Published in the November 2005 issue of Today’s Facility Manager
Ongoing developments in the solar photovoltaic (PV) market are gearing this clean energy source up for significant growth. As PV technology—the use of semiconductors to convert sunlight into electricity—advances, efficiency has risen while the cost to manufacture these systems continues to decrease. While solar power is not a new concept, current market forces are creating a promising outlook for this technology.
Meanwhile, there are a growing number of financial incentives available for buildings to offer another tool for the facility manager who has sustainability in mind. On the federal level, the National Energy Policy Act of 2005 (signed into law by President Bush in August) contained incentives pertaining to renewable energy sources. This legislation included PV energy and increased tax credits for solar energy systems from 10% up to 30%. Eligible solar technologies include solar PV systems. The federal credit is effective until January 1, 2007.
Individual states have been active in creating solar initiatives of their own to reduce demand on the traditional energy grid. These incentives take many forms, including tax credits, direct rebates, and loans. Currently, there are 20 states offering such incentives, with more expected to pass legislation in the near future.
“In terms of incentives, in our experience, the main driver has been the rebate offerings,” says Gary Barsley, director of commercial projects at Camarillo, CA-based Shell Solar. “Another important factor is the size of the fund available. In some places, the pool of money is not that large and is only capable of funding a few projects before it runs out.”
California has been a leader in this realm, creating the Emerging Renewables Buydown Program (since renamed Emerging Renewables Rebate Program) in 1998. Under this program, $540 million was originally allocated to offset initial costs for consumers (both residential and commercial) who purchase renewable energy systems, including solar PV. Most recently, the state legislature allocated another $118 million to the program for projects through 2006.
While PV rebate levels may vary depending on the specific project, a driver of the PV portion of the Emerging Renewable Rebate Program is a $2.80/watt rebate for systems with capacity up to 30kW.
New Jersey is another state noted for leading the growth in PV systems. Jeanne Fox, president of the state’s Board of Public Utilities since 2002, was recently recognized by the Solar Energy Industries Association (SEIA) as a “Solar Champion of the Year.” Her efforts have been largely credited with the 550% growth of the solar industry in the state over the past three years. Under the New Jersey Clean Energy Program, rebates for commercial and residential systems during 2004 totalled $10.9 million.
Rebates in New Jersey vary according to the system size. For example, systems installed after December 2005 with generating capacity between 10kW and 40kW garner a rebate of $3.90/watt. Rebate amounts decrease as system capacity increases.
While California and New Jersey have notable efforts for PV energy, they are certainly not the only states to make strides. The other states with renewable energy incentive programs are making inroads as well. In addition, utility companies increasingly offer incentive programs for customers making the move to relieve the energy grid. (A database of incentives on a state by state basis is available from the Database of State Incentives for Renewable Energy at www.dsireusa.org. Utility programs are also listed.)
“Federal and state tax incentives, coupled with state supported rebate offerings available through programs such as California’s Self-Generation Incentive Program or New Jersey’s Clean Energy Rebate Program have had a tremendously positive impact on the PV market and the number of systems installed,” says Marc Roper, vice president of sales and marketing at RWE SCHOTT Solar, Inc., a manufacturer with U.S. headquarters in Billerica, MA.
“While, in general, nearly every grid connected PV system can eventually pay for itself, without the current incentive programs, the payback period for many commercial and institutional buildings may be too long,” Roper adds.
While the payback periods vary according to factors specific to each situation, with an expected lifespan of 25 to 30 years, PV systems are virtually guaranteed to produce a beneficial return on investment.
Once the decision has been made to generate energy from PV, facility managers can derive further savings from the excess solar energy their PV system generates and the facility does not use. Under this net metering process, the energy derived from PV—but not needed at the time—is fed back to the utility grid. For example, if the system generates 300kWh of electricity during the month and the facility uses 250kWh, the utility provider takes the excess energy and distributes it elsewhere in the grid. The facility is credited with the excess energy to apply it at another time.
While net metering rules can vary from state to state (38 have established rules at present), the overall concept of the PV owner benefitting from this excess energy is a useful incentive. Prior to this benefit, excess energy would be wasted unless the facility had a battery system in which to store it. Barsley notes, “It has really pushed the market growth in the last couple of years for these grid connected systems. Prior to this benefit, most users were losing the value of that excess energy.”
If the price is right after all incentives are explored, solar PV systems may be the answer for facility managers looking to offset the amount of electricity they purchase from the grid. The fact that this renewable energy source emits no pollutants into the atmosphere moves the facility one step closer to a sustainable future.
Information for this article was provided through interviews with Barsley and Roper. For more information, visit www.seia.org, www.dsireusa.org, www.shellsolar.com, and www.rweschottsolar.com.