Last month, Sunetric’s Chief Operating Officer Steve Karagan was recognized by Pacific Business News as a 2010 finalist for the journal’s CFO of the Year award.

As COO, Steve oversees accounting, human resources, information technology, procurement, corporate planning, day-to-day operating activities, and warehouse and construction operations. Steve joined Sunetric during a company reorganization process, and single-handedly contributed to the success of Sunetric though his contribution to the company’s growth, profitability, balance sheet management, corporate management, governance, and leadership. More importantly, he did this all in one year. 

Over a small period of time, Steve’s resourcefulness, conscientiousness, and commitment to the company, reached well beyond the financial aspects for Sunetric. Steve’s extensive knowledge in budgeting, forecasting, planning, and financial analysis, along with his ability to work with all levels of management and in diverse business cultures, has been an enormous contribution to Sunetric.

Not only is he responsible for the remarkable increase in profitability, but his redesign of Sunetric’s records also makes financial information easier to understand and it is now a management tool for future work and planning to continue the growth of Sunetric successfully. 

Steve created Sunetric’s human resource procedures, and developed a formal employee manual. He also started and is now overseeing various teambuilding initiatives to facilitate more interaction between all of the different divisions at Sunetric.  

Even though Steve recently moved to Hawaii when hired as the COO for Sunetric, he has already become very active in community outreach through his church, St. Mark’s Episcopal Church in Waikiki. As a member of the outreach committee, he is part of a group looking to assist the homeless.

Steve previously served as a financial consultant in New York City. He graduated from Boston University with a Bachelor’s in English literature and a Master’s in Organizational Policy.

In an article published in Pacific Business News entitled, Solar-energy business remains bright even as economy dims, Karagan gave his take on how our business model has remained strong in a period of economic recession and also provides a window into some of his personal interests.

How our company is dealing with the financial realities of 2010: We are fortunate in many ways because solar energy saves people money as well as improves the environment, so for the most part solar remains a solid investment during these economic times. Even though the solar industry and our company have shown stability, our management team has spent considerable time recently to define our corporate vision and strategy, and restructure our organization. In addition, among several other initiatives, our company has also focused our product offerings. More importantly, we have refined our value proposition to our customers. In the areas of accounting and finance, we have concentrated primarily on three areas: relentless attention to costs, a new budget and planning process to facilitate success as well as measure progress, and increasing the frequency and granularity of management financial reporting. Additionally, we try to keep perspective and manage our lean team with realistic goals and objectives.

Websites I check each morning in addition to my own: The Wall Street Journal, SunPower and Photon.

iPhone or Blackberry: iPhone.

Reading material on my night stand: “Solar Revolution,” by Travis Bradford.

What I do to unwind: Gym and friends.

Best trip I ever took: Hmm, maybe Morocco, but probably Greece.

My greatest extravagance: Cleaning service.

My favorite fictional character: Gulliver.

One thing that most people don’t know about me: That I’m funny.

If I could have any other career: Star athlete.

There is a lot of excitement in Hawaii right now about “net metering”. I say excitement because over the course of the last nine years, the laws regarding net metering have been amended five times. This kind of dynamic speed is rarely attributed to state lawmakers, but as oil prices go up (Hawaii gets more than 80% of its electricity from imported oil), and more consumers install solar and other renewable systems, state government sees the extraordinary benefit of locally produced renewable electricity and is endeavoring to encourage its growth.

So what is net metering? This is a program in which an individual utility customer produces electricity through a renewable source and feeds that electricity back into the grid. Credit is given for that generated electricity, and although Hawaiian homeowners cannot yet earn a profit on their generation (the program tops out on an annual basis when you generate as much electricity as you use), good planning of the solar installation can equalize these values so that the homeowner’s yearly generation does not exceed the yearly consumption.

It’s easiest to imagine the spinning wheel in an old-fashioned electrical meter. As electricity from a solar installation generates electricity and feeds it into the electrical grid, the wheel slows down. If more electricity is generated, an amount equal to the amount you are currently using, the wheel comes to a complete stop. If you generate more than you consume, perhaps due to a very sunny day, the wheel will begin to turn in the opposite direction. (Note that these days electricity meters are digital, so don’t go digging in the utility closet to find the wheel so you can watch it spin.)
 
