Departments - Features
A Sound Investment: Solar
3/16/2010
Solar power delivers savings for 40+ years; hedges rising costs.
“Solar power is a low-risk, high-return investment,” say Tom Rooney, CEO of SPG Solar. “In many cases, solar installations can pay for themselves in as little as five years and are subsidized with cash rebates, a 30% Federal Investment Tax Credit, and accelerated State and Federal depreciation schedules.”
By switching to solar power, a business can move towards energy independence by owning the power it produces. Think of the benefits of owning power. Whether a company makes the switch to clean, renewable energy now, or later, that company will still have to pay their electric bill. Why not take control of the energy costs and have energy payments go towards ownership of a valuable asset? Here is some basic knowledge for starting on the path to energy independence.
Never Better
Total cost depends on the system size, equipment, and installation type. The first step is to analyze specific electrical usage and the project site to determine the best system size and installation type for the facility. Other factors – such as current electric rate schedules, financial incentives, and system financing – can affect your overall investment.
| As fossil fuel prices continue to escalate, and reducing carbon emissions becomes more important, there has never been a better time to switch to solar power. State and Federal governments are offering generous financial incentives, making solar an attractive alternative to fossil-fueled electricity. An investment in solar power delivers savings for 40+ years and also provides a hedge against rising electricity costs with the ability to project utility expenses far into the future. By switching to renewable energy, a company will be doing its part to combat global warming and reduce our nation’s dependence on foreign energy sources. Being a green business not only reduces a company’s operating costs, but can also be a great source of public relations and a good marketing tool. A growing number of consumers make their buying decisions based on the environmental responsibility of a company. |
Many states and utilities offer a variety of incentives to help offset the initial cost of installing solar power for commercial and public facilities, further increasing the return on investment.
Imagine the cost benefit of paying a lower electric bill, or no electric bill at all. In many cases, a 100% financed solution may be available that saves money from the very beginning, while working toward ownership of a valuable asset. Solar is a low-risk, high return investment that supplies a business with free electricity for years after the system is paid for. Manufacturers are able to analyze specific electric usage and calculate exactly what the return on investment will be and how much will be saved over the life of the system.
“Some states, such as California, offer higher cash rebates to government or non-profit organizations who cannot utilize the 30% Federal Investment Tax Credit (ITC). In addition, there are a variety of loan options available with low or no interest for these local and state agencies,” Rooney says.
Third-party financing, or Power Purchase Agreement (PPA), is another great option for government and non-profit organizations that would like to install solar power but are not able to take advantage of the tax credits or do not have the up front capital. In many cases this type of arrangement can be very beneficial to both parties.
Solar, a Way of Life
Farmers have been using solar power for 3,000 years. Farms are a renewable resource powered by sun and water to grow and harvest crops. Since a farm is a renewable source, and of course so is solar power, it is just a natural fit. Taking that one step further, going solar is more than just a fit; it is a way of life and it always has been.
In the last two years, many farmers are taking solar energy to a new level with the installation of photovoltaic solar panels to replace a major portion of their electricity bills. The surging popularity of photovoltaic solar on farms is a business decision, and more. Every farmer deciding on solar – or any other new technology – asks two questions: does it work, and does it last?
About two years ago, a lot of farmers figured out it worked. The panels produced reliable energy in a cost effective manner that also appealed to their sustainable instincts. But it really was not until recently that farmers received an answer to the second question, that it does last, that solar was here to stay.
Reduced to Zero
The Far Niente Winery in Napa Valley reduced a $270,000 annual energy bill to zero.
The solar PV system at Far Niente Winery utilizes Floatovoltaic technology, the first of its kind to mount large scale PV over bodies of water.Far Niente is one of Napa Valley’s most highly regarded wineries, characterized by luxury and elegance. This elite vineyard bottles only one Chardonnay and one Cabernet Sauvignon from its estate vineyards each year and has consistently maintained an award-winning house style for more than 20 years. Motivated by the desire to preserve its most valuable resource, the environment, Far Niente turned to solar energy to power its vineyard and winery operations, as well as those of its sister winery, Nickel & Nickel.
Solar energy systems produce clean energy with zero air, ground, or water emissions, benefitting the environment as well as protecting the purity of the immediate vineyard environment. To truly benefit from the sun’s renewable energy, the winery sought a solar system large enough to meet its energy needs, but with a design footprint that would not encroach upon its valuable vineyard property.
“In an effort to preserve as much vineyard property as possible, SPG Solar utilized the world’s first large-scale floating solar PV array – the patented Floatovoltaic system,” Rooney explains. “By implementing this cutting-edge technology, the company was able to design a 477kW system, using 1,000 Sharp solar panels. SPG Solar floated the array on top of Far Niente’s irrigation pond.”
The balance of the system was designed as an adjustable-tilt ground mount array using 1,300 Sharp solar panels, allowing maximum sun exposure throughout the year. A 396kW system was also installed at Nickel & Nickel Winery. The system’s electricity production is monitored in real-time by SunSpot, a monitoring software and hardware system. Interactive kiosks display live solar production data, as well as photos and information about the systems.
The investment by Far Niente’s proprietors resulted in:
- Utility rebates from Pacific Gas & Electric (PG&E) which paid for almost a third of the systems’ cost;
- A Federal Tax Incentive of 30% of the purchase price further reduced the overall price tag of the systems;
- By taking advantage of California’s Net Energy Metering (NEM) program, the systems will send surplus energy back to the power grid, compensated at the retail rate, and offsetting annual energy costs;
- By producing their own power, the systems insulate the wineries from energy price hikes – one of the highest costs of doing business in California; and
- The combined systems prevent 927 tons of carbon dioxide (CO²) from being released into the atmosphere each year by fossil-fuel power plants. According to the U.S. Department of Energy, it takes 211 acres of trees one year to absorb that much CO².
Further Advantage
For the larger farmers in the Central and Imperial Valleys, the numbers are even more enticing. An average installation would be about 1MW, producing 2mkW hours of energy per year. In this example, such a system could be built for around $5.2 million dollars and in the Central Valley of California utility incentives are worth approximately $1.5 million. The tax savings from credits and rebates are worth another $3.6 million. After all incentives are tallied, that comes out to a net system cost of $119,000. When you pencil this out with loan payments and other expenses, that comes out to a positive first year cash flow of $1,580,000. Over the 25 year life of the project, that number is never in the red, and adds up to $10,438,064, with a net present value of $3,755,735.
Money is an absolutely important part of why solar is growing exponentially among farmers, and should be growing everywhere else. Positive first year cash flows are really attractive. From agribusiness to family farms, people who work the land value independence. They simply are not comfortable relying on some outside agency – whether that is a local power company or a foreign energy power – to set their prices or their supplies for energy, almost at a whim.
Farmers are also keen about water. The fact that photovoltaic energy (along with wind) are the only major energy sources that require almost no water to create, appeals to their sense of sustainability. When one talks about saving water from solar power, one is referring to water saved at the water plant, not at the farm. Even so, more farmers are becoming aware that it takes at least one gallon of water to create a kilowatt hour of electricity. Creating two million kilowatt hours of solar power on a farm can save two million gallons of water. In some places, such as Arizona, that number is seven times more.
SPG Solar
Novato, CA
spgsolar.com