TOPIC 'Finance' on May 11, 2012 (CDT)
Going Solar? Get Incented!
With advanced manufacturing breakthroughs and new technology, the costs associated with the procurement and installation of a solar Photovoltaic (PV) system are starting to decrease, making solar power a realistic option for businesses.
Bringing a solar program in-house allows an organization to offset the uncertainties of rising energy costs and also presents the option to generate energy that can be sold back to the power grid.
Even with decreased costs, the capital costs of purchasing a solar system and ongoing support costs can be steep. As solar and other renewable energy projects gain popularity, financial incentives from both government and utilities have surfaced. The three most common types of financial incentives are attractive financing terms, purchase rebates and PV electricity production credits. These incentives are designed to reduce the capital costs of installing PV systems and to promote businesses and residents to install solar energy systems.
Financing and Loan Guarantees
Attractive interest rates can be administered through various financial, government and utilities. Customized and creative loan structures are also an option. While these are more readily available, they may not be as appealing as other offers since the initial project costs are not reduced. The economic advantage is solely the access and reduced acquisition costs of capital.
Rebates on Solar Energy Systems
Typically structured as a one-time cash back payment, rebates are generally offered after the purchase or installation of a solar energy system. Rebates can also be structured as grants. The process for receiving grant money requires a grant proposal submission to the funding organization and is generally a competitive process.
Part of the appeal to businesses to install a solar system is the opportunity to benefit financially from PV electricity production. Financial incentives tied to production can take the form of renewable energy credits or feed-in-tariffs. Renewable energy credits, defined by megawatt hours and issued as a certificate, recognize the amount of energy produced. These certificates can be sold if a market exists.
Feed-in-tariffs (FIT) are also known as a standard offer. The FIT is the purchase of electricity by a utility at a higher rate than wholesale. In this purchase only transaction, the business will see no effect in their energy consumption costs and the PV electricity is viewed as a product or service offered for sale to a utility. Depending on location, the standard offer can also include renewable tax credits.