The original net metering law was passed in Hawaii in 2001. This law recognized that the technology for new renewable sources of electricity had become efficient enough and cheap enough, for individuals to begin installing systems in their homes. The law was designed as an incentive to bring renewable energy sources to the islands. In 2004, the law was expanded to increase the capacity of these contributing systems from only 10 kilowatts to 50 kilowatts. Unfortunately, even though larger systems were allowed, if there was any excess electricity, there was no credit given beyond that month’s total bill. In 2005 that changed when a new law provided for the carryover of extra electricity (known as “net excess generation” or NEG) to the next bill. NEG is calculated on an annual basis, and won’t roll over into the next year, so it is important for systems to be balanced between generation and consumption over the course of the year.

Today, the law provides for any excess generation credit to be bumped to the next bill for up to 12 months. Now, for those interested in potentially becoming a net metered customer, it’s important to understand that with a normal net metering agreement, this credit will roll over month after month but expire at the end of the year. You will never be “paid” for the extra electricity you feed into the grid. There is another arrangement, however, known as a Feed In Tariff (FIT) in which you are paid in cash for all the kilowatt-hours your system produces. Unfortunately, the legal and technical details of FIT in Hawaii are still being worked out and FIT cannot be combined with Net Metering. Once the FIT rate is announced it will take some quick analysis by a trained solar consultant to evaluate which choice is best. Generally, if you have a low monthly power bill but a very large roof (and thus a larger capacity to generate power) you may want to go with FIT.  However, the average home owner in Hawaii will probably find that their roof size limits their production capacity to a value fairly close to their usage, in which case it would make more sense to go with Net Metering.  Net Metering is credited at full retail rate, and it is speculated that FIT will be a rate lower than full retail.

One other limitation which is slowly being removed by amendments to the original 2001 law is the limit on the total number of customers of each of the utility companies in the state who can sign up for the program. Each utility company has its own set of rules, but the limits on net metering signups range from 1% to 4% of peak generation depending on your island as of this writing. There is considerable political pressure in Hawaii to raise these rates and allow more homeowners to participate in net metering.

Those interested in the program should contact us for more information and to understand any applicable limits.

Here are some quick facts on Sunetric's participation in 2010 Earth Day events. Don't miss out on the opportunity to connect with a Sunetric Energy Consultant at one of these events to discuss solar options and discounted pricing.

2010 Kuleana Green Business and Environment Conference with Trade Show/Green Market Place

Date: Friday, April 23, 2010

Time: 8:00am- 6:00pm

Location: Kaeuhou Beach Resort

About: The Conference highlights exemplary green businesses, socially and environmentally responsible strategies for any organization, and important environmental issues affecting our communities. The keynote speaker this year is Patricia Aburdene, author of Megatrends 2010: The Rise of Conscious Capitalism. Sunetric will join other qualifying businesses showcasing their green products and services at the conference’s Trade Show/Green Market Place, which is free and open to the public in the foyer of the conference center. The public is invited to come by anytime from 8am – 6pm to visit vendors with green products and services from these innovative companies. The conference also presents an annual Kuleana Award for exceptional socially responsible business leadership in West Hawai`i. Past recipients have included Kahua Ranch, Kona Brewing Company, Natural Investments and Kona Village. Click here for more information.

Earth Day Fair at Keauhou

Date: Saturday, April 24th, 2010

Time: 10:00am- 3:00pm

Location: Keauhou Beach Resort & Kahaulu'u Beach Park

About: The Earth Day Fair at Keauhou gets broad participation from dozens of private businesses, government agencies, non-profit organizations, area schools and other groups, which all share a common goal: to raise awareness of environmental issues through fun, educational and cultural activities.  Sunetric will join more than 60 other exhibitors at this year’s 10th Annual Earth Day Fair where participants can learn about solar, recycling, coastal restoration and preservation, ocean literacy, energy awareness and conservation, sustainable living and Hawaiian cultural practices. On the main stage, poolside, featured entertainers include Merrie Monarch Hula Halau O Po’ohala, Lori Lei Hula Studio and slack key guitar master Makana. Award winning Chef Paul Heerlein and students from the University of Hawaii Culinary Food Service Program will be offering ono food. Show your green colors, ride a bicycle to the Earth and Ocean Fair!  Convenient, secure and free parking will be provided by PATH Hawaii’s Bike Valet Parking from 8 a.m. to closing. The Earth Day Fair is sponsored by the Kona-Kohala Chamber of Commerce, University of Hawaii Sea Grant College Program, Hawaii Tourism Authority, County of Hawaii Department of Research and Development, Keauhou Resort, FairWind Cruises, Hawaii Forest & Trail, Jack’s Diving Locker, and Mini of Hawaii. Click here for more information.

