IPP90
Incentives- Buydown vs Performance Based
The most successful State run PV incentive program in the United States today is the California Buy-Down. This program provides a rebate of US$4.50 /watt of system capacity, buying down the final system cost to the customer by about 50%. The buy down plus net metering creates a simple payback time of from 7-15 years depending on the customer’s utility rate schedule. For details about simple payback and rate schedules in California, read IPP in HP85 and HP87. And for a broader examination of “payback”, read Allan Sindelar’s “Payback on RE?” in HP87.

The design of the California Buy-Down program was a collaborative effort . During the workshops that developed the current program, there was much discussion of performance based incentive programs such as those in Germany and Japan. Programs in these countries use two meters, unlike the single net metering systems in California and 34 other states. For dual metered systems, one meter records consumption while the other records PV production. A premium price is paid for the PV production and the customer recovers the cost of their PV system over time. The customer does, however, bear the full price for the PV system at the time of purchase. After considerable discussion and debate, a majority of the workshop participants opted for a buy-down program. It was agreed that making systems more affordable was of primary importance and that a two meter system was administratively cumbersome compared to a single net metered approach.

And yet, though we are many years into a very successful program, there are those who continue to lobby for a performance based program. Rewarding performance, rather than installed capacity, they argue, will result in better installed systems. One of the arguments forwarded in support of this premise is the supposed poor performance of systems installed under the current California Buy-Down program. These allusions are substantially unsupported. It is agreed that during the first two years of the rebate program, random field samplings of installed systems revealed problems in about 25% of installed systems. This is an unacceptable figure. However, there are facts that should temper our interpretation of this number.

Many of these early rebate systems were Y2K systems with battery storage. These systems are significantly more complex than non battery systems and therefore prone to more problems. Many early systems were installed by do it yourselfers and in many cases system performance expectations were out of line with reality. Also, not all the problems were performance problems. Yet in spite of the problems detailed in the early technical samplings, a report commissioned by the California Energy Commission (CEC) in early 2000 reported 90% customer satisfaction. These customers would “recommend a PV system to friends and neighbors”.

Today, over two years since the initial field survey, with thousands of systems installed, things have changed substantially. First, most systems do not use batteries. Non battery systems are simpler and less prone to installation errors. Secondly, a higher percentage of systems are installed by professionals. Thirdly, system output performance is now better understood and competent installer- designers can provide accurate performance information to the customer. Customers should demand this information before signing a contract. Since most inverters installed today also include kWh metering, customers can easily verify system performance. And, since customers today are installing PV systems primarily to reduce high utility electricity bills, these customers are very performance oriented. They expect to get what they pay for.

In no way am I suggesting that the industry can be complacent or ignore installed system quality and performance. Responsible parties in the industry must be supporting certification and training programs so that the required numbers of competent PV designer and installers are available. Independent testing agencies must be involved in testing components and system performance. It is no longer acceptable to rely on manufacturer’s data alone, data that is too often massaged by corporate marketing departments.

I am suggesting that those who publicly impugn installed system quality as a tactic to forward a favored incentive model may not be serving themselves or the industry well. Installed system performance is a function of good hardware, good design and good installation. It does not depend on a particular incentive model.

The California buy-down program is working very well. Providing a rebate to the customer makes the PV system immediately more affordable. The customer then continues to benefit by lowered utility electric bills. The PV system provider benefits by significantly increased sales resulting in increased volume for manufacturers. This program has created a dynamic economic engine for the PV industry. Why try to fix that which is not broken? Especially when the rational for the fix is based on the erroneous fiction of “poor system performance”.

Finally, there is a fundamental reason why a rate based or performance based incentive will not work in this country. As stated earlier, these programs use two utility meters. One records kWh used, charging a lower rate than the second, which records kWh produced. The differential becomes the customer’s PV production based incentive. The utility is responsible for reading the meters and paying the customer. Now in Europe and Japan the utilities are either national or municipal entities and they serve the public interest. Not so in this country. Given all that we know about the investor owned utility (IOU) monopolies and how they operate, it would be a disaster to allow them to get between the customer and their incentive. IOUs would sabotage any program implemented either through bureaucratic ineptitude or outright intent.

Inverters of the Future
Today when we say inverter we think of a box, usually wall mounted, that has PV modules connected to it. The fact is that discrete inverters used for Photovoltaic systems have led the way in inverter technology due to the global surge in the market for renewable energy. In more general terms, an inverter’s function is to change electrical energy from one form to another. As a power conversion technology, inverters are already being used in many other applications such as motor speed controls, pumps, fuel cells and even Honda generators. In these applications the inverter may not be visible or even recognized. These inverters are “imbedded” in other devices. Along with the anticipated proliferation of discrete inverters we can expect a growing number of imbedded applications. The pattern of development is analogous to computers. Inside every computer is a microprocessor, itself a computer on a chip. Not only is there a computer in your computer, there is a computer in your phone, in your car, in your TV, VCR, Stereo and the list goes on. The growing market for renewable and distributed energy coupled with the need for energy efficiency will push for a new generation of inverters, discrete and imbedded. They will be based on the development of an “inverter on a chip” and we can expect them to be everywhere.

