What should you consider before having solar panels installed in San Diego ? How should you decide which installation company is right for you? What type of solar should you choose? photovoltaic or solar thermal? Are there upkeep or maintenance costs?
All of these are valid and common questions when considering solar panels. It’s a big investment and so it’s understandable that you will have questions and concerns. I’ve collated some basic knowledge, tips and advice on how to ensure you find a good company to install your solar panels and highlight some of the points you should consider when having photovoltaic panels installed at your property.
1. MCS Approved Installers
Firstly, and most importantly, ensure that your chosen installer is an “MCS approved installer”. MCS stands for Microgeneration Certification Scheme and it is an indication to consumers that the installer has been assessed and adheres to standards and regulations that are set by the MCS.
MCS Approved Installers are awarded certification as a result of a thorough assessment of the supply, design, installation, set-to-work and commissioning of renewable microgeneration technologies, solar panels.
2. MCS Approved Solar Panels
Alongside MCS Approved installers, make sure that your panels are also MCS approved. MCS Approved Solar Panels also undergo rigorous standards.
To receive certification, MCS Approved Solar Panels not only receive product testing, but the manufacturing processes, materials, procedures and staff training also undergo assessment. Certification is only awarded if every step and stage meets the criteria.
3. NIC EIC Certification
All electricians who provide services in the UK should be NIC EIC certified. Solar installers are no different and you should make sure the company you choose has received certification. You will then be safe in the knowledge that your system complies with national safety requirements as stipulated by the governing body responsible NIC EIC certification.
4. Solar Panel Quotes
Don’t rely on the first or cheapest company you find – ask for quotes from a number solar installation companies, and let the companies know that you plan to do this. This should help ensure that you receive competitive quotes and it also gives you a benchmark from which you can compare quotes against quotes. It might give you some leverage to “play” companies off against one another to get that quote figure knocked down a little. Companies only exist to make money, so they won’t want to lose a potential customer.
Talk to companies who visit your property to provide you with quotes and ask plenty of questions. This will give better understanding and knowledge of what to expect and what you are told. Consider all your quotes before committing to any one in particular.
5. Cheapest Doesn’t Mean Best
As with most things in life, the cheapest quote you can find won’t necessarily get you the best end result. That doesn’t mean you should opt for the most expensive solar panels either. Find a quote which you feel is fair and just as importantly, choose a company that you feel comfortable about dealing with, a company who answers your questions and takes time to explain the technical side of things in a manner that you understand.
This doesn’t just apply to the company’s bottom line figure, but also the individual materials and equipment the company quotes for. If you haven’t been provided with a detail or itemised quote, ask for one. This way, you will know what equipment and materials you are paying for, and you can compare this to your other quotes.
The technology is constantly evolving and in terms of energy generation for the masses, it is still quite new so there will always be improvements and enhancements being made. Ask your company what products they will be using for your install and take some time to do some background research on them: Are there any problems with the panels? Are there newer versions? Is the price about right? Are there any forums which advise for or against them? Learn about solar panel technology and the terminology used, this will help you avoid being “blinded” by jargon.
7. Calculate Potential Feed in Tariff Earnings
The Government’s Feed in Tariff has been extremely influential in the popularity of solar panels. You get paid for all electricity generated from your solar panels, even if you consume it personally. As a general overview, from 3rd March 2012, the rate is 21p/kWh and then from 1st July 2012 the rate of return will be between 16.5p/kWh – 13.6p/kWh. This rate will depend on the number of panel installations completed between March and April 2012. You can also use one of the many online calculators to see how much money you could be earning on your potential investment.
The Feed in Tariff means that whilst your initial investment may be a big outlay, not only will you save money on your energy bills, but you will also generate an income. This takes the investment in solar panels way beyond most returns from other “normal” monetary investments. If you have money invested in savings accounts, maybe consider solar panels.
8. Solar Thermal and Photovoltaic Panels
Take some time to decide whether solar thermal or photovoltaic systems would be more beneficial to your property. Solar thermal generates hot water, whilst photovoltaic panels will generate electricity.
If you are unsure as to the system you want, contact companies and ask which system they would recommend. There’s no reason why you cannot have both systems installed and if you decide that solar thermal panels are your best option, still consider photovoltaic panels, if for no other reason than it could in theory pay for itself and your solar thermal panel system.
