The Solar Panel and Beyond: An Integrated Approach to Energy Cost Reduction

Eric: Hello Did you tell them that was

That's my daughter's? Come on stage, guys Hi, I'm [Eric Furough 00:00:11] if you don't know me, and I am bringing on stage Tom Werner, the CEO of Sun Power, Robert Eckhardt, the director of architecture and renewable energy development We can just pause with that

That title, we wouldn't have seen that title when you first started at Bed, Bath and Beyond, I'm guessing Robert: No, it's a lot involved as being director of architecture and renewable energy I'm the one that actually started the solar program at Bed, Bath and Beyond and interesting enough, I deal with it from start to finish From due diligence to construction to O and M and so, I'm kind of one stop shopping, [inaudible 00:00:51] to renewable and handle all of the other parts of the business with the [old 00:00:56] lease negotiation stores, getting an open deal with the prototypes and making sure all of our concepts, all of our stores and subsidiaries throughout the years get built to a prototype standard Eric: Great

Tom: He seems like a super nice guy, but he can be brutal Eric: Are you his sales guy for the company? Robert: I wish Tom: We're partners Eric: [inaudible 00:01:21] references, but solar really you can use the word mainstream, you could think about it in the inflection point, you've managed a huge amount of growth in your 12 years by the way, congratulations for 12 years in a Silicon Valley company, that's in and of itself an accomplishment But just the amount of growth that you've seen and dealt with I notice, looking through this [inaudible 00:01:44] you've got a huge range of customers You go from the consumer, you go to the commercial, and you go to the utility scale, and you got this diversity from the Bed, Bath, Beyond to I don't know if you guys saw Tim Cook's announcement last week, but Apple's not only doing 100% renewable in their California operations, but they're trying to do that in their supply chain in China

That is really audacious and that is really incredible Tom, I guess we'll just start what problems are you trying to solve for your customers right now? Tom: You're right, I really do have a unique perspective of 12 years in this role now

Some of the folks on my team have been in solar longer, but in this role, you need perspective Twelve years ago, when I started, oh my God, this is a huge market, it was 2 gigawatts of installed solar, that's several billion dollars, we're a great market because I came from start-up, didn't have such a big market The industry will do 60- something gigawatts this year so it�s incredible how much things have changed When I started, the company was founded 30 years ago by a guy who designed this solar shop and he designed it to be really efficient because at the time he designed it silicon was really expensive From day one the idea was to make solar more economical and then it was sort of, can you get in the range, right? He designed this solar cell as a complete system so it�s very hard to copy

You can't like design the surface of the solar cell or in the back of it simultaneously so it�s designed as a complete system and it�s really innovative I mean we have been mass producing this thing for a decade, made four gigawatts of this and nobody has copied us so then what we realized though, what to make solar cost effective was you couldn't just make the solar cell you had to make the module You had to make the module cost effective and then we realized as the module cost came down you had to make the whole system As you mentioned, we make utility scale, commercial and residential First we attacked utility scale and were making very large utility scale systems up to twenty-five square miles

So, BOS balances systems, the metal, the cabling, the inverters, the electric skid, skada, the whole thing We started to make a power block and take the customized stuff out of the field and high value labor out of the field and move it into the factory What you're gonna see from Sun Power today and I'll do this pretty quickly so we can cover some other things, out at our display is were doing that same concept as we call oasis Were taking that innovation and were moving it to commercial and we call it Helix and every piece of the system is now engineered as a complete system and I want to just highlight a few of those things

Think about it, you mount panels on the roof You can mount panels on the roof at a 10 degree tilt with no tools with helix so we've made putting the panel on the roof snap in Now, you think well is that a big deal? Half the cost of the system for a commercial system is BOS so its a huge deal Another thing we did is we thought about cables We have a lot of cables, we have cables out on modules

they come together and go into a switch box From the switch box, you have cable to the invertor Today you have an electrician up on the roof with five cables They strip each of the cables and then they have to manually mount those cables into the switch box and then into the invertor so what seems kind of obvious now is today, with helix, you plug it into the switch box and plug it into the invertor, take all of that custom labor out of the field and move it into the design of the system

