Solar Power Bus Model

Solar Power Impact on Traditional Power Systems

Solar Power Impact on Traditional Power SystemsThere is no doubt that there will be a solar power impact on traditional power systems. The question that everyone is trying to figure out is how much impact will there be. What aspect of the system will be impacted? Solar power will impact these parts much differently. The areas of power generation can be broken down into the following categories: Fuel; Generation; Transmission; and Delivery. We will take a look at each one of these separately assuming two scenarios.

Solar Power Impact on Traditional Power Systems


Fuel today for electrical power generation depends on sources such as coal, oil, natural gas, nuclear and hydro. Both large solar projects and rooftop solar will have an impact on these sources. Solar is really a new source of fuel. Power is virtually free with no impact on the environment.


Generation will focus on the lowest costs and the least environmental impact. This means wind power and solar projects combined with existing hydropower dams. Generation from steam generated by burning coal, oil, and natural gas will tail off in that order. This change will take place slowly as more and more solar comes online.

Transmission systems will still be required. Unless rooftop solar and local wind farms really take off.  This could still motivate and drive consumers to rooftop installations. Large solar projects and wind farm projects will still require long-distance transmission systems.

Delivery – Delivery will depend on the penetration of rooftop solar panels. Local utilities could find that their revenue could drop significantly. However this is still at least a decade away in North America.

Roof top solutions are becoming more cost-effective. Locations with already high per kilowatt per hour costs will see an impact within the next few years.


Solar System Calculator

A solar system calculator is a must when you are considering installing a solar power system. There are many decisions to be made in addition to design and physical installation. These decisions should be made prior to your decision to purchase or rent a solar power system. Basically, consumers what to determine the answers to several questions. Is it better to lease or rent a solar power system compared to buying a solar power system?  What factors such as interest rate and other fees will impact the payback period and the overall savings? What is the impact regarding maintenance fees?

Solar System Calculator – Vendor Provided

A good solar power vendor will have a solar system calculator that they can provide to the consumer. These calculators help make the decisions surrounding the purchase and installation of solar power systems. Download the app to your smartphone. While others will use a spreadsheet that they can send to the customer. Some sellers may feel that their solar system calculator is a competitive advantage. As a result, they will not release it to the customer. If this happens to you find another provider.

The purchase or rental of a solar power system is a significant decision and the financial analysis surrounding this decision is important to ensure that you gain the maximum savings from the system. Interest rates, fees, maintenance, installation costs, usage, power costs, etc must all be factored into the calculations to ensure that the system is designed to maximize the customer’s return on investment.

There are many solar system calculators available and it may even be to your benefit to try several to compare answers. Also, consider whether you should buy or rent a solar power system. If you buy do you need to borrow the money or do you have the cash available to make this purchase? All of these factors can impact your decision.

Renewable Energy Business Evolution

We have been doing some research on renewable energy business evolution, which is another term for where is the solar business headed and where are wind farm businesses headed. Should you as a consumer invest in a solar generation system on your roof? What about businesses that are in the solar business or the wind farm business?

Would you buy shares in a company that is based on the fledgling solar business? As an investor who is looking at his retirement income, any investments in renewable energy businesses is probably high risk at this stage. The industry is still trying to figure out how to make money and be profitable without government subsidies.

Renewable Energy Business is here to Stay

But let’s make no mistake the alternative energy or the renewable energy business is here to stay. It is only an infant in terms of evolution. The industry must go thorough many trials and difficulties before it matures. Solar energy is really young. Wind power is not far behind it compared to the grand old businesses of generating power through oil or coal fired generation plants. Hydro electric plants are even older. Then there is the nuclear field which is still growing up. We are not sure that we really want to have it around us. This is the best analogy that we can come up with in terms of the electrical generation business today.

The solar companies are like a bunch of infants in a day care running around trying to figure out what they should do just to stay alive. Which one will grow up and become mature and successful. Which ones will fall by the wayside and never develop into a successful business. The message here is that if someone tells you they have this sure thing related to solar power, only put into the investment what you can afford to lose. The risks are very high.

Renewable Energy Business Development Cycle

The renewable energy business evolution is going to take a few years to develop and become stable. This could be as long as 20 years. But it will reach a level of maturity that will make us all wonder why we did not invest in the business at the outset. Electrical power companies in California must be generating 30% of their power by the year 2020. Although they have made great strides with some already in the 10% zone, they still have a long way to go.

Power consumption is growing and 30% of today’s power demand is achievable. However 30% of the demand in 2020 is much more challenging.  These objectives have been set by government to meet several of their own objectives. They want to reduce the demand on coal and oil. They also want to reduce the pollution impact that these oil driven electrical plants have on the environment.

Air Pollution

While the air pollution should not get worse, there is still pollution when you install solar panels. The manufacture of solar panels is one thing and does cause pollution, however the preparation of the ground and the disruption of habitat for animals that live in these areas is another. Animal rights groups are always getting in the way and fighting the construction of solar power plants. This alone could delay the power companies from meeting their objectives in 2020 which is already really aggressive without any delays.

