Real world solar decisions

As part of the SJSU Solar Workforce Project, Prof. Meg Virick (director of the SWF) and I met Saturday to teach engineering students about the business of solar energy. These students have been working with Prof. Jim Mokri of the College of Engineering to evaluate possible solar thermal or PV systems for local businesses and nonprofits.

After giving an updated version of my solar briefing, Meg and I did an in-class student exercise using the Stanford teaching case about REI, the sporting goods retailer. The case focuses on REI’s decision whether or not to install more solar panels on the rooftops of their local stores.

The engineers found it a little challenging to run the spreadsheets. The math was easy, but avoiding GIGO was hard, and neither the case nor their real world experience gave them a good way to make decisions on some of the assumptions.

Some of these questions were in the realm of their technical expertise, such as the useful life of the systems or the rate of performance degradation over the life of the system. Some were inherently subjective, such as the future cost of electricity or inflation. As they say, it’s hard to make predictions — especially about the future.

In other cases, we found ourselves diving into the weeds of the tax code. Is a rebate taxable? (Probably not) Does it reduce depreciation deductions? (Almost certainly).

Still, this was very timely for these students, who are currently working on designing solar projects for real world customers like IBM, the J. Lohr winery and the Palo Alto Medical Foundation clinics. Fortunately for them, most of the decisions will be made above their pay grade, by the client’s CFO or other senior manager.