Energy Retrofit Policy Spotlight: Interview with Barry Cinnamon Posted on Oct 12, 2021

Last month, we began a series exploring policies that would solve the problem of the excessively high costs and long timelines required to retrofit existing buildings to become “net zero emission” properties.  In this article, you can read our first interview with leading industry expert Barry Cinnamon. 

Currently, Mr. Cinnamon runs Cinnamon Energy, a solar and storage installation company based in the Silicon Valley region of California.  Over the last 40 years, Mr. Cinnamon has led a publicly traded solar installer, manufacturer and distributor, designed a rackless solar mounting system, served on the Boards of CALSSA and SEIA, and helped create critical sections of the California Solar Rights Act.

Policies that decrease utility delays and costs to upgrade individual and neighborhood electrical infrastructure would dramatically accelerate the clean energy retrofit market. 

In our interview with Mr. Cinnamon, he noted that significant utility delays and costs are one of the largest obstacles facing the clean-energy retrofit market.  He thinks that if property owners want to “do it all,” cleantech retrofits must be done in succession, beginning with upgrading the properties’ electrical infrastructure.  For instance, if a property owner wants to net zero their property, this means that first they must plan ahead to make sure that the building’s electric infrastructure can handle the increased load needed for a retrofit.  

Clean technologies now exist, but the skills to install them often cannot be found.

Mr. Cinnamon noted that the technologies to retrofit properties to “net zero emissions” now exist, but the skills to install them are often not available or impossible to find for property owners.  For instance, to install an electric heat-pump hot water heater, three trades are needed: an electrician, HVAC contractor and a plumber.  Any one of these contractors typically does not have all of the skills required.  Of course, this also creates an opportunity for the people and companies who can do it all.

Policies that support property owners’ needs to be agile in a rapidly changing technological landscape are critical for clean energy retrofits.  

Mr. Cinnamon finds that many property owners become confused, and a retrofit will not happen, if he suggests a comprehensive energy retrofit solution: e.g., one that includes a full swap out of all appliances in addition to the installation of an individual solar and storage microgrid.  As a result, he usually suggests to property owners that they start with a solar installation, and then, sequentially swap out their high-emission technologies for lower emissions ones as they break.  If this approach is taken, however, the property owner must have already planned ahead or they could be forced into replacing the broken appliance with another high emission one when faced with a three to nine month wait while they navigate upgrading their electrical panel, or worse, a neighborhood transformer with their utility.

Solar systems should be sized for existing load, but also designed to accommodate future additions and technology upgrades, especially as some manufacturers will go out of business. 

From Mr. Cinnamon’s perspective, when approaching a new retrofit property the best approach is to size the solar and storage system for the existing demand while planning to add panels and storage down the road as retrofits are made.  He suggests designing solar and storage systems for the property’s pre-retrofit energy demand and with the ability to accommodate additional panels and storage in the very near future.  

For a full transcript of our interview with Barry Cinnamon, please see the full text of our interview below. [1] 

Question:  How long have you worked in solar, what regions have you served over the course of your career and how has your business evolved over the last 20 years?

Cinnamon’s Response:

I started in solar in College doing solar thermal. When I graduated from college in 1980, I went to work for a company making an evacuated tube solar thermal collector. It was actually kind of similar to Solyndra, except we were heating water instead of trying to capture photons and electrons. But, when the solar tax credit, and this was in Boston, in Cambridge, when the solar tax credit went away, at least on the East Coast, the solar business kind of disappeared. Oil prices went down.

Reagan fueled the solar tax credit, took the solar panels off the White House, and I ended up just doing a lot of energy conservation work, pioneering work on ground source heat pumps. But, my passion was always solar, and I couldn't find a job in that. So I ended up going to business school for a couple of years, graduated in ‘86 with an MBA. I still couldn't find a job in solar, so I spent the next 15 years in the software wilderness, had a good track record of successes there.

I was running an Internet company in 2000 and 2001. The crash happened, and I was trying to figure out what to do. I had moved to California at that point after buying a software company based in San Jose. I saw that we were in the middle of the energy crisis. This was 2001. Prices are going up like crazy. And I was wondering, how is that solar stuff working? I started reading about it. And I read an article in the Mercury News about Power Light putting solar on Clint Eastwood’s house, I think in Carmel, and I looked into it and I said, “Let me see what's involved in putting it on my house in Saratoga.”