To learn more about our ongoing Green Hawaii campaign for Earth Day and how you can involved, click here.

Visit Sunetric on Facebook to find out where Sunetric's Watt Wheels solar mobile will be for Earth Day!

UPDATE: We've got the answers here.

As demand for solar increases among households and businesses in Hawaii so too do your choices for PV contractors. With input from the Hawaii Photovoltaic Coalition, here is a list of questions to help you prequalify potential solar contractors/installers. Among other things, these questions help you find out what services they offer at the time of install and in the future as it relates to post sale support and warranties, and evaluate whether the company will be around to assist you, service your system and honor manufacturers’ warranties down the road.

1. Do you have a contractor’s license?
2. Is it a C-13 (Electrical Contractors) license? If not, what type is it?
3. Does your company sub-contract out work to a C-13 license holder?
4. Under the latter scenario, who provides the warranty on the system? For
   example, is the warranty on the system provided by the C-61a (Solar Hot Water
   Systems Contractor) license holder that sold you the system or the C-13 license
   holder that signed for it but did only a partial installation?
5. How many PV systems has your company sold/installed (excluding solar hot
   water systems)?
6. Can I get references from a few of your past customers? In addition, are you
   registered with the Department of Commerce & Consumer Affairs (DCCA), the
   Better Business Bureau and the Professional and Licensing Division of the
   DCCA? Has anyone filed complaints against you with these entities?
7. What is the contractor’s warranty on labor? The State of Hawaii mandates 1
   year.
8. Can you provide me with a cost broken down into both DC and AC Watts?
9. Can you provide me with an equipment list, breaking out the cost of labor from
   the cost of materials?
10. What formula do you use to calculate in kWh (kilowatthours) the production of the
    PV system?

As always, Sunetric's Energy Consultants are available to answer any questions you may have and help you choose the best solar system for your needs. Call us today at 808-262-6600.

Green energy is the buzz in the islands these days, with households looking for alternative, renewable energy sources to power their 21st Century lives. The emergence of consumer-scale renewable electricity generation systems has allowed individuals to choose the green alternative instead of relying on the big companies to add renewables to the grid. But along with these new technologies come a new set of choices—what type of generating unit is best? Wind, solar, geothermal, and others are emerging as possibilities, but for most residential applications in Hawaii, the choice is between solar and wind.

Let’s compare the two.

It’s true that a wind-driven turbine can produce enough electricity for a family household. A small unit can provide up to 50 kilowatts of electricity—which is more than enough electricity for even a large single-family home. With that said, solar units can provide the same amount of electricity but without some of the obvious (and not-so-obvious) drawbacks of a wind turbine.

Consider some basics first. What about simple aesthetics? You’ve worked hard to make your house a home, to make it beautiful and to make it your own. Now imagine the installation of a 55-foot steel pole with a large propeller at the top. This is probably not in keeping with the vision you had for your property.

And why do I mention 55 feet? Legalities and zoning laws. In Hawaii, as with almost every residential area in the United States, the height of structures is limited to 35 feet (and sometimes only 30). Interestingly, this limit was originally based on the fire-fighting capabilities of the early 20th Century, but has since become much more widely accepted as the proper scale for residential development. A turbine should be approximately 20 feet above any surrounding trees and structures, so if you live in a residentially zoned area, a turbine under 55 feet high won’t work. Special approval will have to be given by the city. This requires a “special use” permit which will probably require a public hearing. This process alone can cost thousands of dollars and might still end up with a veto from a neighbor who doesn’t want a giant pole in the middle of the neighborhood.

Photovoltaic cells require no such process or zoning approval. They lay flush with a house’s roof and are completely unobtrusive. From an aesthetic standpoint, they are clearly superior to a large wind turbine installation. From a legal and zoning standpoint, they are hassle-free.

