The first number is $10,300,000, the amount of money our clients have saved on their electricity bills since one of our first solar projects energized in February, 2011. Even more important, all of the 116 solar projects we have developed and managed for our 35 clients since then have met or exceeded the expected costs savings; and we already have another 148 solar projects that will be operational by this time next year (for a total of 264).
This impressive record of success is the result of accurate financial forecasting, well thought out design, effective construction management and a strong working relationship between TerraVerde’s Asset Managers and our clients’ Finance and Maintenance Department staff. Be it ongoing monitoring, preventive maintenance, administrative support, or warranty enforcement, it takes a team to ensure that solar projects produce promised results.Recently, TerraVerde has begun offering Asset Management Services to clients who did not develop their project through TerraVerde, but need help in managing or improving the performance of their solar projects.
The second number is: $373,000,000. This very large number represents the 25 year projected savings our school, water agency and municipal clients will realize through TerraVerde’s current operating projects, plus projects launched within the past 12 months. Because of our track record over the past five years, we are confident that our clients’ actual energy cost savings will continue to meet or exceed these projections. A major component of this number is the expectation of long-term inflation in electricity prices.
Some of the electricity cost inflation drivers include: constraints on supply, i.e., premature shutdown of nuclear power plants (e.g. PG&E just announced the shutdown of Diablo Canyon no later than 2025), diminishing production of the State’s hydro-electric sources, and the risks associated with gas-fired power (e.g., the recent Aliso Canyon natural gas storage facility shut-down), as well as, the rapidly accelerating demand for power from the electrification of transportation.
The California Energy Commission uses 6% as their long-term electricity inflation factor in their Prop 39 program, which is 50% higher than annual inflation rates TerraVerde uses in our more conservative savings projections. The prospect of continued electricity cost inflation is one reason we’ve seen a surge in solar implementation. Even where early term savings are not significant, many schools, cities and water agencies are implementing solar as a hedge against electricity price inflation.
Another reason is that the cost of solar construction has never been lower. Plus, the cost of financing is at historically low levels, making tax-exempt structures or power purchase agreements excellent options for public agencies. That said, Utilities are reacting to the growth of customer based solar by changing the way they charge for electricity; significantly increasing the ratio of demand charges to usage charges. While solar can offset both usage and demand charges, to reliably offset demand charges, solar should be paired with battery storage.
This brings us to our third number, 71, which represents the number of battery projects we have helped our clients launch since the State began allowing customers to install batteries “behind the meter” 2 years ago. As with our solar projects, our battery projects are also meeting or exceeding costs saving projections.