Solar Economics:
State and Federal Governments continue to implement a variety of programs and finanical incentives that make choosing a solar renewable energy system more affordable than it has ever been. See below for a list of the current solar economic incentives for both comerical and residential systems.
Commercial Solar Economic Incentives
|
Solar Incentives
|
Description
|
Expiration date
|
|
Federal Treasury 1603 Grant (in lieu of ITC)
|
Cash grant for 30% of the total turnkey cost of a solar renewable energy system
|
End of 2011
|
|
Federal Investment Tax Credit (ITC)
|
30% investment tax credit for the total turnkey cost of a solar renewable energy system
|
End of 2016
|
|
2011 Depreciation Bonuses
|
100% of system cost can be deprecated in the same year the system is placed in service
|
The 100% depreciation will fall to 50% by the end of 2011
|
|
Solar Renewable Energy Credits (SREC’s)
|
Currently paying out $0.539 per kWh a system produces
|
Currently a 10 year opt-in
|
Residential Solar Economic Incentives
|
Residential Rebate Matrix
|
|
Rebate Matrix ($ per watt)
|
Old Rates (2008)
|
Current Rates
|
|
Base Incentive
|
$1.00
|
$0.75
|
|
MA Manufacturer Adder
|
$0.10
|
$0.10
|
|
Moderate Home Value
|
either $1.00 or
|
either $0.85 or
|
|
Moderate Income Adder 1
|
$1.00
|
$0.85
|
|
Moderate Income Adder 2
|
N/A (included in above)
|
N/A (included in above)
|
NOTE: Commonwealth Solar Rebate Program is now referred to as Commonwealth Solar II
The application process, award requirements and forms are now available at www.masscec.com
The Average household requires a 5,000 watt or 5KW system (rough area equal to 325 sq ft.)
Rough Cost of a Turnkey SunPower 5KW Solar System: $35,000*
*Including structural and electrical permit applications, State Rebate application, NSTAR interconnect application.
Making Solar Affordable Based on 5kW system producing 6,000kWh per year
System Turnkey Cost: $35,000
- $0.75/ watt base rate 3,750
Rebate Adders: (limit one)
- $0.85/watt moderate income 4,250
- < $75,810 indiv. or < $95,420 family -or-
- $0.85/watt moderate home value < $350,000
- (home values vary by county, $350,000 if Bristol County)
- Federal investment tax credit 10,500
- at 30% of total system cost
- Mass state incentive 1,000
- Total incentives = $19,500
$35,000 - 19,500 = $15,500 balance of system
Average annual revenue generated by system: $4,440
System payback: $15,500 / 4,440 = 3.5 years
Rebates may be considered taxable income to the Rebate Recipient by the Internal Revenue Service of the United States of America and the Department of Revenue of the Commonwealth of Massachusetts. Rebate Recipients are strongly encouraged to consult with a tax professional to determine the federal and/or state tax implications of receipt of the Rebate. The Rebate Recipient is responsible for any federal or state tax liability incurred as a result of the Rebate. Please note: A rebate tax liability may exist for the Rebate Recipient regardless of whether the payment is made directly to the Rebate Recipient or to the Installer for the benefit of the Rebate Recipient.
Making Commercial Solar Affordable: Based on 100kW system producing 105,000kWh per year
- Turnkey Cost Estimate $465,000
Incentives:
- Federal Investment Tax Credit = $139,500 ii
- Depreciation = 163,238
- Net cost after 1 year = $162,262
Added savings:
- Value of Power (at $0.16/kWh) = $ 16,800 annually
- Annual SREC revenue (at $0.50/kWh) = $ 52,500
- Revenue generated by system/yr. = $ 69,300
Payback period: $162,262 / 69,300 = 2.34 years
ii = assumes that commercial entity takes rebate as taxable income
Tax Disclaimer:
o The above examples are for ILLUSTRATIVE PURPOSES ONLY and do not necessarily demonstrate actual tax treatment or tax credit implications associated with Commonwealth Solar Rebates!
o Furthermore, MTC and MRET, and Beaumont Solar recommend consulting a tax professional before making decisions related to rebate tax implications.
Starting in 2008, Commonwealth Solar has $68 million available for funding over the next four years to support PV installations in Massachusetts. The effort combines $40 million from the Renewable Energy Trust (Trust) and $28 million from the Alternative Compliance Payment funds that the Massachusetts Division of Energy Resources has collected under the state’s Renewable Portfolio Standard program. The state estimates that Commonwealth Solar will result in 27 megawatts (MW) of PV projects over the next four years.
For Investment Tax Credit News and Updates see: SEIA Web page:
http://www.seia.org/cs/federal_issues/the_investment_tax_credit_itc
For specific tax examples go to SEIA manual for solar taxation:
http://www.seia.org/galleries/pdf/SEIA_manual_version_1.2.pdf
For all tax treatment go to DSIRE: http://www.dsireusa.org/
For Investment tax Credit FAQ see:
http://www.seia.org/galleries/pdf/ITC_Frequently_Asked_Questions_10_9_08.pdf
|
