In part 1 of this article , I outlined the available federal and state tax credits and the incentives PNM has to offer Las Vegans who install a PV/solar electric system. Now we will look at two specific examples to see how the costs and benefits actually play out.
A common grid-tied residential PV system, i.e. a solar electric system connected to your meter to offset or zero-out electricity purchased from your utility, would be a 4.2 kilowatt (kW) system, utilizing twenty-four 175 watt, roof-mounted solar panels. Such a system would typically install for around $38,000. After deducting $2,000 federal and $9,000 state tax credits, and remembering that these systems are exempt from sales tax, we arrive at a $26,600 system cost. A 4.2 kW system will produce an average of 530 kilowatt hours of electricity per month. With net metering at the current rate of 8 cents/per kWh from PNM, this is a saving of $42 per month. In addition, PNM is currently paying 13 cents per kWh to obtain RECs (Renewable Energy Credits), which helps them reach the renewable energy targets mandated by the Public Regulatory Commission. The combination of net metering and RECs means each of those 530 kilowatt hours is worth 21 cents, so that's a combined benefit of $116 per month and $1,335 per year.
A 10kW system sized for a business use would have an installation cost of around $85,000, and would qualify for a 30 percent federal tax credit of $25,500, so that's an actual installation cost $59,000 after the credit. That size system would produce around 15,500 kilowatt hours per year, for which the savings and REC payments are $271 per month, or $3,250 per year. In addition, business can take advantage accelerated depreciation ontheir solar system investment.
For larger commercial power users, PNM is currently seeking approval from the PRC to include renewable energy systems of up to one megawatt. A system that size would produce 125,000 kilowatt hours per month, so this new policy definitely targets large commercial customers, which is good because we need to do everything we can as a society to replace dirty and expensive fossil fuels with something clean and sustainable.
The above examples of residential and commercial size systems illustrate some of the benefits that follow on these investments, but leave out the fact that the cost of electricity is steadily increasing, along with all other conventional energy costs. For that reason, the value of the electricity offset by these systems increases with each passing year, making the cost-benefit ratio better and better as time goes by. Since these systems have a service life of at least 25 years, the ROI (return on investment) for that period is typically calculated to be around 8 percent on an average annual basis. That calculation includes the cost of any maintenance required over the service life of a system.
Note that the Federal Solar Tax Credit is set to expire on December 31, 2008, so anyone interested in receiving this break had better act soon, especially as systems must be fully installed by that deadline to qualify for the credit, and time must be allowed for the installer to obtain system components. The benefits to a business are especially great as there is no ceiling on the 30 federal percent tax credit.
Part III of this series will look at the economic, environmental and social benefits to Las Vegans and the surrounding community that result from residentsusing the energy solution that circles over our heads over three-hundred days a year.
Daniel Jencka is the sales and education manager for locally owned Energy Concepts Corporation. He may be reached at firstname.lastname@example.org or 454-0614