So, I started to crunch through the numbers and I said, “Gee, if you look at it the right way and do a good economic analysis, it's pretty good with the rebates and everything and the higher electric rates.” I had three companies come over to my house to give me quotes, and none of them understood how to portray this from an economic standpoint. So I ended up trying to sell solar to some people.

First, I put together a website.  Then, people started going to it and I started getting into the business of selling PV systems on a roof. I partnered with a local contractor. We started doing installations and then it just grew from there. Started in Saratoga. I got kicked out of my garage in Saratoga because I was recycling so much cardboard every Sunday night.  The town said that I had to move, so I moved to Los Gatos, and I’ve been in and out of Los Gatos ever since.

So Akeena moved to Los Gatos in 2002. I had a little bit of an incident where we had to change the Solar Rights Act so that we can put solar on our roof. But, we became kind of dominant in Silicon Valley, opened up offices around the Bay Area around California in 2003. I opened up an office in New Jersey, which is where I was born and raised. Eventually, we had offices on and off in Connecticut, New York, New Jersey, Pennsylvania, Colorado, and did some work in Hawaii, Arizona, and I ended up going public through a reverse merger.

Kind of like a speck at the time in 2006, and we had a pretty good track record. I started focusing on technology because I saw that having a technological advantage would be good. I developed the first integrated, rackless solar mounting product, and that grew. We partnered with Westinghouse in 2010 to create Westinghouse Solar, and the whole company was eventually sold to a group in Australia.

I founded Cinnamon Energy in 2012 and started doing installations again in 2013. Now, we're very happily doing residential and commercial solar and storage installations in the Silicon Valley Area. And that's kind of what we're doing. So it's kind of a long story, but it's been, I don't know, 40 something years in solar, right?

Question: In general, how important do you consider state and federal policies to your business?  And, specifically, what current policies do you consider to be the most important ones for the growth of your business and for your customers?

Cinnamon’s Response:

The most important policy is net metering that allows customers to basically benefit economically from the energy that they send back to the grid. That's, like, number one, most important.

The second most important policy that's made a big difference in the industry is the investment tax credit, which, we worked really hard to get uncapped through the efforts of our legal counsel, Angela Lipanovich, at the time when she worked at Akeena. We were successful in getting the residential ITC uncapped, I think it was in 2008 by George Bush as part of the Tarp program. That was a 30% uncapped tax credit. It made a big, big difference, and it spurred the residential business.  The investment tax credit was always on uncapped for commercial and utility scale.

Those are the two biggest policy drivers, certainly, they apply across the country. But the economics of solar are really dictated by the cost of energy. And the electric rates vary significantly all around the country. So when you're in a place with cheap electricity, let's say, well, I'll give you an example. California rates are $0.30 a kilowatt hour. We're looking at payback of five to eight years for a simple rooftop solar system. But if you're in a location where electric rates are $0.15 a kilowatt hour, assuming that the installation cost is the same, which it often is not.  Then you're looking at much longer payback. Sometimes twice as long.

So, it's the local cost of electricity that has the biggest impact on the local payback. And that's where state incentives kick in. If you have a state incentive, that's some kind of rebate program, which many States have had, including California, that helps get customers into the seven to ten year payback range where sales really start to take off. Those are the big incentives that I see that make a big difference. 

Question: Do you ever recommend building owners make retrofits prior to installing solar?  How do you plan out a solar system prior to the building owner making major building retrofits? For example, do you look at a building’s energy demands and potential for electrification as a whole or do you simply review historical utility bills and recommend a solar and storage solution for the existing energy needs?

Cinnamon’s Response:

That's a really good question. And you identify the two ways to pursue it, which is really to do a thorough analysis. You look at what their energy needs are, how much solar they need, and what retrofits are going to be necessary to electrify, which is usually 80% HVAC. And, then you put together a plan that way. I'll be candid with you. That doesn't seem to work. It doesn't work for us because when we focus on solar, storage and electrical upgrades, it scares the customer. 