We designed a little cable clip that doesn't seem like a big deal This thing has the last twenty five years in the field and the way the cables are mounted is a big deal because it gets hot and cold up there and so how we route the cables is then thought through completely The mounting of the system with the high efficiency panel will give you 72% more energy over the life of the system The mounting you'll see out at our display, there's these rubber cable mounts, they're 90% made out of renewable rubber The factories that the modules are made of are cradle to cradle

We have cradle to cradle certified certification in our factories Over the course of the time we have together I'll talk a little bit about the software that is included Complete redesign Think of the system simultaneously Optimize the whole thing so we can get cost down and quality up simultaneously

Things have changed a lot in twelve years Eric: Yeah, you guys really started as a hardware company and you've been innovating down to the smallest detail to get that scale and to drive the price down which has obviously been one of the big things around adoption As Mark [inaudible 00:06:51] says software is eating the world so talk a little bit about moving into becoming essentially a software company as well Tom: Yeah, software is going to change everything here too and Robert will have a chance to talk about this a little bit As a customer Robert asks things of Sun Power about how do I know my systems performing? How do I compare my system and then a number of other things and that led us to think of the importance of Sun Power integration and Sun Power as a company started making solar cells then we made the module, then we made systems then we guaranteed energy so we did it in the form of PPA's [inaudible 00:07:31] so we looked more and more like an energy company

As we add software, we become an energy company because we have a thing called energy length that we design with Interknock, a partner of ours, and what that allows a customer to do is Robert made the decision of generating solar energy and of course he wants to know how much am I producing? Am I getting my money back that was committed to so he can get the closed loop and know exactly that and that's sort of obvious but he can also look at load and when you can look at load simultaneously with generation then you can do some really awesome stuff The first obvious thing you can do is, there's a thing called the demand charge and you have the 15 minutes as what sets the rate that you get charged as a commercial customer in a lot of markets What you can do is you can start to change load profiles so you can eliminate that peak 15 minute charge or you can add storage and then you can really get creative you can store solar energy and move your use of solar energy around Of course with software and I can optimize the whole thing First we have to walk before we run so we can do mundane things like prove the payback and then Robert can compare facilities, which ones the best performing, which ones highest energy consumption, he can forecast, he can compare to forecast

Software is gonna be a huge deal Eric: Its a good pivot to Robert You've been with Bed Bath and Beyond since 1998 Solar since 2006, you've got 1550 store in the US and you've got 26 projects with solar and it looks like in four states 17

4 megawatts of solar which is pretty impressive Lets go back though What were your original goals? How did you guys get into this? Robert: So the original goal is how do we generate additional savings for the company and also defend against the rising cost of electricity rates We also are looking at the time at wind and solar but solar seemed to win out because of the fact that it has a long life expectancy 25 years or more and it came with real environmental benefits and energy efficiencies One of the things is that we will continue to do solar because it makes economical sense

I think one driving factor, back in 2006, when I had presented to the company lets do solar and maybe it was just a individual goal of mine At that time I was told putting solar panels on top of a roof top, you're crazy You've got structural issues, concerns about how water drains off the roof, roof warranty issues, voiding the roof warranty I can tell you today of systems that have been in place for at least five and a half years None of those issues had any real impact We've had systems in place that have gone through hurricane force winds to stores in Massachusetts that had record snow falls this year and those panels are still up and running To all those people that were naysayers that said you can 't do it, I just want to say I proved you wrong and you can do it as well Eric: That's great and talk about where you want to go? Where are you going now that you've had this success Robert: Yeah one of the things with us that's difficult is that we have are our stores our leased

