that the stimulus bill did a lot to help the situation. It created a cash incentive program as an alternative to the tax program. It also directly created significant demand through grants to states, municipalities and government facilities. As a result, the second half of 2009 was tremendous for contracts and bookings. We expect that 2010 will be our best year on record.
X: Borrego Solar must be in an ideal position to choose the best solar technologies for its projects. Among the various choices like thin-film solar, PV, concentrating solar PV, solar thermal, which ones do you recommend and why?
MH: We generally use crystalline solar PV for our projects. The technology is proven and widely available. The price has also come down by more than 50 percent in the last 18 months. Given the current pricing of crystalline PV there are very few other technologies that can compete on value and reliability. Crystalline technology has been used in commercial applications for more than 30-years. Despite the growth in thin film cell capacity, crystalline silicon technology is still used in the vast majority of solar power plants.
X: Can you explain what advantages a Power Purchase Agreement, in which Borrego Solar or someone else finances the cost of a solar installation and the customer pays for the electricity generated, has over conventional financing for a commercial customer?
MH: Power Purchase Agreements allow a building owner to take advantage of the benefits of solar energy without taking the risk. No upfront investment is required and all the risk of performance is on someone else. The building owner only has to pay for the energy produced. It is similar to the Software-as-a-Service model. It is very good for companies or government agencies that want to save money and go green, but don’t want to take on the burden of operating and maintaining the system. Borrego has the advantage of being able to offer our customers the option to own the system or purchase the energy through a PPA. In addition, our PPA has the advantage of being fully integrated with our EPC (Engineering, Procurement, Construction) business, allowing our customers to have a single point of contact and responsible party for all aspects of the project, system, and services.
X: A couple years ago, The San Diego Union-Tribune highlighted how some local schools had made substantial investments in solar installations—and ended up paying drastically more for grid-supplied electricity. Does the utility rate structure in San Diego still create disincentives for school districts?
MH: The issue of proper utility rate structure design is very important and often ignored by policy makers and advocates. Generally, rate structures have improved in San Diego and now it is easier for schools and government agencies to go solar. There is still more work to be done as many customers in the SDG&E service area still can’t take advantage of the solar-friendly rate schedules. Regardless, schools and government agencies represent the majority of our PPA customers. We are usually able to deliver a solution that is cash flow positive out of the gate.