So, the way we approach it, because we've got to stay in business and we also want to do the right thing for the customers, we basically look at the customer’s electricity requirements and see how big a solar system they need to put in. Let's say it's a six kilowatt system, we always offer and explain the benefits, which are huge. I mean, we've got a battery attachment rate that's almost 60%.  Sixty percent of our customers right now are buying at least one battery with their systems. So, let's say in order to zero out your bill, you need a six kilowatt system. But wait, you're probably going to buy an EV or you marry. And when you replace your old gas furnace or hot water heater or put an electric cooktop inductor cook top, you're going to need more energy.  We quite often discuss with the customer the benefits of slightly oversizing the system and then also designing the system so that it's easy for them to add more panels in the future.

That's the way we approach it. We don't do HVAC. And because of that, we kind of don't get enmeshed in the whole upgrade of the house. There's really too many pieces involved with that.

Question: Clearly, the upfront costs for low-emission electric building retrofits technologies are higher compared to high-emission technologies, but how are the long-term costs comparable?

Cinnamon’s Response:

So, I'm going to push back a little bit on your premise that clearly it's more expensive. Let's just look at the items individually. An induction cooktop is maybe $500 more than replacing it with a nice gas cooktop.  Heat pump water heaters, when I priced them out before, they were about $1,500 or $2,000 more. And a lot of that was just because of the electrical work you have to do. But then there are rebates for that. So, if you're in an area that has rebates, which there are, it's the same for HVAC.

Here's the interesting thing. If your gas furnace dies and you have an old compressor for your air conditioner it is in some ways cheaper to put in one heat pump, then replace both of those appliances. They will both die. When I put in my heat pump HVAC system, I completely took out the gas furnace cap at the chimney, took out that space, and then all I did was replace the compressor and the air handler with a heat pump, and it did everything. So it was cheaper than replacing both of those appliances, which will inevitably have to be replaced.

The big cost in electrifying, unfortunately, is not replacing the individual appliances. But in an older home, you need to upgrade to a 200 amp electric service right now. I happened to be driving up to a friend in San Anselmo who wanted to put in solar and a battery. He said he is only going to do it with us. And, he has 100 amp electric service, which means that we can only put in a tiny solar system and he's got a Tesla.

He needs a lot of power. So he has to upgrade his electric service. We do that all the time now. We have to update the service panel and upgrade the electrical service. And we went through the paperwork with PG&E to update that. We know it's going to be a six month process costing $5,000 to $10,000. And that's for an overhead service. And PG&E told him we need to upgrade the transformer in the neighborhood. They can't put in solar until we get around to upgrading the transformer.

And he got mad because he said, all of my neighbors have solar and they just put it in and they love it. Why do I have to be delayed? I explained to him the process where a transformer, according to PG&E is overloaded. Basically, we have to either derate his system or put in the wrong inverter, a tiny inverter initially, and then subsequently do the electrical upgrade.

So it's upgrading the electrical service. It takes a lot of time. The delays and costs with PG&E are ridiculously off the charts. We're doing a job in Gilroy. It's going on twelve months now, and PG&E requires, like, three or four inspections. Every inspection is delayed by three or four weeks, and the customers get very angry. That system is going to cost $15,000 to upgrade because it's underground. So that's where the biggest cost factor is for building electrification for an old building.

Question: What new state and federal policies do you think could have the biggest impact to help grow the cleantech retrofit market for building electrification and solar?   How should policymakers align the policy goals of building electrification and solar to avoid a competition for available funds to support those markets?

Cinnamon’s Response:

Well, let's put solar aside. When we're looking at building electrification, the building needs bigger electrical wires going into it. So in order to streamline building electrification on a widespread scale, you need to solve the problem of utility delays and high costs. That's what needs to be done. If that is solved, we're going to just limp along forever. Look at a customer. They have a ten year old gas furnace and a 13 year old gas hot water heater. When the gas hot water heater goes out, they want to put in a heat pump, water heater.

There's $2,500 rebate. Great idea. They call up a plumber. He can do it in a week. They call up the utility and it's going to take three to six months to upgrade the wiring so that they can put that in. Same thing goes for the heat pump HVAC system. So that's the biggest delay. The utilities, and I have no idea why, because there's actually some incentive for them to sell more electricity, but they have a broken process to upgrade the wires to homes. What I have discussed with some people in California is coming up with a program to do this quickly in a neighborhood.  So instead of taking six months and $10,000, maybe you could do a whole neighborhood in three months and $5,000. That would make a big difference. 