We have a 10 year term so how do we get a performer that works and a return on an investment One of the things has always been wordy incentives and a tax credits lied and high cost of energy and so that has worked but how do we try to do more stores? How do we go in areas where there's low costs of energy and maybe the question is now that this helix system is out there, I think that [inaudible 00:11:29] has presented something to us that we've been asking for that can help meet our goals which is to put it on a lot more stores and we do want to put it on a lot more stores I think the helix system, the plug and play, unless you've done a solar system, you don't realize the amount of time and labor is involved and all of the conduit and pulling wires through the conduit to the slip joints, to the bending of the conduit, the connections of the wires into the lugs, talking the lugs, marking the lugs, making sure over time you tuck those lugs Having a plug and play system, I think is really a game changer and really gonna help increase our solar program and do it in more and more stores Eric: What about on the software side? Robert: The software side, I'm very interested to see that

I have one system in Florence, New Jersey where we do over-generate so it generates 100% and there is times where it does over-generate and then at the end of the year I have a [inaudible 00:12:33] where I have to find out from the utility company what is my savings and I don't really have anything except for utility bills that shows in and out usage that will then tell me what my wholesale rate will be at the end On the software side, with energy link that Sun Power has presented, I can physically and look at what my savings is Also, my performance that I had presented to the company, they really only dealt with what is the Kwh savings? Its just on the supply, what about the demand? Never really looked at the demand side, maybe demand was looked at more with now with battery storage but solar does have savings on demand size There is kw savings, I just haven't had anything tangible that would be able to show me that but the energy link will now do that and I think that I'll be able to get more performers approved by showing not only savings on the supply side but also on the demand side Eric: What about multi-facility situations and different states and its pretty complex, is this going to help with that? Robert: Certainly, again its going to come down to the return on an investment and I feel that the fact that the helix system has reduced the time of installation, its going to reduce the cost and therefore the performers will pan out

I really believe that Sun Power has partnered with us and understands our business model because of our lease terms of only ten years and sometimes less If now, they'll really listen to us as far as what it takes for us to achieve our goals Eric: I think what's great and why I'm excited to have you on stage and so thank you for coming out is that, one of the things we hear is we run an executive network of about 85 companies that their chief sustainability officers and you'll have somebody from Apple talk about what they're doing and somebody from Google and then somebody else will say were not that company We don't have that CEO and we don't have that kind of margin, frankly and continued growth so its very refreshing to hear a conversation, well really this is just really about the economics, this makes economic sense for you What are things that you could share with people that are coming from that perspective? What would you offer as advice to people that are trying to take the path you've taken? Robert: I think one of the things to look at is a lot of people don't understand there's an [inaudible 00:14:55] market in a couple of states in New Jersey and Massachusetts and its a very rich incentive and I can tell you that if you're looking for a quick payback and return on investment, those are two great states to go in

I think overall in order to make Bed Bath and Beyond's program work is we need to partner up with someone who can do a complete turn key system I needed someone that can do due diligence up front, handle the design phase, handle the engineering phase, go in for permits, deal with the interconnection, deal with shutdowns, I mean there's times you go in shopping centers where there's multiple stores on a transformer You have to shutdown, you have a grocery store and you have to put them on generator There's a lot of complexities that go on and I think Helix will reduce those complexities and I think partner it with a company with Sun Power which has the turn key system from start to finish and also helping out with the operation of maintenance and be able to see where are savings have been great I think its a no brainer that the helix system is going to be the way of the future and I am hoping to see a lot more solar being presented out there

The other thing I haven't mentioned is there's these environmental attributes that are so real and I think its a great thing for the environment and personally, one of the things I've realized of myself that I wasn't doing, my wife and kids would say to me, "Hey dad, why are you running the water while brushing your teeth?" Didn't realize I was doing such a thing so now I do shut the water off every time I brush my teeth so I feel like I'm doing something that's helping the environment Eric: Were there any unexpected things that came out of this for instance, in the stores, did your employees notice, do they know that you have solar? Does it matter to them? Robert: I gotta tell you when I tell the store managers that the solar is going up on their roof, they are so excited They want to know more about the solar system than the store sales Its kind of infectious to find out they're so interested in knowing that there's something going up on the roof of their building that's going to save the company money Eric: I'm going to ask you the same question, what advice would you give to, you have a variety of people from cities here, you have a variety of people from schools, from personal

