The HELiOS Model

The more that you read, the more things you will know. the more that you learn, the more places you'll go.
--Dr Seuss

Overview

HELiOS works because it combines favorable financing, utility administered rebates, efficiency and conservation measures, potential availability of school modernization funds, and a modest contribution (money or in-kind support) made by the local community, to make it possible to install a renewable energy system that produces all, or much, of a school's electricity needs without increasing a District's operating costs. Financing can come from a variety of sources including low interest federal bonds, tax exempt municipal leases, or General Obligation bonds.

How is that possible to pay for a solar project without putting pressure on the General Fund? Like Dr. Seuss, you have to be creative, but there are a variety of options to consider that depend on each District's current financial situation.  We start with the assumption that a District will pay for the photovoltaic system (PV) only with the savings from its avoided electricity costs, not from its General Fund.

When the PV system is installed, much or all of the payment normally made to the local utility goes to a lending institution to pay off the loan. The HELiOS target is to ensure that the payments on the PV system do not exceed the cost of repaying the loan or bonds. It is possible that the avoided electricity costs can actually exceed the cost of the loan or bond repayment making it possible to have a positive impact on a District's General Fund from the day the PV system goes on-line. And over time,  the savings will just get better because we know that electricity costs increase by about 5% each year on average in California.

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historical electricity rates (California)

The graph below depicts how we determined that it was possible to help our local school district install a 103 kW PV system at Washington Elementary (2008) without increasing the District's operating expenses. The graph shows the 3 key elements in the HELiOS model: 1) electricity costs for Washington Elementary over the next 30 years if its consumption patterns remain static and electricity costs increase at the historical average (5% per annum for PG&E); 2) the fixed cost of financing a PV system over 25 years; 3) the "gap" that, if eliminated, would make the purchase of a PV system "cost-neutral" to the school district.

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     rebate at $2.95 per watt

(Note: The projected increase in the cost of electricity relies entirely on historical data and does not consider how future fossil fuel shortages or how increased demand may affect future electricity pricing.)

The “gap” - shown in red  on the graphs - may be the only thing preventing a District from investing in a PV system. Eliminating the “gap” is the key to making HELiOS work in your school district. While we raised money from the local community to erase  the "gap" for Washington Elementary, current economic conditions (April 2010) may have closed the gap without the need for a community contribution. We've calculated that if an effective price of $5 per installed watt can be achieved, cost neutrality results in most cases. We're almost at that break even point now -  here's why:

1) Solar panels costs have dropped significantly over the past 12 months,
2) Installation costs have come down as bids become more competitive (always seek competitive bids, never "sole source" a PV project),
3) Rebates remain robust (but are also falling quickly),
4) 0% or near 0% interest federal bonds (for school construction, renewable energy, energy conservation) have been made available school districts and local governments to stimulate the economy.

With the help of KyotoUSA volunteers, we've created a pro forma that will help a district determine if a PV project can achieve cost neutrality. We'll post it at a future date, but contact us and we'll work with you to see if your project would meet our cost neutral criteria.

PG&E is at Step 8 ($0.15 per kWh) for non-residential PV systems. Always look to the California Solar Intitiative's Trigger Point Tracker for the status of rebates administered by the state's Investor Owned Utilities.

For the rebates offered by Publicly Owned Utilities, see their respective websites. Check the Utility Connection for all US municipal utilities or the California Municipal Utilities Association for links to their current membership. 

      * Note: As of January, 2010, California's Investor Owned Utilities (IOUs) pay out the California Solar Incentive (rebate) in 60 monthly installments based on the amount of electricity the PV system generates. This rule applies to all PV systems greater than 30 kW. Installations smaller than 30 kW may take either an upfront rebate based on the size of the PV system or over 60 months based on electricity production. Publicly Owned Utilities (POUs) may follow similar rules.

Contact us for more information on the underlying financial calculations and assumptions that can help you determine what it will take to make a PV system cost neutral to your school district.