Nature provides Las Vegas with an abundance of sun from which to derive both thermal and electrical energy.
This series of three articles will cover how a business or homeowner can benefit from converting solar radiation into standard AC power for their home or business. Solar electric power technologies are known as photovoltaic or PV systems because they convert some of the energy from photons into electrical voltage. While most everyone knows that PV systems are a green energy solution,and that they employ glass-like panels mounted on roofs, poles and racks, not everyone understands the specific benefits that come from owning a renewable energy system.
Thanks to tax credits available from the state and federal government, substantial benefits begin with the purchase of a PV system. For residential installations there is a 30 percent income tax credit on the installed cost of a system, returning up to $11,000 of that installed cost. The first $2,000 comes off of one’s Federal income tax liability, and up to $9,000 more comes off of one’s State income tax. These are not deductions but actual credits, and work like cash at tax time. For commercial installations, meaning systems purchased by a business, the Federal tax credit has no cap, so a large 10 kilowatt system installed for perhaps $85,000 would qualify for a $25,500 tax credit. Individuals or businesses that receive more in solar tax credits than what is owed for the current year are given up to 10 years to use up their credit, ensuring that the whole benefit is obtained. In addition to tax credits, solar power systems are exempt from sales tax, and commercial systems qualify for accelerated depreciation.
(Note that the Federal Solar Tax Credit is set to expire on Dec. 31, 2008, so anyone interested in receiving this had better act soon. And because systems must be fully installed by that deadline to qualify for the credit, one must allow time for the installation company to order components and complete the installation. If you are interested in seeing the Federal tax credits continued, call your representatives and let them know.)
Though some PV systems are designed for off-grid customers, where no utility-sourced power is available, most systems are grid-tied. A specific set of economic benefits begin after a grid-tied PV system is up and running, and for Las Vegans these come through PNM, our local electric utility.
The better known of these benefits is net-metering, whereby the power from a PV system offsets the power ordinarily purchased from the utility, the process of which can be observed during the day by watching a PV owner’s electric meter spin backwards.Net metering through PNM is based on annual usage, so if more power is produced one month it rolls over as a credit to the next month, and also from year to year. Most residential PV systems are sized to zero-out a customer’s total annual usage, leaving only the monthly meter charge as the cost of being tied to the grid.
The lesser known utility-sourced benefit occurs when PNM pays its customers for every kilowatt hour the PV system produces, even though the customer used that power! PNM does this to obtain renewable energy credits, or RECs, that go toward meeting the renewable energy targets mandated by the New Mexico Public Regulatory Commission.
Having its customers become a source for green power makes both economic and public relations sense to PNM, and it is currently paying 13/kilowatt hour (kWh) to obtain those RECs from their PV-system customers.
As a result of net metering and RECs, PV system owners can eliminate some-or-all of their utility bill PLUS receive checks for the power they created and used, a combined return that comes out to about a 22 per kWh. PNM is currently purchasing RECs on systems producing up to 10kw in AC power, much larger than the average residential system but big enough to be a substantial benefit to larger, commercial-type users.
Local, real-world cost-benefit examples will be covered in Part II of this article. Part III will wrap it all up with a discussion of economic, environmental and social benefits to Las Vegans resulting from using the energy solution that circles over our heads, full-force, more than 300 days a year.
Daniel Jencka works as a renewable energy specialist for locally owned Energy Concepts Corporation. He may be reached for questions or comments at email@example.com or 454-0614