The Great Smoky Mountains
Tennessee has some truly spectacular environments; from the Great Smoky Mountains to Cherokee National Forest and the high points of the Appalachian Trail, we have some some special places to protect. You already know that switching to solar power can help safeguard those places by reducing greenhouse gas emissions. The real question is, how good of a job are your state legislature and utilities doing to help make that switch to solar easy for you?
In Tennessee that answer is split like night and day. Tennessee Valley Authority (“TVA”) provides electricity for virtually the entire state, and they are doing a pretty sweet job encouraging solar power with a strong performance payment program. The legislature, on the other hand, has given us less reason to cheer. The lack of a Renewable Portfolio Standard or state rebates to help offset the initial costs of solar power installation, in particular, present obvious areas for improvement. Let’s take a look at the details.
Tennessee’s (Missing) Renewable Portfolio Standard
A Renewables Portfolio Standard (“RPS”) is a statute or other piece of regulation that mandates that a portion of at state’s electricity is produced from renewable resources (like solar power) by a certain date. If you have been following renewable energy policy at all, you already know that a whole lot of states have passed strong a strong RPS. Many of the RPS’s mandate goals as high as 30%, even 40% renewable production in the next 10-15 years.
So what’s going on in Tennessee? Well, not much. Nothing in fact. Tennessee has absolutely no renewables portfolio, no targets – nothing. Tennessee needs to get on track; Colorado, California, New York, New Jersey, Connecticut, Rhode Island, Oregon, Washington, Arizona, and many other states that have already passed strong RPS’s to ensure a bright future for solar power and other renewable energy. Trust, a strong RPS is integral to having that bright future here. No one wants to give you free money – least of all the electric companies. Without a strong RPS pushing them, politicians and CEOs have no incentive to give you incentives. Incentives for more solar power, that is!
As you’ve surely guessed from the lack of an RPS, Tennessee lacks any legislation-based (i.e. truly statewide) performance payment program. Don’t fret though; like we mentioned earlier, TVA offers it’s own incentives. That means almost all of you are eligible. Even if your bill doesn’t say TVA, chances are your electric company purchases power from TVA, which still makes you eligible. You can give the utility a call and check on your own if you want, but the expert installers we partners with in your area will also be happy to save you the hassle and take care of all of the details for you.
The TVA Generation Partners program will pay you a premium of $0.12 on top of the retail rate for every kilowatt-hour (“kwH”) of electricity you produce. You get your payment as a credit issued by your TVA or your local TVA-affiliated power company on on your monthly bill. If you produce more electricity than you consume, payment for the excess credits (i.e., payments owed to you that exceed your monthly bill for electricity usage) will be issued either monthly or annually, at the discretion of the power company.
Along with the $0.12/kwH premium you’ll get paid every year, TVA and TVA-affiliated local power companies offer an up-front rebate of $1,000 to help offset purchase and installation costs for your solar power system. No other rebates are available here.
State Tax Credits
Uh Oh. Now that TVA can’t come to the rescue with programs of its own, we’re starting to see the effect of having no state RPS. That’s right, Tennessee does not have any tax credits for solar power. Those yearly payments from TVA sure do look nice, but what we really need to encourage solar power here is to lower the initial costs to install a system that qualifies for those yearly payments! Tax credits sure would have been any easy way to do that.
If there aren’t any tax credits, Tennessee is at least helping with with a tax exemption somewhere? You bet! When you install a solar power system here, the cost of that system is exempt from all sales tax. That saves you 6.25-8.25 % off the starting cost! You can choose to apply for the exemption up front (again, our installer partners will take care of all of this for you!), or to take the discount back as a credit on your state taxes in April. Hey! We guess Tennessee does have a state tax credit … sorta. It’s not money back per se, but money not spent is still money saved!
What Tennessee doesn’t have, sadly, is a property tax exemption for solar power systems. When you install a solar power system your monthly electric bill goes down. When your bill goes down, your property value goes up by about 20 times your expected annual savings. The majority of states now have property tax exemptions for renewable energy systems like your spiffy new solar power system. If the legislature doesn’t want to get off its butt to provide a thorough statewide renewable energy policy, the least they could do is at least remove hindrances like this.