Question: How does a building owner, whether residential or commercial, do it all?  On the one hand, they want to make everything electric, including their transportation.  On the other hand they want to be zero carbon emission with their electric supply.  How do they make it work financially when they have to do a whole property retrofit which might cost hundreds of thousands of dollars?

Cinnamon’s Response:

If you were to say I want to completely electrify my home, first of all, there are no contractors that I know that are going to do everything. It becomes a little bit of a challenge on a general contracting basis for a homeowner to get three quotes for the heat pump water heater, get three quotes for solar, get three quotes for insulating the attic, get three quotes for the HVAC, et cetera.

It takes a little bit of time. But, that's the best way, to do these things incrementally. The other thing that is really clear is you should replace these appliances not all at once.  Although you can if you have a lot of money. But the more rational way to do it is just to replace them as they fail. If you have a five year old gas hot water heater, wait till it breaks and then put in a heat pump water heater.

But make sure that you have the 200 amp electrical service done in advance. Sequencing is the best way to do it. First, put in the solar and the storage system. Now get the tax credit on that and while you're doing that work, upgrade your electric service because the tax credit applies to that. And, then as your appliances die, you replace those one by one. The other good thing to do at the beginning is include an electric EV charger as part of the solar system. You'll get a tax credit on that too and the installation cost lower if it's done as part of the solar system.

So that's the way I would recommend for people. The other thing that I would recommend doing is if you have old installation in your roof, add insulation.  Replace that and any old insulation in your walls.  There's not a lot you could do about that because it'll cost you $15,000 to fix. And, at least in the Bay Area, if you have single glazed windows, it's not worth putting in double glazed windows.

Unless you have a lot of money to pay for upgrading the building, you're better off just beginning with a few more solar bills. In the past, paying for energy audits and things like that really got in the way of our being efficient on doing solar installations.

I don't think it's a viable business model for somebody to be a general contractor and say we're going to do everything with respect to retrofits. The reason why, I mean, maybe there are some people that are going to say I don't want to mess with it, I have the extra money and I'm going to just have one thing. But, it's going to be more efficient, faster and cheaper to work with multiple contractors.  And, I don't think it's a viable business model for one contractor to do everything. You're going to end up with a very customized end product. It’s just not a viable business model.

If you do any major work on your home, you're going to hire a general contractor. That general contractor is going to hire an electrician who is going to hire a plumber. He's going to have his HVAC expert. So, that turns out to be the most efficient way for contractors to do this. Having all of those trades under one roof with a truck with plumbing equipment on it, the truck with solar equipment on it, and the truck with HVAC equipment on it, that doesn't turn out to be cost effective because you're not going to do everything on every job.

And the contractors that do each particular thing, they'll just be better. So, my advice comes back to starting with the solar contractor and getting a good solar contractor that can size the system properly for what you need now. And it's not hard for that solar contractor to size it for electrification. At the same time, get the bids for HVAC, for plumbing et cetera. That's my recommendation.

Question: How should property owners deal with the fact that there might not be qualified installers for building electrification technologies in their area or they might be able to get the quotes they need for such technologies like heat pumps heating systems, etc?

Cinnamon’s Response:

When I asked the plumbers to put in a heat up water heater, they said, yeah, we do that. But they didn't even know what I was talking about. They were thinking about the flash water heaters. That is the instant hot water heaters, which are not that energy efficient. So I said, listen, you do the tank part and I'll do the electrical part.

So that's the way we ended up doing it. I don't think he ever did another one because he just wasn't that familiar with them. You have to tell the contractors what you want and don't let them try and talk you into something that's convenient for them. That's what happened with me. It's more convenient for him to put in a flash hot water heater. That's what he does all the time. No, that's not what I wanted. So you have to tell him.  I had the same experience with a heat pump HVAC system.

I wanted to get an efficient system that has a variable speed compressor in two zones, and they were going to give me two of these big clunky things that were not going to be as efficient and they're cheaper. And it was something that they did all the time. But I finally had to say to my contractor, no, I want a very efficient system. So that was two or three years ago. There's a lot more information and knowledge about this stuff now. 

Silicon Valley Clean Energy has an entire course that contractors can get paid to listen to and watch that educates them on all these technologies. It's pretty cool.

 

[1] This transcript was generated by an automatic transcription service and may contain minor typographical and technical errors due to the audio quality of the recording.