The Price of Green: Is It Worth It?
Ken Erdmann (pictured, right) of Utah-based Erdmann Electric typically installs about 12 to 14 PV panels that generate between 9kW and 11kW of power, along with a 6kW inverter.
State and local rebates make solar, wind and geothermal systems more appealing.
Some of us can get a little too passionate about alternative energy: all those tempting rebates, all that feel-goodliness, all that social prestige. But looking simply at the monetary side, is it really worth it to install a photovoltaic (solar) system to power your home?
Tax considerations, rebates and other incentives are being offered from every corner: utilities, manufacturers, and the government, down to the city level.
Is it worth it? Some home technology pros break it down for us:
Phoenix-based One Way Electric prices its fully installed systems at $7 per watt. So for a typical 10-kilowatt system for a larger home, the average installation is $70,000. Company principal Kevin Pozo says the utility rebates are one of his strongest selling points. In his locale, Arizona Public Service (APS) offers a $3-per-watt rebate of up to $75,000 or 50 percent of the installation cost.
Residential Technologies in Charlotte, N.C., has varying price ranges. The company charges up to $8.50 per watt for small residential jobs and as low as $6 per watt for large installations, excluding labor charges.
For labor, the Residential Technologies charges between $50 and $65 per hour for photovoltaic (solar) jobs. It takes the company about one hour per panel for an installation and about 15 hours to install and program the inverter and run the connections.
In all, a typical 10-kw project takes about 70 to 75 hours. With product and labor, that amounts to about $80,000.
There are some modest maintenance fees. Residential Technologies charges a $150 annual fee to clean and scrub the panels. He charges more for steep roofs.
DIY? HelioPower sells an all-inclusive 5.9-kw kit for about $36,600. The company estimates that a Californian could recoup roughly half that amount.
ROI on Going Green
You hear a lot about generous incentives for going green, but wading through the various offers from utilities and all levels of government can be cumbersome.
Pozo of One Way Electric says it typically takes two to three months to process the paperwork for clients.
“We do all the paperwork on behalf of the client, including pulling the permits,” he says. “We have to.”
When it is all said and done with, how much do the tax advantages help? A lot. According to Keith Davis of Residential Technologies, an integrator in Charlotte, N.C., as much as 65 percent of the cost of a system in North Carolina can be covered through tax incentives and rebates. For a typical residential installation, Davis says the payback is seven to eight years. After eight years, a large system can produce positive cash for the homeowner, especially since utilities in the state are required to buy back power from solar customers at 15 cents per kilowatt hour (kWh).
Hans Stullken of One Way Electric says that, for a typical $70,000 residential solar panel installation, a homeowner in Arizona can receive as much as a $30,000 rebate from the local utilities based on usage and system size, a 25 percent state tax credit on the installation cost only (currently capped at $1,000 but that cap may be lifted), and as much as a $12,000 federal tax credit over a period of years. So if the state cap is lifted, a homeowner could pay, in the end, as little as $18,000 for a $70,000 system. In the meantime, they have drastically slashed their energy bill forever.
“The incentives are driving the market,” says Tim Henderson of One Way Electric. “Homeowners are realizing that the rebates are there to be taken. ROI, not wanting to be green, is the big driver right now.”
It doesn’t stop there. In the state of Arizona, there is no sales tax charged on the purchase of solar panels. That’s a savings of 5.6 percent. Also, according the Stullken, the full amount of money spent on solar panels is added to the appraisal of a home, but that amount is not considered when calculating property tax. So a $400,000 home that spends $70,000 on a PV installation is appraised at $470,000, but the property taxes are still based on $400,000.
How Much Can You Recoup?
As part of the American Recovery and Reinvestment Act of 2009 (ARRA) signed into law in February of 2009, $40 billion was allocated to energy-related programs, including tax credits, rebates and incentives for homeowners and builders to adopt alternative energy systems.
The new law provides a $1,500 tax credit for installing Energy Star windows, doors insulation and heating/cooling equipment through 2010 for existing homes and 2016 for new homes. In addition, homeowners can receive a 30 percent tax credit (with no limit) for installing solar panels, wind turbines and geothermal heat pumps. Moreover, builders can receive a $2,000 tax credit for constructing a home with energy-efficient materials.
Tax incentives and rebates come in many shapes and sizes from many different parties. The Database for State Incentives for Renewables and Efficiency (DSIRE) is an excellent resource for determining what you can recoup on solar and other green initiatives. http://www.dsireusa.org”>Visit http://www.dsireusa.org.
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