|
$153,000
|
Total estimated installed cost (actual cost will vary) |
|
- $21,250
|
Energy Trust incentive ($1.25/watt x 17,000 watts; add $0.25 for PGE customers) |
|
- $76,500
|
Oregon Business Energy Tax Credit (up to 50 percent of installed cost) |
|
-$55,900
|
Approximate net present value (up to 30 percent) of federal tax credit (and accelerated depreciation) |
| Just about nothing! | Approximate final net cost to business |
Ok, so as a business owner, if having incentives account for just about your entire PV system cost doesn’t sound good to you, perhaps you shouldn’t be in business in the first place. Demand for systems should be HUGE!! Let’s take a look at a commercial example for heating water with solar in Oregon:
.
|
$30,000
|
Total estimated installed cost |
|
- $6,000
|
Energy Trust incentive ($6.00/therm x 1,000 therms) |
|
- $8,000
|
Oregon Business Energy Tax Credit (based on $16,000 eligible cost * 50%; limited by 15 year payback requirement) |
|
-$13,000
|
Approximate net present value (up to 30 percent) of federal tax credit (and accelerated depreciation) |
|
$ 3,000
|
Approximate final net cost to business |
.
Again, this is awesome. By utilizing a mix of federal and state incentives, a business owner may only be responsible to finance 10% of the total installed cost of a solar hot water system. Wow. Let’s turn the focus to the home. While many consider a solar system a long-term investment in your home (the value continues to grow as energy costs rise) those business credits dwarf what is available to homeowners. Cash incentives from Energy Trust of Oregon and tax credits from the State of Oregon and the federal government only seem to cover half as much for homeowners as they cover for business-owners:
| $20,000 | Total installed cost (see note) |
| -$4,500 | Energy Trust incentive ($2.25 / watt x 2,000 watts) |
| $15,500 | Amount paid by customer to contractor |
| - $6,000 | Oregon tax credit ($3.00 watt x 2,000 watts, $6,000 cap) |
| -$2,000 | Federal tax credit (30% of $15,500, $2,000 cap) |
| $7,500 | Final net cost to customer |
.
Now, we turn to the residential solar water heating example. First some background information. Heating water accounts for about 15 percent of the average household’s energy use — second only to heating and cooling your home. You can expect a solar water heating system to heat about half of the total hot water your family will need in an entire year. According to the Office of Sustainable Development, from May through October (In Oregon) these systems frequently provide enough energy to heat 90 percent of your home’s hot water. Again though, it seems a little unfair that if you’re a business you can recoup up to 90% of the total cost of your system and if you’re a homeowner you’re lucky to recoup 50%. Hell though, it’s great that in Oregon you are able to recoup anything (imagine if you lived in Alabama or something. Actually, I haven’t reviewed Alabama’s solar incentives yet so I should probably shut my mouth):
.
| $8,000 | Total installed cost (see note) |
| -$880 |
Energy Trust incentive ($.40/kWh x 2,200 kWh)
|
| $7,120 |
Amount paid by customer to contractor
|
| - $1,320 |
Oregon tax credit ($.60/kWh x 2,200 watts, $1,500 cap)
|
| -$2,000 |
Federal tax credit (30% of $7,120, $2,000 cap)
|
| $3,800 |
Final net cost to customer
|
.
From here, we just need to do a little more simple math to calculate payback for homeowners. Since the price of energy hasn’t done anything but rise at a rate of about 7%, let’s say over 15 years the average price of electricity from the utility will be $.13/KwH – So annual savings is about $290 (2200KwH * $.13). Now, under current residential incentives, this system pays itself off in about 13 years. That’s a long time for a homeowner to recoup the investment compared to a business owner.
The blame for this disparity should not lay with the Oregon state legislature. Instead, the cause of this large gap between business solar credits and homeowner solar credits lies with the federal government. Why? The ability to rapidly depreciate this solar equipment on your taxes. You can’t do this as a homeowner but you can as a business. That benefit alone accounts for a significant amount of the net cost to businesses (Look above at the percentage that accounts for!).
.
So if you’re a homeowner and you want to finance your solar equipment, until some progressive energy legislation passes through Washington DC, you either need to refinance your mortgage with an energy efficient loan, or you could start a home based business and use the rapid depreciation schedule.
Typically, how long do solar panels last?
Thanks for the great website.
Hey there Early Klamath,
This depends on what type of panel we’re talking about. All solar panels have a tendency to degrade over time (that’s why your warranty will reflect this). Crystalline solar panels typically last between 20 and 25 years, while thin film panels usually last between 8-10 years. This is one of the reasons the government allows rapid depreciation on the equipment. Thanks for your question and your compliment!
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