Buying a Solar System for your Home or Business in Tennessee
March 9th, 2010Budget, Site, Grants, Brands and Installer
Harvey Abouelata, VP sales & Marketing for Efficient Energy of Tennessee
Setting a budget for your photovoltaic system will quickly determine if a system is right for you. If you are installing a system for your home you should consider spending on average about $7 to 9.00 per watt installed cost before grants and incentives. A residential system is typically under 10kW. If you are a business installing a small commercial system you should look to keep your cost under $8.00 per watt installed cost before grants and incentives. A small commercial system is generally between 20kW and 30kW. With all of the grants and incentives in the State of Tennessee just about any business can make a financial case to install a solar system. It is a little tougher for a homeowner to make a concrete financial decision. For residential systems, I suggest that one follow these rules: evaluate your home and energy needs, make sure you have done everything you can to reduce your energy usage, and then install a solar system. Evaluate, Reduce and then Produce. My last consideration would be, “how long do I intend to stay in the house?” If this is the house I intend on living in for ten years or more, it is an easy decision. If I think I am going to move prior to ten years, then I should consider Wells Fargo Appraisal of 20 to 1. For every dollar your solar system saves you on your energy bill per year – your system is worth 20 times that (which in turn adds to the value of your home).
Your solar site is very important for two reasons. Your site determines your potential ongoing production of your system and your initial install costs. Ideally, you want to install a solar system on a south facing location with no shade. If you have lots of solar obstructions then move on; solar is not for you. The ideal situation is to mount your panels true south at a tilt matching your latitude. The odds of this happening are slim to none but that is okay. There are software packages that can very accurately help determine the production of a system at a different azimuth and tilt. Many times you find the impact is minimal. Mounting systems for solar systems are very sophisticated these days. There are systems designed specifically for tile roofs and metal roofs. There are literally hundreds of bullet proof systems designed for asphalt-shingled roofs. There are great ballasted-systems for flat commercial roofs requiring no roof penetrations at all.
I do not think you can find a better state to install solar on a commercial business. We have fantastic incentives for 2010. For residential we have less, primarily because we do not have income tax in our state and most incentives for residential are tax-based and not grants. For residential you have a 30% federal tax credit (this is not a tax deduction – it is a full tax credit). Systems must be put into place before December 31, 2016. The tax credit can be carried forward until December 2016. In addition to the tax credit we have the TVA Generation Partners Program. Through your local utility, TVA will give a credit on your utility bill for $1,000 for systems installed over 500 watts. In addition they will pay you $0.12 plus your retail rate for every kWh your system produces for ten years. After ten years, we are not sure if TVA will continue the program or not. However, since they are buying the rights to Renewable Energy Credits my educated guess is this program will continue indefinitely.
For businesses, a solar system is a very attractive financial proposition. The TVA Generation Partners Program works identically for business and residential customers. There are also grants available for Tennessee businesses. The Tennessee Clean Energy (TN-CET) grant will pay (by contract) 40% of the total system cost, up to $75,000. The business must be for profit and own the property to be eligible for the TN-CET grant. As a side note this grant is about to run out of funds and will be covered under a similar grant from the Tennessee Solar Institute. The next grant to look into is the USDA REAP grant. This is an energy grant that has more specific eligibility requirements and the grant application is nationally competitive. First and foremost, the business must be located in an eligible, “USDA designated rural” area. Second, the business must meet the U.S Small Business Administration’s small business industry size standards. There are tables that you can look up to find the criteria for a particular business. However, you need to determine your NAICS code first. This website should help: www.naics.com <http://www.naics.com> . The NAICS also has a link to the small business standards. If the business is eligible for the USDA REAP grant then they can apply for the 25% grant (capped at $500,000). The USDA grant is a competitive grant with a strict deadline. The USDA also provides a contract for the funds. If the business is awarded the USDA grant, they will also be eligible for a 30% Federal Tax credit that can be taken over five years. The TN-CET and USDA-REAP grants are both counted as taxable income, so the Federal Tax Credit will most likely be used to this additional tax liability. If the business is not eligible for the USDA REAP grant then the company is eligible to receive the 30% Federal Energy tax credit as a grant. The Federal energy grant is not competitive. After the system is installed, the business fills out an online application for the grant funds and they will receive a fund transfered into their bank account within 60 days of the application.
Now that the budget, site, and incentives have been discussed it is time to focus on photovoltaic brands. Personally I am very opinionated about this so, be warned. Almost all solar panels carry a twenty-five year 80% production warranty. If the panel you are looking at does not, cross it off the list. There are many “off” brands that are very cheap. These very cheap panels are most likely made in China and my guess is it will be very difficult to enforce the warranty. As a solar installer we will not install them. The next very important consideration is, are they UL listed? If they are not UL listed, cross them off the list. That should leave your list with the bigger name brands that will be around in twenty five years to honor their warranty. For our national economy’s sake, consider panels that are made in the United States and are creating jobs here. The brand I am and will always recommend is SHARP. SHARP is the only panel that is not only made in the United States, but is made right here in Tennessee!
Finally, how do I pick an installer in such a new industry? Like anything else I think the safest route is to ask lots of questions and be sure to get referrals. Here are a few questions I would ask:
1. Ask for a copy of the solar installer’s insurance certificate
2. Will the solar installer protect the warranty of the roof?
3. What certification does the solar installer have?
4. What is the solar installer’s General Contractors limit?
5. Is the solar installer’s license current?
6. What type of staff support does the solar installer have (electrician, roofers, engineers, etc)?
7. What dealership does the solar installer have?
8. Can you visit a commercial installation to see the solar installer’s work?
9. What experience does installer have? Again, ask for referrals.
Solar technology is a rapidly growing industry in the State of Tennessee and now more than ever, it is an opportune time to install a system. Keep in mind that delaying a decision could be a missed opportunity. The Federal grants are governed by time and the State grant is limited by dollars. Once the money is divvied up in the state it is gone. Home and business owners that purchase a solar system in 2010 are making a tremendous contribution to our economy, creating jobs and bringing Federal money to the State of Tennessee. While they are making a short-term contribution to our state and economy, long term they are protecting themselves against the rising cost of electricity and the looming threat of the cost of Renewable Energy Credits. If helping our economy and contributing to a business’s profitability was not enough… a photovoltaic system owner is helping us all breath a little bit easier and getting us one step closer to energy independence.
