The Myths of Solar: Part 3

{ August 10th, 2011 }

In past “Solar Myths” articles we’ve talked about topics ranging from how to mount solar panels, to the lack of batteries needed, to Energy Payback Time of photovoltaic modules.

This week, our discussion turns toward myths surrounding solar from a financial sense. Get ready to learn why solar is a good investment.

MYTH #1 All the rebates for solar are gone.

This myth and its accuracy does certainly seem to change by the month, if not the day, with the solar industry. Rebates and solar have had a rollercoaster ride from the early 1980s with Jimmy Carter up until the present day. There are state incentives to keep track of, utility incentives, federal incentives and even grants. Good news is, they are still strong. Here’s a breakdown of what is currently available and for how long.

• 30% federal tax incentive —for commercial and residential, this incentive is for 30% of the system cost after all other rebates. It can also be taken in grant form for commercial until the end of this year, otherwise it is good until the end of 2016.

• Xcel Energy rebate — also for commercial and residential but restricted to Xcel Energy electric customers. For systems under 10KW, the upfront rebate is $1.75/watt, or about 30% of the total system cost. Customers also get a small check from Xcel every month for the produced power, called a production incentive. This production incentive amounts to $200-$600 per year for 10 years. The current rebates, which get reduced with amount of systems installed, are structured until the end of the year. The 2012 Xcel Rebate Plan is still being negotiated with the Public Utilities Commission

• State rebates — these rebates are for customers not on Xcel and are set to phase out by the end of summer. There is currently a wait list for these rebates.

• USDA grant — for commercial, these grants can be up to 25% of the system cost.

• Depreciation — for commercial installs, depreciation can be taken. Solar systems qualify for 100% bonus depreciation through the end of this year (system must be operational and inspected) and 50% bonus depreciation through the end of 2012. This becomes a huge benefit to commercial business owners with tax burden.

MYTH #2 Solar is too expensive.

If everyone rented a home in our society, those customers looking at buying a house would say exactly the same thing: “Houses are too expensive.” We have become accustomed to renting our power every single month: get the bill, pay the bill, dread the next month when the bill comes again and it’s even more expensive. Solar is an investment. Just like buying a house is an investment. You have an upfront cost associated with it but then actually have something to show for your money spent.

On residential systems the payback is sitting at less than 10 years, considering electric costs go up at their traditional, slow increase of 5% each year. This increase could easily be more aggressive as overall power demand grows and current power plant retire, adding expense for new plants to come online.

That means, during the payback period the money you spend is going to pay for your system. Once it is paid off, the next 15-20 years are free power, or in other words, the system is paying you.

Commercial systems are even better, with a payback of 5-8 years, considering 5% increase in electricity.

Return on Investment on these systems ranges from around 7% for residential and 14% for commercial. Your checking account get 1% ROI, a CD 2% and real estate for the last five years is at around -6%.

Put that money into a power-producing system instead of letting the bank hold the money and you’re happy every time electric rates go up since it means your ROI just got better.

MYTH #3 I don’t have money so I can’t get solar.

Solar leases have shot this myth full of holes. If you don’t have the money to invest in solar, you can still get a solar system. In a solar lease situation, you get solar on your home but a third party owns the solar equipment. Each month you still pay a bill for the power that is produced, it just get paid to the owner of the solar system, rather than to the utility company. For instance, if you currently have a $100 electric bill and you get a solar lease that covers 75% of your electricity, you will still pay $25 to Xcel and then pay $75 to the solar lease company. Plus, when electric rates go up, your system is locked in at a set solar rate. High Noon Solar now offers solar leases through SunPower, a 25-year national solar corporation.

MYTH #4 It’s all about payback.

Yes, you do want to know that your investment breaks even at some point but there are more reasons than just that to buy a solar system. It is good to know that your power is not coming from something that pollutes the air and water as our traditional coal plant power does.

Or that it comes from a war-torn region. Or that it is keeping us dependent on nations that would rather not see us flourish. Solar also helps reduce the demand on our delicate grid structure, one that has seen a lot of stress with the recent 30 state heat waves. Yes, the money is important, but so is our health and national security.

To learn more about solar as an investment or leasing solar for your home or business, contact High Noon Solar at 970-241-0209.

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