GREEN WITH SOLAR ENVY
by Larry K. Fried
GREEN WITH SOLAR ENVY
by Larry K. Fried
“I want solar too,” the neighbor lady cried gleefully from her back deck. She stood just a few feet away from the rooftop where installers from the Green Store were screwing down new PV panels on the rooftop of the south Eugene home of Damond and Laura Morris. This was the scene that first grabbed my attention when I arrived at their home. The scene lent a keen insight into the dynamic and positive impact a solar install could have on a neighborhood or community.
The Morris’s are participants in Solarize Eugene, a limited time program designed to make both solar photovoltaic (PV )and solar water residential installs more affordable to EWEB (Eugene Water & Electric Board) electrical customers. Solarize Eugene combines bulk purchasing power with existing tax credits and EWEB incentives to bring the final net cost of purchasing a base residential net-metered PV system to a previously unheard of price level. Solarize Eugene, which will have ended enrollment by the time you read this article, is one of a number of Solarize programs in communities around Oregon that have been instituted or are forthcoming. Each uses the bulk purchasing model, but is in other ways unique in its details to the city or neighborhood that organizes it.
According to the Solar Oregon website (solaroregon.org), the first Solarize program began as a neighborhood project in Southeast Portland, and quickly grew from the initially projected 20-30 installs to around 120 residential installs in a period of about six months. “This unexpected success has led to more projects under way now in other neighborhoods of Portland and other cities in Oregon.” At the time of this writing, Solarize Salem is about to launch their solar PV program for the entire mid-Willamette Valley, including Marion, Benton, Yamhill, Polk and Linn counties. Solarize South Oregon, which includes Cottage Grove and other parts of Southern Lane County is also just coming online.
It a Good Time to Solarize
“It’s one of the best times to invest in solar,” says Don Hudgins of Solarize Salem. “Prices have come way down.” Sarah Mazze, Solarize Eugene Program Manager, agrees, “Even without the EWEB incentive, this is a great time to solarize. According to Mazze, PV panels are about half the price they were a few years ago and they may actually go up in price in the near future. The reason is that the US is adding unfair trade penalty tariffs to PV panels manufactured in China. China has been accused of dumping, undercutting US manufacturers struggling to sell at a profit. With the new tariffs added, all manufacturers may raise the prices on their panels to fair market value. Still, this is all highly speculative, as the level of the tariffs have not yet been set, and won’t fully go into effect until 2013.
Prices have been set for Solarize Salem. “We think we are going to be at the lowest prices in the country,” says Hudgins. The two Solarize Salem contractors will offer 2-5kw PV systems at just $4.15 per watt, and $4.05 for larger systems of over 5kw. Those prices are the purchase price to own a system, but Solarize Salem is also offering a lease program option through one of their contractors. The lease option includes maintenance over the life of the lease. The cost factor of a system that is being leased is 35 cents additional per watt for participants in this program. Of course, these prices are the upfront cost, and are prior to any tax credits and incentives that the customer receives. Depending on the tax situation and incentives available, these credits and incentives can cover 80-90% or more of the cost of the PV system. For the customer, the payback on such a system can be as little as 5 years. After that it is free energy generation.
“It’s fantastic!” exclaimed Damond Morris whose estimate for a final cost on his 2.94 kw system was around $1,270. That is less than 9% (91% reduction) of the total initial cost estimate of $14,380 for his install. The final cost includes receiving an EWEB incentive of $4,108 (to paid directly to the installer), a federal tax credit of $3,081 (can be taken in one year) and an Oregon tax credit of $5,922 (must be taken over 4 years). Not included in this cost calculation are an upgraded electrical panel the Morris family opted for, and the federal tax consequences of taking the Oregon tax credit, but more on the complicated nature of tax credits later.
Cost, though very important, wasn’t the only factor in the decision to go solar for Laura and Damond. In fact, they opted to pay a little more and purchase Oregon-made solar panels by SolarWorld, rather than the less expensive China-made panels also offered as option in the Solarize Eugene program. The couple feels really good about supporting Oregon jobs, and a local Eugene-based business, such as the Green Store. According to Mazze, the Morris family was typical of the first round Solarize Eugene participants. “All but one or maybe two PV installs are using the SolarWorld panels.” The Solarize Salem prices quoted above are using SolarWorld panels, which apparently are the only panels the program will offer participants.
All five of the Solarize Eugene PV installers are well established Eugene-based businesses, and three of them – Green Store, Pacific Solar and Rain, and Solar Assist , are current Natural Choice Directory advertising members. “These five competitors have agreed to cooperate and work together,” Mazze explained. They had to agree on a cost structure they could all live with, and to share the customer base that the program generated. Solarize Salem is working with two contractors. One, focused on purchased-based systems, is based in Albany, while the other company, focused on solar leasing, is operating in parts of several states, including Oregon.