9. RHI – The Renewable Heat Incentive
The Renewable Heat Incentive does not provide such a good return on your investment as the Feed in Tariff, but it is still a good incentive that deserves careful consideration. The scheme’s aim is to encourage property owners to reduce their heating energy consumption and carbon foot print by providing the following benefits:
0.085p per kWh return for 20 years
energy consumption reduction
A Government payment contribution
10. Maintenance Costs
You will undoubtedly be told that there are no upkeep or maintenance costs involved with solar, and throughout life expectancy of a solar panel installation, there should in fact be little maintenance or upkeep in regards to the panels themselves. However, the inverter, which converts direct current (DC) to alternating current (AC), will, at some point in the 25 years, need replacing. The cost to replace your inverter will be somewhere near 1000, and so this should form part of your calculation and consideration for solar panels.
Normally, solar systems will be installed on rooftops or high up above the ground in order to get the best exposure to direct sunlight especially in San Diego. The result of this is that less able-bodied people may require assistance to have the solar panels cleaned or to clear any fallen leaves or debris from on and around the panels to keep them working at their maximum capacity.
SolarCity's Stock Should Continue To Rise As Solar Becomes More Affordable - Tesla Motors (NASDAQ:TSLA)
SunPower Corporation (NASDAQ:SPWR) is a global solar energy solutions provider. It operates in the specialized semiconductor industry and was incorporated in 1985. It is headquartered in San Jose, California and has offices in North America, Europe, Africa and Asia. The company's operating activities include designing, manufacturing and supplying solar panels and solar systems to a wide range of clients. SunPower's customers range from residential to utility customers, including businesses and the government. The company also offers different products related to solar systems that include inverters and control chargers. SunPower Corporation reports its revenues based on geographical segmentation. The company generates about 70% of its revenue from America, 20% from EMEA (Europe) and 10% from APAC (Asia Pacific). The revenues from Europe and Asia have been decreasing over the years partly because of the growing American demand and partly because of the recent economic conditions of Europe. NRG Solar is a significant customer of the company, being responsible for 35% of the revenue generated from America or in aggregate terms 24.5% of the entire revenue. SunPower is backed by Total S. A., the fifth largest publicly-traded energy company in the world. Total has a controlling interest in the company and holds around 66% shares of SunPower.
SunPower Corporation is listed on NASDAQ and is currently trading around $30. 2013 proved to be a good year for the company as far as market performance is concerned. Shares of the company appreciated consistently during the year. In the first week of January, shares were trading at around $6 but now they are touching $30. The solar industry has been facing difficulty in the past two years but now it seems that the market is regaining confidence in the solar industry.
EPS of the company also improved during 2013 which caused the share price to increase. Revenues have also been improving over time and SunPower has posted a CAGR (compound annual growth rate) of 4.95% since December 2011. These growing financial figures were responsible for the positive trend of the share price.
It appears that the solar industry is starting to recover. The recent years have been rough, especially for American solar businesses because of the dumping exercises carried out by China. The subsidizing of solar companies by the government of China enabled them to sell below their production costs. This forced the American companies to cut prices and suffer losses. Oversupply in the industry was also a major factor in the reduction of prices and diminished earnings. The sales of Chinese solar firms in Europe are capped now due to limitations imposed by the European Union. Once the US and Europe have settled the Chinese solar panel issue, profits in the industry will begin to grow. Furthermore, China has banned the construction of any further solar panel factories. All these developments enhanced the investor's confidence in the solar industry which in turn is reflected in the market performance of the American solar companies. "We're at a point now where demand starts to be driven by cold, hard economics rather than by subsidies and that is a game changer," says Jason Channell of Citigroup.
The solar industry is poised for future growth. According to IEA, renewable electricity will surpass output from natural gas and double the generation from nuclear plants by 2016; becoming the second most important source of energy after coal. It is worth noting that the growth of renewable energy has always been underestimated in projections. For instance, in 2003, IEA predicted that non-hydro renewable energy would represent 4% of the global generation by 2030 but the industry reached that figure in 2003. According to BNEF, renewable energy will account for around 69-74% of new capacity added by 2030. Estimates by HIS predict the global PV (photovoltaic) market to grow by 17% in 2014. All of this points toward the fact that the solar industry will grow in the future.
BNEF also projects a 20% increase in PV installations by 2017. The emerging markets are USA, China and Japan, accounting for 52% of the solar demand in 2013 compared to 13% in 2008. Overall, the industry is set for growth but the question is, on whose expense? China and the US are the two main competitors in this industry. The relative strategies and actions of their governments could affect the companies based in both countries.
Global Production Leader
China is the largest supplier of PV modules. It plans to add 10 GW of solar capacity to the system each year until 2015, aiming for 35GW by 2015. The current capacity is 5GW. Chinese companies like Trina Solar, Yingli Solar and Hanergy have low production costs and are offered subsidies by the government. Therefore, they manage to compete on very low costs, rendering the US based suppliers unprofitable.