One area that seems to be helping is that consumers are converting on mass from incandescent lights to fluorescent and LED lights, This has been reducing the demand for electricity in various states and provinces. The consumer is getting on the band wagon and reducing their electrical use by turning off lights, using power in non peak demand times etc. This is going to make it easier to meet some of the targets we mentioned above.

We are going to write more on this subject in the next few posts. leave us your comments and thoughts. They will help to influence our ideas and thoughts and contribute to the input of the next posts. Our readers will appreciate the thoughts and comments as well.

For more posts about solar power business models, click here.

Solar System Management?

You have had a solar site assessment completed and you have completed your solar power business plan which should tell you whether it makes sense or not to go ahead with your installation. However there are two  more major factor that should be included in your overall business plan. One is the subject of this post, Solar System management. The other is Solar System warranty program and maintenance. Which we will discuss in the next post.

The system includes the panels on your roof and the inverters they are connected to. Of course the electrical system connection in your area. One of the most important elements in this system is  measurement. It must measure the amount of electricity your system is consuming or providing to the network. All of these components must be managed on your behalf over the life of the contract that you have signed. Someone with the technical know how must deal with any problems that arise over the life of the system. Much like your car, which is very complex these days, you need a skilled technician to maintain it.

What is Solar System Management?

The first part of this is negotiating the rate that you will sell the electricity you generate back into the grid. It varies by location. Also the utility that you are dealing with. The rate per kilowatt is important as are the term of the contract and the rate that your initial rate will increase or decrease over the years. If you are signing a long term contract, then you want to make sure that your are protected for inflation.  The rates will vary year over year. Of course each utility will have a different rate they will initially offer.

In addition in some areas, government subsidies play a large part in the economics of these installations. Some governments have also suddenly stopped providing these subsidies. Leaving the investors and owners with a loss based on the cost and the lower revenue. Potential investors should complete sensitivity studies. Take into account changes in the costs as well as changes in the revenue for both increases as well as decreases.

It is important to pay attention to this. Ensure you remain protected over the years of your contract.

Monitoring Your System

The second part of the solar system management  activity is monitoring your system. It is important to understand that your system is running optimally at all times. Also when one component stops working or is not producing it’s optimum amount of electricity.  If one component stops working, you want to know about it immediately. So that it can be corrected and not damage other components.  As consumers we do not have the time to watch this and probably we would not understand what the system was telling us anyway.

Are there automated systems that report to the consumer. Or to the technical monitoring company when a system is not running optimally. How much does this cost? How reliable are the monitoring systems as well as the company that is providing the service.

Solar System Management contracts

This should be part of your contract with the company doing the installation so that it is worry free and trouble free. The last thing you want to be doing is your own monitoring! It is in your interest as well as your provider’s interest to ensure that the system is generating electricity and feeding it into the grid so that you both get paid over the life of the contract.

There will be literally hundreds of different contracts available across the continent. Consumers need to protect themselves by ensuring they actually read and understand these contracts. What are your responsibilities and what are the responsibilities of your provider?When you move, What do you need to do? What happens if the company you are dealing with goes bankrupt? What rates are you guaranteed?  You probably want to have a lawyer review the contract. Specifically a lawyer who is familiar with solar systems and the peculiar idiosyncrasies of these contracts.

They are complex and it is worth taking the time to understand them! This is a complex project. Consumers should pay attention to this project in the same manner they would any other major project around their home.

For more posts about solar power business models, click here.

Solar Power Business Model Variables

Solar Power Business Model VariablesThere are lots of web sites available who are trying to sell you a solar panel power system. they talk about how easy it is and how they solve all of the problems for you so that really all you have to do is sign on the dotted line and suddenly you are committed to a 20 year contract! This web site is trying to get the facts from the consumers perspective and assess what the real Solar Power Business Model and business case is for the consumer.

This post is going to describe some of the factors that should be part of your business model as a consumer considering the installation of a solar panel power system. As we mentioned we are looking for a financial model that consumers can use to evaluate whether it makes sense or not to install a solar panel system purely from a financial perspective. We are going to ignore the noble and emotional areas such as supporting the planet and green energy in this particular post. These attributes  are important, but when it comes down to money, consumers want to know what is in it for them, what is it going to cost and what wil the benefits be?

Solar Power Business Model –  Inputs

So what variables or financial revenue and cost measures should be included in a financial model that a consumer can use? Here is our starting list. Send us comments if you have others that we should be considering.

  • Revenue or power consumption reduction estimates
  • Potential grants available, how much, how long
  • Charges if any to complete initial survey estimate of potential power production
  • Equipment costs from estimate
  • Charges for  installation
  • Charges for completion of application for grants
  • Roof repairs, roof replacement etc to support solar panels – initial installation
  • Roof replacement costs to remove and re-install panels later in life of contract
  • Application costs to attach to Grid
  • Financing costs, interest rates, term of loan, payments
  • Legal fees to evaluate contracts
  • Additional home insurance or special riders
  • Solar income insurance
  • Ongoing maintenance for your system
  • Equipment failures and repair costs
  • Cash flow analysis
  • Payback analysis

Sensitivity Analysis

Once you have information concerning all of the variables you can begin to build a spreadsheet model to evaluate your cash flow. This will serve as the base line model for your evaluation and decision to proceed or not with a solar panel installation. You may even use this model to help you gain financing for the installation and initial maintenance. However we strongly urge you to develop sensitivity analysis to evaluate the risks associated with your project. Remember many contracts that are being offered have a 20 year life span. Which is a very long time in this business and many things can change for the better as well we as for the negative.