Electricity costs about 9.47 cents/kwH here. Here at Solar Power Rocks, we kind of geek out on anything that affects solar power, including electric prices, so trust us when we tell you that 9.47 c/kwH is super cheap. In the bottom tier of the county, in fact. You should also trust us when we tell you that cheap electricity is a bad thing. The low prices are backed by burning smog-spewing, greenhouse gas-emitting, earth-killing fossil fuels. Not only that, but keeping electricity so cheap only discourages folks from finding ways to gett off of fossil fuel based energy.
But you’re smarter than that, right? Right! Fossil fuels are going to come back to bite us in the you-know-what. While everyone else is wincing, you’re going to be shaking your head, wondering why they didn’t make the switch to all that efficient and still cheap solar power. While your neighbors are looking for the financial band-aids, you’ll be raking in the savings.
Net Metering and Interconnection
Net Metering requires your utility to monitor how much energy your solar power system produces and how much energy you actually consume, and make sure you get credit for the surplus. Interconnection standards govern the procedures and fees that utilities may implement for getting you and your net-metered system connected to the grid.
Both net metering and interconnection are critical parts of strong renewable energy policy. They help you get the absolute most out of your solar power production. A solid net metering plan, with interconnection standards that make it simple to get on the grid can help you zero out your entire electric bill, and even turn a profit where net metering regulations provide for cash payments.
Sadly, Tennessee lacks any statewide program for net metering and interconnection, and there hasn’t been so much of a peep out of the legislature. Fortunately, with the entire state in its service area, TVA is able to come to the rescue again. Remember the Generation Partners program we laid out earlier? Of course you do! It’s the one with all that free money that your power company will send you every year. Remember the part where if you run a surplus and your credit exceeds your bill, you get a check for the extra money? Well, that basically amounts to a net metering program, and a darned good one in fact.
5kW Example Return on Investment
What do all the numbers add up to for you? Glad you asked! Let’s see.
Installing a typical 5kW solar system runs about $25,000 (5,000w x $5.00/w). Don’t worry. That price is going to drop a bunch, even without state incentives
- We start by subtracting that $1,000 rebate from TVA, for a new price of $24,000.
- Next we take off the 30% federal tax credit, calculate after the TVA rebate. Subtract $7,200, for a new price of $16,800.
- Now we figure in those yearly performance payments from TVA. Subtract another $749, for a new price of $16,051.
- We estimate your current monthly bill savings to be about $49. With a conservative estimate for the future rise of electricity prices, you can expect your new solar power system to pay for itself in about 14 years.
- In addition to those direct savings on your monthly electric bill, you also just increased your home’s value by nearly $12,000
- Don’t forget – you’ve added some green to the earth as well! The fossil-fuel generated energy you’re replacing with clean solar energy is the equivalent of planting 110 trees every year you do it!
Remember that these numbers are estimates. Every home is unique, and everyone’s savings will be a little bit different. The best way to know exactly how much money solar power can save you is to talk to one of our partners on the ground. Just fill out the form below and one of then will be more than happy to go over all those details and help you craft a plan to get the absolute most out of a solar power system in your home. Your quote is 100% free (yes, that’s right, 100% free) and you can get as many of them as that smart shopper in you desires!
Tennessee has something of a split-identity going on with solar power policy. The legislature has been so silent on the issue, one wonders if they’ve ever even heard the word “photovoltaic.” But where the legislature has failed, the statewide utility company has shine (at least kinda) bright. Before the TVA program, Tennessee was a solar no-man’s land, with payback timeframes pushing decades beyond the expected life of your system. Now, however, TVA’s Generation Partners program has pushed payback down to 14 years. That’s not what we call stellar around here, but it’s more than enough for your solar power system to pay for itself, and then some. That’s worthy of an adequate “C” grade.