It is also worth mentioning that the moving parts of a wind turbine, while potentially hazardous to birds, also have the potential to fail. Like all moving parts, wear can result in failure and a costly repair bill. Solar panels have no moving parts. Once installed, they simply work. There is nothing to wear out or fail as with the complicated mechanisms in a turbine.

Finally, I think I should mention the issue of bird safety. It may sound like a joke, but a rapidly spinning propeller blade in the sky will result in bird casualties. Hawaiians do not want to learn this lesson in the same painful way that people in other areas have learned it: by finding thousands of their beautiful native birds shredded in the fields. So far as I know, a solar panel has never hurt one of our feathered friends.

Until recently, the most common use for a rooftop in the realm of solar power generation was for a solar water heating array. In the not-so-distant past, this made sense. Electricity-generating photovoltaics were expensive and had a relatively short life, while rooftop water heaters were inexpensive and simple. Using nothing more hi-tech than a garden hose left out in the summer sun and a holding tank, rooftop water heaters were capable of augmenting a household’s hot water supply for very little money. But the drawback to this technology is simple: hot water is all that it can produce.

Here are a few simple facts:

Today, the lifespan of a solar cell is 25 to 30 years and the cost recently dropped dramatically (PV warranties are typically 20 years while solar hot water systems are typically only guaranteed half the time or less). Solar cell production in the United States is growing at nearly 50% per year, and this is driving down the price. At the same time, companies such as General Electric and the German firm Stiebel Eltron have made extraordinary developments in “heat pump” technology, and are now marketing heat pump water heaters with up to 62% increases in heating efficiency.

Given this, if your home already utilizes a rooftop water heater, it makes sense to consider replacing it with a new, high-efficiency electric water heater and provide the needed electricity with a new photovoltaic array. If you haven’t yet invested in new, green energy alternatives, then - with all of the new technology emerging - this option is clearly the preferable choice.

There’s another way to look at this as well—it’s a matter of personal choice and options. With a rooftop solar water heater, you have dedicated your roof to the production of hot water. Now, this probably made sense when it was originally installed. After all, the electricity that would have been used to heat the water is conserved and results in some savings, but there are many downsides to these old units. In most systems, the water needs to be circulated through the pipes to avoid overheating and that requires the use of electricity to drive the pumps. Additionally, any time you and your family are away from home, the energy is wasted. On a vacation for example, when no hot water is used the system actually results in a net cost because of the continued action of the electric pump.

But with photovoltaics, the choice of how to use the electricity and savings is yours. Replacing the old rooftop water heater with solar panels allows the production of electricity which can be used as you please. It can heat water with one of the new high-efficiency heat pumps at an even lower cost than pumping an active rooftop system with an inefficient electric water pump. And when it comes time for that vacation, well, while you’re away nothing is wasted. The PVs continue to produce electricity and the hot water heater can be switched off.

Increasingly, your rooftop is becoming the most valuable piece of property you own. In the new green energy economy, your rooftop has the potential to be a money-making power plant, and so to commit it to the simple heating of water, particularly when there are so many other uses, is a short-sighted investment.

The new heat pump water heaters from General Electric, Stiebel Eltron, and others, allow for more choice than homeowners have ever had before when it comes to green energy production and use.

Something new is happening in the “green energy revolution” almost every day. Renewable energy sources are coming online everywhere and becoming more efficient, and new ideas in solar power are revolutionizing the way that individuals and businesses produce and use electricity.

But this explosion of new ideas extends beyond the technology. New concepts in the economics of solar power are opening up new opportunities for people who might have thought that a new solar installation would be too expensive.

One of the most exciting new ideas in the world of solar power that’s come along recently is the “solar lease”. This is basically a way to pay for a solar installation while still lowering your utility bill, just by using the electricity generated by the power of the sun. Solar leases are already available for commercial application in Hawaii and residential solar leases are sure to come soon. It’s a great option for people who might like to spread cost over time, or lower the up-front cost of an installation.

Basically, a solar lease is a way of financing a solar installation based on the potential for future energy production. It’s as simple as leasing a car, but the lease is paid for by the photovoltaics themselves and the resulting total monthly savings. As for the security of the investment over the long term, well, there are few bets as safe as the generating capacity of solar cells in sunny Hawaii.

Here’s a simple breakdown of how it works.

