Strategic Budget Calculations

Strategic Budget Calculations, a Tool for Financial Feasibility

In July of 2017, the City Council of San Luis Obispo will be begin testing the feasibility of transitioning the City of SLO into a net zero energy entity. Zero net energy is achieved when the amount of energy that is used is approximately equal to the amount of renewable energy produced on site. In the terms of this project we are taking the term “energy” to mean electricity and does not include replacing the natural gas used in buildings for heating and water. We are producing a report that discusses how zero net energy can be achieved in San Luis Obispo via installation of solar facilities. In order to get an idea of what zero net energy might look like, we will be using the Santa Barbara County Renewable Energy Blueprint report [1] created by Pete Schwartz [2] in 2007 as a reference. Pete Schwartz performed similar calculations for the Community Environmental Council [3] for Santa Barbara. Our goal is not to reproduce a replica of this report, but rather create a tool that can be used by future policy makers and green energy advocates to approximate the cost and amount of energy needed to power city of San Luis Obispo infrastructure using only renewable energy as our energy needs change. For example, as the cost of electricity increases or average efficiency increases, this tool can accommodate any changes that need to be made in our calculations.

Problem Statement
Our mission is create a tool that can be used to calculate the finances and logistics necessary for the city of San Luis Obispo to achieve zero net energy. This tool is setup to handle only the city’s infrastructure which includes such things as fire stations, parking garages, city hall, and utilities. In addition to the tool, which helps calculate costs and feasibility of solar for the city, we have also used data given to us by the city to create a rough projection of the city’s energy usage and what that would translate to in terms of megatons of CO2 released. This is approximated using California’s energy usage by source. Our tool is for the most part focused on the financial viability of implementing solar, while such things as energy conservation and efficiency will not be discussed in much detail in this report. Instead please see a concurrent report being put together by other students seen here [4] about how to improve the building efficiency for the city of SLO.

Section 1: Demographics

It is important to understand the demographics of San Luis Obispo, even though our project focuses primarily on conversion of city infrastructural non renewable energy usage. This is because the decision to or not to invest in the solar project relies heavily on the opinions and ideals of the residents of San Luis Obispo.

San Luis Obispo County is currently 245 years old with a population of over 280,000 residents in the entire county. The scope of this project is limited to the city, hence we will be focusing on the 47,500 people that live within the city. Using statistics from the U.S. Census Bureau’s website [5] we can see how San Luis Obispo stacks up against Santa Barbara where Prof. Schwartz did his original Environmental Report:

slo bs sb.JPG

Figure 1
Figure 1, we see a quick comparison of the cities of Santa Barbara and San Luis Obispo. Using this comparison we can see that that while Santa Barbara is almost twice as big as SLO they are comparable in most things. The one big difference that can be seen in these two cities is that the median household income is much lower in SLO than Santa Barbara. This is likely due to SLO being a smaller college town with a large student population that would drag down that average. Otherwise SLO beats Santa Barbara in overall education level which would mean that as a whole the people of SLO (versus SB) may have a greater understanding/ appreciation for the new alternative energy infrastructure be ing proposed. Knowing these demographics and the overall wealth (or lack thereof) in SLO is a factor in whether it is appropriate/feasible to invest in these technologies at this time.

slo energy prices.JPG

Figure 2
In Figure 2, we see that energy in SLO is predominantly more expensive than the National and California average. What this means for our project is that more expensive energy options such as batteries could potentially be used since the acceptable price point increases as the average electricity rate increases. Basically what this means is that it would be more economically feasible for us to create an expensive solar farm from which we would purchase energy than it would be in a state such as Washington where electricity prices are about half as much as ours due to the abundant availability of hydro power.

Gapminder Graph PHYS 310.png

Figure 3 [6]
This graph shows the energy usage per person compared to the income per person. The size of the dots are proportional to the population of each of the country, and the colors of the dots refer to the particular region of the world where that country is located. Certain countries were highlighted due to their high population, and influence in the world’s economy. It is evident that the population of a country is not proportional to the energy use per capita. What is for certain, however, is that higher income per individual correlates to higher energy use per person. Wealthier countries such as Japan, France, and Germany all consume large amounts of energy with respect to their population. But the U.S. takes the cake, consuming more energy per person than almost anyone. According to data taken from the U.S. Census Bureau [4], the population of the U.S. in 2010 (the same date as this graph) was around 309 million. If we take the energy used in 2010, at around 9500 TW, and divide this number by the population, we get around 310 million Watts used per person in one year. Considering the fact that the majority of our energy comes from non-renewables, there is a clear need to not only alter how our energy is produced, but enact conservation so as to decouple the relationship between income and energy use. This is true not only on a national or global scale, but also on a local scale. In particular, we can use and produce our energy more intelligently right here in San Luis Obispo.

