Posted on 07/15/2012 12:29:05 AM PDT by UnBubba
My company is contemplating the installation of a 1.2 MW solar photovoltaic (PV) generation solar panel project on the roof of our facility. We are located on Long Island and are powered by LIPA.
LIPA has a new green initiative program called CLEAN. LIPA's CLEAN Solar Initiative will pay customers $0.22/kWh for PV plants between 50 kW and 20 MW under 20-year contracts. LIPA will begin accepting applications under the program on July 16th, 2012.
The United States experiments with feed-in tariffs at the local level. A number of U.S utilities, municipalities and states have approved feed-in tariffs, however such policies typically deviate from the European model in one or more aspects, and few have led to rapid growth in PV markets.
Question. Do you think this is a good project for my company? The $0.22/kWh fee sounds great (we currently pay about $0.16/kWh on average over the course of one year), but it's fixed over 20 years.
Thus, there is no protection for dollar inflation and the potential rising cost of electric. Who knows, in five years $0.22 might be worth only $0.15 (or less).
I would appreciate your comments on this issue. There are other tax benefits for doing this project (i.e., 30% ITC and bonus depreciation) but I would like to exclude these from this analysis because they were available in prior years and have been evaluated.
Thank you.
Yeah, there’s 8760 hours in a year.
Some are at night, in case you didn’t notice.
Energy use reduction (aprox.) 33% reduction in purchased energy; 33% reduction due to conservation measures due to heighten awareness of energy wastefulness and some inefficent equipment replacement (there are tax incentives here as well).
Comments: Absolutely no issues with the solar system to-date (plug and forget). Immediately after installation, energy costs in our area jumped 10.2%. While others in my area were jumping up and down mad, I actually never knew about the increased until a neighbor told me.
Of course, this wouldn't make sense without the huge tax incentives and it's likely that there is only so long that broke governments can continue these incentives.
Payoff will be in less than five years at current rates. I expect energy costs to increase and I'm planning to add off-grid capability due to concerns of future reliability issues with commercially provided power (i.e. rolling blackouts).
My $25K.
Were you addressing me with this comment? I think not (I didn’t pose the original question), but interesting. What is the installed cost (total investment) for a functional 1200kW Solar system.
You are in LA, I’m in AR. How do you deal with the dirty panels with water an pollen? I’d guess I’d spend 50 hours a year squeegying them ;)
I still squeegee the panels once a year, from the ground, using an extend-able pole mounted squeegee. The panels are mounted on the garage and that makes them easy to get at. It only takes about 45 minutes, including set up and putting everything away. The most electricity the 3.2kw unit has produced, is just over 20kw in a day. That's about $2.40 of worth of electricity here, in one day! :) Not a lot, but it all adds up.
The system would cost approximately $3.36 million. We would receive a 30% federal ITC ($1.008 million), approximately 60% bonus depreciation on 85% of the project cost in the first year ($600,000 =$3.36 million * .85 * .60 * .35 (effective tax rate)). Thus, in year 1, our net cost would be about $1.75 million. Once the project is completed we would begin to earn our fees ($300k/year). We would also get the tax benefit of depreciating the remaining 25% of the project cost over time.
Having said all that, the pay back period is still quite long (about 6 years, which includes interest expense on financing the project).
We completed an energy efficient lighting project on our entire facility last year which had a pay back period of about 10 months. That project was a no-brainer. This project, not so much.
That has been accounted for in the calculation. The factor takes into account night hours (where no energy is produced, at all). The factor takes into account the physical location (latitude and longitude) of the facility.
I don't see how you could go wrong, if your company isn't overextending. Sounds like a very good capital investment plan considering the likely hood of increasing energy costs and the possibility of future power interruptions due to our aging national electric grid. Plus the system stands last at least four times the payoff period.
Well, if there’s math involved, I’ve got a 40-40 chance of getting it wrong.
One thing to consider though, is what will the maintenance costs will be on a large system. The bugs have pretty much been worked out of the smaller units.
You have done the math, how does a 6 year payback compare to other uses for the companies capital budget? you menitioned lighting upgrades, its there other low hanging fruit available? Also, are you selling all the power back or just you excess? When you purchase price of electricity rises above 22c can you simply consume and not sell to the grid?
If you can use the power directly, does the design allow the system to function during a blackout? Sounds silly, but I haven’t scene a residential system that does.
Finaly, have you calculated the increased cost of roof maintenance. how long will the roof under the system last? if you have to reroof every ten years, you will have the added cost of removing and reinstalling the sytem every ten years.
You have done the math, how does a 6 year payback compare to other uses for the companies capital budget? you menitioned lighting upgrades, its there other low hanging fruit available? Also, are you selling all the power back or just you excess? When you purchase price of electricity rises above 22c can you simply consume and not sell to the grid?
If you can use the power directly, does the design allow the system to function during a blackout? Sounds silly, but I haven’t scene a residential system that does.
Finaly, have you calculated the increased cost of roof maintenance. how long will the roof under the system last? if you have to reroof every ten years, you will have the added cost of removing and reinstalling the sytem every ten years.
You have done the math, how does a 6 year payback compare to other uses for the companies capital budget? you menitioned lighting upgrades, its there other low hanging fruit available? Also, are you selling all the power back or just you excess? When you purchase price of electricity rises above 22c can you simply consume and not sell to the grid?
If you can use the power directly, does the design allow the system to function during a blackout? Sounds silly, but I haven’t scene a residential system that does.
Finaly, have you calculated the increased cost of roof maintenance. how long will the roof under the system last? if you have to reroof every ten years, you will have the added cost of removing and reinstalling the sytem every ten years.
You have done the math, how does a 6 year payback compare to other uses for the companies capital budget? you menitioned lighting upgrades, its there other low hanging fruit available? Also, are you selling all the power back or just you excess? When you purchase price of electricity rises above 22c can you simply consume and not sell to the grid?
If you can use the power directly, does the design allow the system to function during a blackout? Sounds silly, but I haven’t scene a residential system that does.
Finaly, have you calculated the increased cost of roof maintenance. how long will the roof under the system last? if you have to reroof every ten years, you will have the added cost of removing and reinstalling the sytem every ten years.
I will also inquire about being able to use the solar generated electric if our costs exceed $0.22/kwh.
The solar contractor claims that the free standing (ballast mount) panels will actually extend the life of the roof. Our roof is about 5 years old and is covered under a 20 year warranty.
I have a meeting on Tuesday to pursue this project further.
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