Let’s take the example of a typical residence with favorable conditions such as a good, south-facing roof angle (or the ability to install panels at that angle). Let’s assume that a monthly utility bill from one of the state’s utilities (HECO, HELCO, or MECO) will be about $200. For this scenario, we will assume an installation of a modest system which has the capacity to offset the monthly bill by 75%, resulting in a $50 bill each month. The solar lease payment will vary depending on a wide variety of factors, but it is reasonable to assume that payments would end up being around $100 a month. This means that from the outset of this green energy venture, your household would be saving $50 a month.

There’s another important factor in understanding the value of a solar lease, and that’s the reason why it’s impossible to calculate total savings over the life of that lease. The reason is that energy prices and utility rates will continue to rise, but the lease payment negotiated prior to the original investment will be locked in for the duration. You will continue to save money for years (or decades)—it’s just a matter of how much. The upward fluctuation of prices is particularly pronounced in the state of Hawaii because of the isolation of each island’s generating stations and the distance from the mainland. Solar power generation is a good way to insulate yourself from these swings in utility costs.  

With the ability to generate your own electricity, you might as well have a money tree sprouting in your garden. Under normal conditions, even a modest system will generate enough electricity to reduce your monthly bill by more than the amount of the monthly lease payment, effectively creating the opportunity to install and operate a solar energy system for free.

Last week, we tried to give you a roadmap of some of the great incentives currently available to residential and commericial solar customers. A few months back, our President, Sean Mullen, authored a great piece for Pacific Business News entitled, "Solar Investment: The Time is Now, Right Now" in which he laid out precisely the level of combined savings available to Hawaii customers and made the case for why now is the time to invest in solar. In case you missed it, we've included it below. 

The economic outlook may be uncertain on many fronts, but 2010 holds definite promise for Hawaii business owners looking to take advantage of renewable energy—though smart investors must be keenly aware that the clock is ticking.

Change is on the horizon for both the state and federal solar tax incentive programs. Currently federal incentives are available as either a 30% tax credit or as a 30% cash grant, but the cash grant program expires at the end of 2010. Similarly, Hawaii’s state incentives are available as either a 35% tax credit or 24.5% refundable tax credit. Unfortunately, not only is the federal grant expiring, but there is significant uncertainty as to how long the state refund program will last as well. Combined, these incentives can offer up to 54.5% cash back, or a 65% tax shield depending on your tax appetite.

In a slowly recovering economy, safe investments are few and far between, and even fewer are those predominantly paid for by the government, but business owners must act soon to benefit from both the state and federal ‘cash-back’ programs.

And the urgency doesn’t end there—the cash-back federal incentive requires that qualifying systems be installed and operational by December 31st, 2010. This deadline, along with the expiration of the federal cash grant, is sure to generate a drastic Q3-Q4 draw down in manufacturer supply due to imminent nationwide demand. As such, if organizations do not commit to a photovoltaic system purchase early in the year, it is very possible that hardware will simply be unavailable as the calendar comes to a close.

So act now, right now, to take advantage of opportunities that may never be available again. Turn to Sunetric, Hawaii’s solar authority, and gain a crystal clear view of the ideal energy investment options for you, your company and Hawaii.

Sean Mullen, President

Sunetric CEO Alex Tiller authored an opinion editorial for the Pacific Business News on the effects of a new “decoupling” plan approved by the Hawaii Public Utilities Commission to encourage greater energy efficiency beginning in 2011. According to Tiller, an imminent rise in electricity rates as a result of decoupling earnings from energy consumption should lead to increased demand among households and businesses for solar. 

When Hawaiian Electric, Maui Electric and Hawaii Electric Light adopt decoupling next year, they will see an immediate gain in their returns on equity. Maui Electric, for example, is currently operating at 5.2 percent ROE. Under the new decoupled rate system, MECO will be guaranteed a 10 percent ROE to meet a peak demand of 240 megawatts (although peak demand in December 2009 was 190 megawatts). The idea is that costs per kilowatt hour are based on total operating costs divided by peak demand. But this means that costs per kilowatt hour actually go up as demand goes down.

In HECO’s recent PUC filing, it proposed that each of the island utilities raise rates gradually each month for the remainder of 2010. This will likely result in a monthly increase of 5-10 percent beginning in April or May and continuing through December.

The bottom line? Consumers — even those who make a conscious effort to use less energy overall — will pay more per kilowatt hour for their electricity, and may see a significant increase in their utility bills."