What advice would you give to somebody who's looking at scale to go solar? Tom: Things are changing incredibly rapidly and I remember five or six years ago going to see the utility and the utility was sort of asked me to go get them a coffee They didn't take it very seriously at all, like are you kidding me, a solar company wants to come see me? Now, utilities are very big in utility scale solar because costs have come down and its more and more economic and so what I would say to you is don't think you know what solar costs or what the prices are because things have changed quite a bit When you optimize a complete system, the numbers that we can hit with the ITC are very compelling compared to wholesale electricity rates and as Robert mentioned, if you can get a complete system from one company and you get the complete system warrantied so its one stop shopping

One phone call, one service, it all comes from one Technology is changing fast, economics are improving and then how you buy energy is changing really fast so the financing, you can get a loan, you can lease it, you can get a PPA depending on what you want to accomplish If you're buying a long-lasting system like Sun Power you may want to pay cash because then you get the residual value at the end Things changing really fast on the financing side of things that enhance the overall value proposition so sort of, project where things are going to be Consider how the technologies changing and how its actually mainstreaming, not just for for ground mount but for roof top, also

Keep your eye on software because the idea in the old days that you just passively pay your energy bill those days are over You're going to optimize your energy, you're going to know load, you're going to know your solar generation, you're going to be able to optimize the two so stay on top of that because then you can really have control and start to say the trade off of what do I want to spend versus comfort, versus green or carbon emissions, you're going to have total control of that so keep your eyes on that Eric: Well were going to have some questions online but first I have a little quiz for you guys We did a survey and I was just curious to see what sort of adoption rates of this audience so I have the answer to this question but I want to know who thinks that people as What's a higher percent, the individuals in the room having solar on their home or their companies having solar at work? If you think that you guys as an audience of individuals, have it more than companies, raise your hand If you think your company in the room has more solar than the individuals, raise your hand You are a smart group Twenty six percent of the companies represented here have solar installs and we didn't get into size and all that and 16% of you have solar at home so you well higher than average Tom: 74% that don't have solar, there's a booth right out here

Eric: Outside also, you're showing your residential solar outside at the micro grid so we could hook you up both ways So [inaudible 00:20:41] what do we have coming from online? Speaker 1: The first question is for Robert on the retail side of the equation, how do you work through a scenario where the store is in a leased property and you may have to be talking to a building owner Tom, not sure if you have to deal with that in your business model, as well

Robert: Basically on new leases, we do have it in our lease agreement that we are allowed to put solar on the roof We do still want landlords to take on roof responsibility and I wish someone would develop a white paper that would say solar panels do protect the roof I have put solar panels on TPO, PVC, [inaudible 00:21:21] Roofs that were in warranty, out of warranty and today, have no roof leaks on panels that have been installed five and a half years Tom: White paper should be done within a week, Robert Robert: Yes

Eric: Anymore questions from online? Speaker 1: Yeah, were also getting a [inaudible 00:21:39] of activity around energy storage so for both of you, how do you think about that? Tom: Storage, I'll say a few comments and then turn it to Robert because he's got examples and I'm sure you're real interested in that Storage is like solar was five or ten years ago, its a little hard to tell Its just hitting the point where you can get scale and get cost down and then people say well is storage economic and its just like solar was five or ten years ago, it depends It depends on the application Today storage can make sense for example, eliminating demand charges

You can make an economic case to put storage in place just like California or New Jersey, among other states in New York where you can attack the demand charge There are other applications as well, of course where energy really is a meaningful part of your business then you will want to use storage Its a combination of them that I think is going to be really interesting going forward but demand charge is the near term and I'll turn it to Robert Robert: We have four locations where we�re doing storage I wish we had done it in one facility and stocked in California where we had a large warehouse and we did put solar but the issue is that we run a tariff that is not beneficial to the solar and in order to get off of it, we should have done battery storage which would have kept our kw demand down which would have put us into a different tariff, which would have been beneficial to get us additional savings of solar so I think they should work in a hand and hand and definitely provide additional savings

Eric: Great, well that is really our time Please join me in thanking our panelists here, Tom and Robert Thank you Appreciate it

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