The excess production and oversupply of solar panels by Chinese manufacturers reduced the price margins in the industry. This oversupply has been adversely affecting the global solar industry for the past few years. The capping of Chinese solar panels by the EU and the restriction of the Chinese government on the establishment of new solar panel installations has helped in improving the conditions of the industry globally. This, however, presents a problem for the American solar companies because the Chinese suppliers are likely to converge upon the attractive US market. This development could pose a serious hindrance to the growth of US based companies. China still produces the cheapest cells and the efficiency of the cells is also competitive. American companies need to find a way to produce cost effective cells to counter China's competitive advantage. To encourage competition, The U.S. Commerce Department set anti-dumping duties ranging from 18.32% to 249.96% on solar-energy cells imported from China in 2012. This provides a level playing field as far as the American market is concerned. In Europe, the market is equally competitive for both US and Chinese firms because China's sales have been capped. In Asia, as expected, Chinese companies have a clear advantage over their American counterparts.
Residential Leasing Program
SunPower's leasing program is a competitive advantage for the company, as it allows the consumers to install their energy systems without paying all charges upfront. Consumers can save up to 10% or 15% on their electricity bill and be eco-friendly at the same time. SunPower is trying to bridge the gap further by lowering the costs of the system and improving the efficiency. It is aiming to enhance efficiency by 10% and reduce panel costs by 35% in 2015. The residential lease program has attracted 16,200 customers since 2012. "Our residential lease business remains strong, with demand outstripping our financial capacity in the first quarter," said Tom Werner, SunPower's CEO, during a call with analysts to discuss quarterly earnings. The company has been fuelling its finance requirements from Citi, Credit Suisse and recently from US Bancorp. These leases are a competitive advantage for SunPower because they help in reducing the overall energy costs of the consumer.
Maxeon cells that are being manufactured by SunPower are the most efficient cells to date. They are 24% efficient. Provided the company manages to reduce the production cost of the cell, they would be every one's first choice.
SunPower's Oasis C7 is a solar photovoltaic tracking system that concentrates the sun's power seven times to achieve the lowest levelized cost of electricity (LCOE) for utility-scale solar power plants.
The leading technologies offered by SunPower are its differentiated strength and can help the company to grow.
Research and Development
SunPower is involved in research with King Abdullah University and the French Laboratory of Interfaces of Physics and Thin Films. Total S. A. is also working in solar R&D which could also benefit SunPower. Total is working in collaboration with:
LAAS: (Laboratory for Systems Analysis and Architecture - Toulouse, France) to enhance the efficiency of photovoltaic modules using a systemic approach.
IMEC: (Interuniversity Micro Electronics Center - Louvain, Belgium) to decrease the amount of silicon needed for cells and improve their efficiency
LPICM: (Interface and Thin Film Physics Laboratory - Saclay, France), a joint research facility of the French National Center for Scientific Research (CNRS) and the Ecole Polytechnique's engineering school with a combined team working on crystalline silicon thin film technology.
SunPower's exposure to extensive R&D is reflected in its technologically advanced products.
P/E ratio of the company stands at 26.8x and PEG ratio at 0.76x. This indicates that the company's growth would be higher than what market is paying for a dollar of earnings. In simple terms, the market perception is not in line with future growth and we can say that the price is not perfectly correlated to the anticipated growth. Industry growth estimates are 17.09% but the street expects SunPower to grow by a staggering 30%.
With growth estimated at 30% for the next 5 years the multiplier to value the company should be higher than its P/E. That is why we are taking a relatively higher multiplier of 35x.
The mean price target is $35.7, using an average multiplier of 30x which is also above the current price. However, we will use a higher multiplier of 35x and a target price of $42. These estimates give us a 25% upside on SunPower.
SunPower Corp. is well-positioned in the solar industry. It has highly advanced and differentiated products, which, despite their high costs are capable of competing with the low cost and less efficient solar modules. With its intense exposure to R&D, we believe that the company will be able to compete on the cost basis in the near future. It has the potential to become the leader in the solar industry. With the anti-dumping legislation enacted in the US, cap on China's sales in the EU and plans to initiate global leasing, SunPower has an opportunity to penetrate these markets. The top quality cells, Maxeon, enable the company to compete with other American counterparts like First Solar. As far as Asia is concerned, the market will continue to be influenced by China until the solar giants of America can develop a cost effective solution.
Overall, the future of SunPower Corp. is bright whether fueled by their differentiated technology or by the backing of Total S A. The target price of the company indicates further price growth. So, our call on the shares of SPWR is a BUY.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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