A lot of people may question whether there really is enough sun in Western Oregon to justify solar. It turns out that, because of our long sunny summer days, we receive as much annual solar resource as the national average. According to Solarize Eugene, “there are more than 17,000 Oregon households” using solar energy to generate electricity or heat water. Germany is the world’s leader in solar installations per capita, yet Berlin receives less sun than Oregon.
While un-shaded southern roof exposure is the ideal, western exposure is almost as good. The Morris installation is on a western facing roof, and according to Damon, tested at 88-89% total solar resource fraction (TSRF). The EWEB incentive requires 85% TSRF, which means that 85% of the solar energy at your location over a year is available to the solar collector. Even eastern facing exposure can be used in some instances, although it is unlikely to meet that 85% threshold. Roof space required for PV is about 100 square feet per KW(1000 watts), so a 3 KW system (12 panels) like the Morris’s requires about 300 square feet. If there is not enough roof space with good exposure, there are other options to consider, such as a solar cabana or a ground mounted system in the yard. I personally lack enough good roof space at my home, and am investigating the feasibility of installing a solar carport over my short driveway.
Paying for Solar
Even with a net zero cost after five years for the Morris family, they still have a hefty upfront cash amount to pay – something in the range of $10,000. Many property owners are not going to be able to manage that kind of upfront payment from savings. Fortunately, there are several options for solar financing. For PV system purchases there are home improvement loans available through credit unions and banks. Umpqua Bank has a targeted program, called GreenStreet Lending, which offers low interest lending to both homeowners and small businesses for all kinds of energy efficiency and renewable energy projects, including PV installs and solar water collectors. Some utilities also offer low interest loans for these systems. For example Lane Electric offers a 0% loan of up to $9,000 to their customers.
There is also the option to lease a PV system, and there are now two or three solar leasing companies operating in Oregon. None of these companies are locally-based, and some rely on the Chinese made panels. A solar lease can require as little as $0 down (the real down payment can be much higher) plus a monthly fee that is offset by the amount of savings you get on your electric bill. The terms of the lease might run for 15 years, at which time you can either purchase the equipment at a prorated rate, or the company can remove the system. Solar leases are still eligible for the Oregon state and federal tax credits, although they usually have to be passed on to the leasing company as part of the deal.
Incentives and Tax Credits
Oregon residents have some of the best renewable energy incentives available in the country, partly as a result of the 2007 law that mandated that investor-owned utilities reach certain goals for renewable energy in their portfolios. For large utilities this level is 25% by 2025. The incentives include a 30% federal tax credit on the cost (labor and parts) of a PV system with no limit on the amount. This tax credit can be taken in one year. Oregon also has a tax credit for residential solar PV systems that is based on the size of the system – currently $2.10 per watt of installed capacity (DC), with a maximum of $6,000. The credit can be taken at a maximum of $1,500 per year, so it takes four years to use the entire maximum credit.
Oregon state income tax is deductible from your federal income, so taking an Oregon tax credit will result in increased federal tax liability, decreasing but not eliminating your overall savings. For example, say you are at the 25% federal tax rate level. If you take a $4,000 Oregon tax credit, you will pay an additional $1,000 ($4,000 x .25) in federal income taxes. You might want to consult your tax advisor to fully understand your tax credit eligibility and overall tax liabilities with respect to purchasing or leasing a solar system.
Willamette Valley residents may also be able to access utility-based cash incentives. For customers of investor-owned electric companies, such as Pacific Power, the incentive available is through Energy Trust of Oregon. Currently that incentive is $.75 per DC watt, with a maximum of $5,000. For public utility districts (PUDs) the incentives can vary widely. EWEB currently has an incentive of $1.70 per AC watt (about 85% of DC capacity), up to $6,000. EWEB’s incentive is funded by their GreenPower program, and there are limited amount of funds available for each round. Lane Electric offers a $1 per watt rebate with a $4,000 maximum. Salem Electric (SE) offers $600 for the first 3KW of DC, and $300 for each additional KW. As an alternative to the rebate, SE offers an 5% interest loan ($7,500 max).
If, like the Morris’s neighbor lady, you want to solarize too, then don’t hesitate to check with your electric utility to find out more about what incentives you might be eligible for. Be sure to see if there is a Solarize program currently active in your area or contact your local solar company. They can help you wind your way through the myriad of rebates and credits.
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