Section 2: Solar in San Luis Obispo

Included here is basic information about Solar in San Luis Obispo. We feel that this information is relevant because even if a large scale project to abate 100% of the city’s non renewable energy usage was implemented, (according to RCE solar) there is not enough net area available on the roofs of the facilities to meet the energy needs via solar. Because of this, it may be wise for the city to consider smaller solar projects that could be build on a case by case basis. Figure 4 from Section 3 shows the costs of smaller abatement fractions as a function of year.


  • 30% federal incentive extended to 2019
  • High grid electricity costs ($0.17 per kilowatt-hour) make solar payback times shorter
  • Quickly-rising electricity costs (+13% in the last 5 years)
  • Exceptional policy scores: interconnection (A) | net metering (A)
  • Much higher than average sunshine (26.8% above average)


  • Mediocre state financial incentives (#28 out of 50)
  • Below-average electricity usage (557 kWh per month) means fewer opportunities for savings
  • A lot of land can be used up in creating a dedicated solar farm

Solar is 41.9% more cost effective than the rest of the nation and will pay itself back in around 8 years 7 months for a home buyer. We like to see return times (without state incentives) under 20 years. [7]

Clearly their strenuous calculations will add up, but we want to double-stamp this optimistic plea for solar. Our first step is to gather average data points from around the U.S., and then from SLO.

Residential 5 kW system

Estimated system cost: $20,950
(-) Federal tax credit: 30% with no maximum
Final cost after tax credits: $14,665
Est. energy savings per year: $1,706
Time to recover costs: 8 years 7 months
30-year savings: $36,515

Commercial 50 kW system

Estimated system cost: $193,500
(-) Federal tax credit: 30% with no maximum
Final cost after tax credits: $135,450
Est. energy savings per year: $17,057
Time to recover costs: 7 years 11 months
30-year savings: $376,269

We can deduce that in this certain instance we can save around a 7.5% bonus on the installation costs & energy output differentials simply by investing more substantially (10 times the array size). This jump in system-size could be seen as an opportunity for collaborative neighborhood effort to sustainably exist as a community. The implications of this scaled investment could draw back to a point that Pete V. Schwartz made in class. Saying to the effect that we are in a new era, one that is socially driven to level-up among the ranks of their colleagues and that now there is the chance to do this by making the switch to such an environmentally-responsible way of living. Decision Data [8] has additional data on Solar Panel acquisition in San Luis Obispo and goes into further details of solar such as how to get a solar installation quoted for your individual needs. The website also includes several links to companies that finance and distribute solar arrays.

Other Logistics
“At the time of this writing, the installed cost of solar panels was between $7-$9 per watt: A 5 kW system would cost around $25,000-$35,000. Many utility companies offer incentives, and some subsidize as much as 50% of system costs.” [8]

Estimating the numbers of an average Solar Panel Residential-Array (5 kW) to be ranging $25,000-$35,000, we can now use this as a reference point to guide our curiosity that roams among our vast amount of renewable-energy options. We now locate the average cost of buying from the grid (fossil-fuel energy) for a (let’s say) 30-yr span. We can also explore certain advertised deals that can add to our arsenal attack toward the SLO’s net-zero goal.

Section 3: The Tool Itself

Link to Tool: (Still in development)
This Excel spreadsheet has several tabs in which we do estimations and calculations that can be later built upon in order to create an accurate picture of the CIty of SLO. Additionally there are lists of assumptions and hints on how to use the tool that are conveniently located in the spreadsheet.


  1. Projected Energy Use
  2. Solar Budget Calculations
  3. Constants, Data, and Fits
  4. Assumptions and Additional Notes

Projected Energy Use

projected energy use.JPG

Figure 3: Projected Energy Use

Note: A 30 year forecast was used in order to match the data from NREL’s Solar Energy Cost Projection Report, and the exponential decay used to model future consumption likely undershoots usage especially past 2025. Accounting for this however, would only make investment in NR Energy Abatement via solar more fiscally sound.

Solar Budget Calculations:

Solar Budget Calculations.JPG

Figure 4: Amount of money spent with respect to investment in solar over time.