The nature of this "next generation" inverter and how it may be developed is the topic of a recently released "white paper" published by Sandia National Laboratories. Titled "Status and Needs of Power Electronics for Photovoltaic Inverters: Summary Document" it begins: "Photovoltaic inverters are the most mature of any DER (Distributed Energy Resource) inverter, and their mean time to first failure (MTFF) is about five years. This is an unacceptable MTFF and will inhibit the rapid expansion of PV". The authors assert that the industry must move to a new level, a quantum jump if you will, and achieve reliability or MTFF of 10 years. This can not be achieved by continued incremental improvements of current design and practices.

Current inverters designs have evolved from the basic "chopper" or switch design along two pathways. One, being smarter switching control and logic and the other, improved switching components. Future designs, Sandia reports, will utilize digital signal processing (DSP). A DSP chip translates signal information into mathematical values. It digitizes the waveform. Once digitized, the waveform can be processed, evaluated and modified, in very short time periods since the DSP chips are fast. By being able to gather and feedback information in “real time”, the output signal can respond quickly to a wide range of situations: changes in load, changes in input waveform, and internal inverter changes (temperature, component aging, as examples). Improved control responsiveness will improve reliability. From a manufacturing perspective, a single DSP chip could serve a wide range of inverter applications. Manufacturers could choose, with software, which DSP features to implement. By having a single universal “inverter on a chip”, volume production should reduce cost while significantly improving reliability.

The second pathway for improving inverter reliability while lowering cost discussed in the Sandia report is improvement in the output devices themselves. These are the electronic components that handle the power. Think of the DSP chip as the brains and the output module as the muscles. With the growing inverter market we can expect to see tailor made output devices designed for this application. “Made to order power electronics” designed with software can provide the next generation of power modules with the reliability required for distributed energy applications.

A third area needing standardization is the software that will control the inverters. Sandia suggests that developing a set of software modules tailored to address the features of the DSP chip would eliminate the need to write software for individual inverters. Again the manufacturing cost is lowered and reliability is increased.

Lower cost, high reliability inverters are certainly desirable goals. Sandia thinks the time has come for an initiative like the one above because of the growth in the residential PV market. Now, if we can only survive the “Growing Pains” (IPP 88) while it takes place.

Change is the Norm
The recent purchase of Siemens by Shell Renewables continues the trend toward ever larger corporate players in RE. Among the large corporate players there seems to be a differentiation into two camps. On the one hand we have the large traditional energy companies, for example BP Solar and Shell Renewables. In the other camp we have companies like Kyocera, Schott and Sharp. This latter group is not traditionally associated with energy. Rather, they are highly diversified in fields like glass, electronics and high tech materials like specialty ceramics. I take some comfort in the diversity offered by these non traditional energy companies, hoping that they will provide competition and balance.

While large corporations now dominate the manufacturing side of RE, the delivery end is still dependent on the skills of the installers and designers of systems. Even when large manufacturers offer complete systems ( I’m not referring to the lame kits currently marketed but rather engineered systems based on inverters and modules manufactured by the same company that are intended to be used together), there will continue to be a need for trained installers. As we look to a very bright and dynamic future, those of us who are established, need to ask ourselves what can we do to facilitate this transition. Certainly one primary action is to grow our own companies. In the process we are training workers, who like most of us, are learning “on the job”. I do foresee a time when other avenues of entry into the field will be required. Training and certification for installers and designers will eventually be part of this industry. At this time, there is, understandably, contention around the need for and character of any such program.

A recent NABCEP survey seeking input from a wide range of industry players including manufacturers and installers provided some interesting results. It was anticipated that installers, being, on the most part independent or owning small companies would have the greatest resistance to certification. It turned out that this group was the most responsive and provided many constructive comments. A big surprise came when a major solar trade organization in this country, initially unresponsive, failed to endorse the concept. Behind their lack of engagement, I found out later, was the fact that major module manufacturers did not support this initiative. It would be unwise to name these companies at this time, since NABCEP is seeking support from all sectors and is actively seeking constructive input. I am sure there will be continued work and discussion concerning certification.

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Don Loweburg, Independent Power Providers (IPP), PO Box 231, North Fork, CA 93643 559-877-7080
Fax: 559-877-2980 don.loweburg@homepower.com,

wwgw.i2p.org

Status and Needs of Power Electronics for Photovoltaic Inverters: Summary Document (SAND2002-1085),
U.S. Department of Commerce, National Technical Information Service, 5285 Port Royal Rd, Springfield, VA 22161, 800-553-6847, Fax 703-605-6900, orders@mtis.fedworld.gov, http://www.ntis.gov/ordering.htm (Online orders)

The North American Board of Certified Energy Practitioners (NABCEP), PO Cox 260095, Highlands Ranch, CO 80163 Phone / Fax 720-344-0341 wparker@ispq.org http://www.nabcep.org