At the minimum, all costs should be increased by 20%. All revenue should be lowered by 20% to determine what the worst case scenario is for your situation. In some cases you might even make it a larger percentage deviation to ensure that you can deal with the worst case situation. For example if in the area in which you live, you typically get 300 days of sunshine on average. You might lower that by 30% or to 210 days to reflect a really bad year with lot’s of cloud. If you can still handle the reduced income and negative cash flow should this worst case scenario occur, then there will be no surprises for you financially which you cannot deal with.

Sensitivity factors to consider

Besides varying all revenue by minus 20% and all costs by plus 20%:

  • Premature roof replacement
  • Sale of your home
  • Solar company goes bankrupt
  • Grants end unexpectedly
  • Solar panels have premature failures
  • Tariff rate guarantees spiral downwards

As we do more research in this area we will update our list of factors to take into account. We are still looking for a consumer oriented business model that we could post to our site. However most companies want to provide you with a quote first. Which means you must work from their models etc. Personally I would rather take their numbers and plug them into a business model that I can manipulate and complete sensitivity analysis on my own.

Readers, if you are aware of one, please share a solar panel power generation business model with us!

For more posts about solar power business models, click here.

Solar Power Business Model

Solar Power Business ModelThe solar power generation business is going through a shakedown at the time of writing this post, which is going to have a huge impact on the prices that consumers pay for solar panels and also on the number of opportunities that are available for consumers to find products and solution to help them generate their own electrical power. The big companies want to keep power generation and distribution for themselves. They want to avoid getting this into the hands of the consumer. Prices for solar panels dropped while China was dumping on the market. Consumers in general are concerned about the complexities of dealing with panels and batteries etc.

The Big Picture in the Solar Power Business

Back when oil prices reached their highs in 2008, many people who are promoting green energy and independence from oil pushed hard for the solar power business. The result was a number of companies heavily funded by investors with promises of subsidies from various governments. Their business model worked at the time as long as oil remained high. Also as the subsidies stayed in place and demand for electricity continued to grow.

Three years later in 2011, the perfect storm hit and it was devastating to many companies that did not have a sound business model in place. First the economy tanked and we can debate the reasons for this. But the net result was that demand for electrical power fell and has not caught up yet with demand pre 2008. Secondly, as the economy went south, government revenues also fell. Which meant a variety of belt tightening measures had to be put in place. One of the first things to go were the subsidies that the governments promised.

Now companies who depended on this revenue found themselves cash poor and unable to meet their commitments. Oil also fell which pleased the consumer and is helping industry, however it takes away the momentum and support needed by the green activists to continue pushing solar power generation. Several major companies who produce power via solar panels as well as solar panel manufacturers have gone bankrupt as a result.

What will Happen to the Solar Power Business

While the events that triggered this collapse are one of a kind, we hope, this stage of a new industry is pretty typical. There are always many companies entering a new industry hoping to make it to the big time. At some point there is always a shake out that is triggered by some market or world event that causes many of the underfunded or poorly managed companies to fail, leaving the stronger ones to survive. As we indicated this is pretty typical in the life cycle of a new industry.

The next couple of years will be difficult for the industry as prices fluctuate and demand cycles, however those who manage cash flow tightly and maintain a sound business approach should survive. They need to treat government subsidies, if any are available as icing on the cake.

What Does all of This mean to the Consumer

For the short term, it means that the cost of purchasing solar panels is going to decrease. With inventories of panels remaining high, prices are falling as corporations cancel their orders for panels. The price of electrical energy has not fallen to any extent. So the business case for many consumers and corporations alike has just improved. There is a much shorter payback for adopting a solar power solution involving solar panels.

Oil will increase again in the next year or so. Interest in alternate forms of power generation will increase as consumers spend more on oil related products. Once the inventory of solar panels and related products is used up, prices will again begin to rise. The message in this story is constantly review your business case. Keep the numbers up to date to ensure that you are making the right decision based on accurate numbers.

Solar Power Business Model for the Consumer

We are looking for a spread sheet model that compares the cost of installing a solar panel systems for a consumer application, It should reflect generating power to be used in the home. The excess power would be fed back into the grid providing additional savings to the consumer. We have not seen an economic model as of yet. We may build our own to help ourselves as well as readers make accurate decisions regarding this business decision.

In our next post we will start to list some of the variables that need to be included to help assess the economics of this decision. Your input would be invaluable. For more posts about solar power business models, click here.

  • Copyright © 1996-2010 Managing Home Maintenance Costs. All rights reserved.
    iDream theme by Templates Next | Powered by WordPress