quickly become cons during snowstorms, thunderstorms and Maryland’s annual hurricane season from late August through October when Hurricanes such as the infamous Isabelle and Sandy blast through our wooded, watery region, bringing floods, downed trees and – the clincher – power outages. If not for the threat of the power outage, we may sit back and enjoy a hurricane as a powerful force of nature, so long as our lights are on, heat or ac is blasting, and refrigerator’s chilling.

Hurricane Sandy caused around 300 thousand power outages here in Maryland, with an estimated 60 thousand in Anne Arundel County alone. It’s a no wonder that many prospective solar system owners – as well as existing solar system owners – want to know if a solar power system can power any of their appliances during a power outage, even if only while the sun shines. Unfortunately, it’s not that simple.

For both functional and safety reasons, there are several additional complexities to a “hybrid” PV system that connects to the grid but also provides backup power during a power outage. To start, during an outage you need to be able to safely isolate your “solar generator” from the grid to protect the line workers. You will also need energy storage (batteries) to balance solar energy supply and household demand. In most cases, you need an additional inverter to convert the batteries’ DC electricity back to AC electricity for your household. Lastly, most battery systems require some level of maintenance as well as replacement one or more times in the lifetime of the solar system. The bottom line is that unless you are willing to pay a nominal 30% premium for a solar system that includes the necessary batteries, transfer switches and additional inverter(s), you might be better served with a more traditional approach to backup power, like a gasoline or natural gas generator, and possibly just for critical loads.

Don’t get me wrong. Hybrid systems are growing in numbers and technology advancements, consumer demand, and smart grid capabilities all will help to drive down costs to make these systems more affordable in the future, ideally making our grid more stable with many distributed sources of energy. In the mean time, most solar installers can offer a hybrid (battery backup) or traditional generator back up options, so you can decide what suits you best.

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