Net savings for the city can be seen on the graph above as the difference between the the blue data set representing no usage of solar to abate non renewables, and any of the other data sets. It is noteworthy that after approximately 2025, the city will begin saving money regardless the fraction of Non Renewable energy that is abated.
Assumptions and Notes:

1. That SLO City’s energy use distribution (by source) matches that of California (info from EIA website)
2. That the percentage of SLO City’s energy coming from renewables is all locally produced (Topaz solar, etc..)
3. The increasing trend in energy use grows exponentially in the same fashion as the SLO Energy Wise Plan suggests for all of SLO county
4. That certain types of California Energy sources are not used to produce electricity for SLO City (jet fuel and gasoline for example)
5. That the fractional contribution for the various fuel types doesn’t change over time
6. That the trend in the usage of Energy follows an exponential decay.
7. That the operation and maintenance cost is negligible for the solar panels
8. That the city already has land available to build such a facility (~700,00sq. ft.) The amount of real estate available on the rooftops of current buildings and facilities in the city is enough to cover around 20% of the 5 MWh facility. That means that the total area required to purchase is 560,000 square feet. Prices of land in SLO are indeed expensive, although less so for areas that do not contain building. There are currently listings , for example, that cost around $700,000 and provide roughly three quarters of the land that we would require. Additionally, this land is within a few miles of the city, meaning that line losses could be minimized. There are likely cheaper options available, although such options may be too far away from the city to be used effectively. As for using additional locations such as parking structures, this could be possible, although not extremely useful. There are few parking structures in the city to begin with, which would not provide a large amount of solar. Given the cost of building shade over parking lots, it would still be far less expensive to simply buy land strictly for the purpose of creating solar power.
9. That little storage is required. On average, each night we only use about half of the electricity that we use during the day. That means only around one third of the electricity has to be stored. If we assume lithium ion batteries cost about $.50 per Wh, and we are storing about 1.6 MWh of energy, then it could potentially cost $800,000 worth of batteries for storage during the night.These batteries would need to be replaced every 3 or so years.

1. This is for Installation and doesn’t account for the costs of storing the energy for use at night (though we are assuming some of this will come from the grid, and that that fraction is allready renewable)
2. This does not account for dispatchment costs, meaning there isn’t enough rooftop space for these buildings power themselves, or at least should be analyzed on a case by case basis. This is what it would cost to put the panels all together out in a field somewhere.
3. We used the cost per kwh from NREL’s report for Bakersfield CA’s numbers, slo may be slightly more or less.
4. There would be costs for maintaining the panels, and for making sure the electricity produced is actually usable by the buildings it would be going to.
5. This is also not factoring in the continued payment for the fraction of already renewable energy use.
6. Moving forward in attaining zero net energy the use of natural gas in buildings would have to be phased out and then replaced with electrical system. This would require a great deal more electrical use by the city infrastructure as natural gas can be used much cheaper for heating than electricity unless the electricity being used is harvested from solar panels in which case it would be nearly free and carbon free. This report did not have the resources and time to cover the analysis of replacing natural gas and so this would be an excellent issue for a future project group to correct.

*NOTE: According to a consultant from RCE solar, we would need on the order of 5 times the amount of roof space, and we would need to make sure all of the building’s roofs were solar ready, so urban placement is probably not feasible.

Notes for Continued Work
1. Make more accurate assumptions about energy percentage usage for SLO.
2. Incorporate the Dispatch Cost of Solar Distribution and storage via batteries.
3. Come up with a more accurate figure for how SLO city’s net non-renewable energy usage will change over time (beyond a perhaps unrealistic exponential decay).
4. Get a more accurate contractor quote for the job.

About the members of this group:

  • Adam Berg is a second year Electrical Engineer at Cal Poly who hopes to pursue a career in the power industry.
  • Nick Stair is a fourth year Chemistry Physics double major from Paso Robles CA who will pursuing his PhD in Chemistry at Emory University next fall.
  • Carlton Bjork hopes to learn what it takes to protect and nourish the environment.
  • Austin Kurth is a second year Electrical Engineer at Cal Poly from Sacramento, hoping to pursue a career in the power industry.

The members of our group, from left to right, are Adam Berg, Nick Stair, Carlton Bjork, and Austin Kurth.

General References:






[7] {dated: Apr 25, 2016} [web link to Solar Power Authority web site:


References for Budget Tool: