SOLAR ENERGY SYSTEMS FOR HEAT AND ELECTRICITY Is my property suitable for an active solar energy system? What types of systems are there and how do they work? What government incentives are available? ON THE ROAD AHEAD SOLAR WILL HELP COPE CONTACT INFORMATION WITH UNCERTAINTY Carlo La Porta Capital Sun Group, Ltd 6503 81st Street Cabin John, Md 20818 Tel 301 229-0671 fax 301 229-0434 Email firstname.lastname@example.org www.capitalsungroup.com “How to transition from condo to solar living?” Group Questions “How do you retrofit an old house to use solar? is it possible to get off the pepco grid entirely?” “General overview of solar possibilities for residences, and a ballpark idea of the cost (plus rebates, credits, incentives, etc). ” “I'm organizing the Capitol Hill Energy Co-op group solar panel purchase. I'd like to learn more about vendors and technology that we should be looking at.” Residential solar heating, installation costs, maintenance time and cost, interface with power company, storage problems, cost/benefit analysis for my house” “What are low cost solar options? ” “Ways to make use of solar power in everyday life for those who are not homeowners> For example, in cooking, recharging appliances, etc. What products or technologies are practical, recommended.” “How to obtain a list of contractors for control systems for solar water heating for hot water use and radiant heat, fresh air exchange, and cool water space cooling?” “What can owners expect in payback.” “What can I do on an existing house without replacing major systems that work just fine today” “+ Scalable solar - water only and/or full solar + Tax benefits (Federal/DC) for installing solar” “Looking to replace an old hot water heater and want to know more about solar options.” “Approximate cost of installation? Time involed? Suitability for DC area\?additional power from Pipco? Necessary storage ability or purcahse of ” “How can get solar installed with a green roof? What incentives exist in DC to get solar installed at lowest cost? Who are reputable installers in DC metro area? Can get a solar design that is a little more design friendly?” “(1) How vertical solar panels/tubes can be integrated into the facades of buildings. (2) The DC area solar receptivity.” Is it economical for my parents to install solar panels on their current house which was built in 1918? ” “My parents are building a house in CA. They looked into solar panels ~1 year ago, but determined that it wasn't financially worth the investment. I'd like to learn more about the financial side, including incentives from ARRA. ” “How to install solar in DC. How it works with financing, renewable energy credits, finding contractors. And how much energy you can expect to get from solar panels in this part of the country.” “Certification standard for the installers in this area. Maintenance of solar panels. DC grant for solar hotwater info and more!” “Where are the contractors in northern virginia for installing solar? How do I get solar installed on a roof in a townhouse if it's only permitted on the back side of the townhouse according to the bylaws? Has anyone installed solar shingles? ” “I'm mainly interested in getting enough information on cost, startup, and logistics like space and exposure required to set up solar for water & electricity - basically, how to get over the initial inertia of not knowing where to start.” “I'm moving into a new house on April 30th. Heating, A/C, appliances, everything is at least 20 years old. I would like some ideas on the best way to start the solar process. How big or how small should I start?” “Info on roof solar panels in the city: Cost? Savings? Programs? Is it being done? ” A guy in Philadelphia who made/designed a PV system for the whole building of condos in center city. What about multi-family solar? ” “What is the period of time to recoup the investment for installing electricity generating solar panels in DC, and what are the installation options (i.e., could the panels be integrated into the roof or free standing)?” “What steps can I implement on a budget? I would love to harness solar power but the cost is often daunting.” “If the solar panels are oriented properly, how much energy can one expect to generate onsite with various size panels. PERCEIVED DISADVANTAGES OF SOLAR WATER HEATING SYSTEMS 29% Too expensive to install 21% Not enough sun for solar energy 14% Not as much hot water capacity 14% Appearance 8% Too much maintenance FACTORS MOST IMPORTANT TO SOLAR ENERGY SYSTEM PURCHASERS 88% Amount of maintenance required 87% Type of warranty provided 83% Hot water delivery capacity 83% Money saved monthly on water heating 82% Price of system fully installed Source: National Renewable Energy Laboratory focus group study in four states, Mid 1990S HISTORY SHOWS HOW IMPORTANT SOLAR TAX INCENTIVES CAN BE Federal 40% residential tax credit expires in 1985, 90% drop in glazed collector manufacturing results Luz International loses Calif. incentive and suffers from excessive costs to accelerate completion by year end. Concentrator collector production halts ENERGY PRICES DETERMINE WHERE SOLAR COMPETES BUT IN TODAY’S MARKET INCENTIVES CAN MATTER MORE SOLAR COMPETITIVENESS DEPENDS ON ANNUAL SUNSHINE AND ENERGY COSTS Arizona New Jersey Natural gas 2005 $7 to $8 /mmbtu $10 to $11 / mmbtu Electricity Industrial 2005 $15.45 / mmbtu $25.14 / mmbtu Annual Insolation fixed tilt=latitude 7 to 8 kwh/m2/yr 4 to 5 kwh/m2/yr June Insolation tilt=Latitude 18 MJ/m2/day 10 - to 12 MJ/m2/day New Jersey has 40% less global radiation annually as Arizona. Natural Gas in New Jersey is 40% more expensive per mmbtu as in Arizona Electricity in New Jersey is 63 % more expensive per kWh as in Arizona A POLICY FLAW STATES AND UTILITY REGULATORS OFTEN GIVE MORE SUPPORT TO SOLAR ELECTRIC TECHNOLOGY THAN THEY DO TO MORE COMPETITIVE SOLAR THERMAL TECHNOLOGIES PV Panel Crystal + AmSi Flat Plate Thermal Wholesale Cost $69.05/ft2 $19.50/ft2 PV 3.54x more Delivered Energy Per Day 86.4 Watt-hrs/ft2 322 Watt-hrs/ft2 PV 3.73x less PHOTOVOLTAIC TECHNOLOGY SOLAR THERMAL A 2000Watt PV System Generates A 40 Square Foot Solar Water Heater Will 2400 - 2600 kWhs of AC Electricity Offset 2200 – 2500 kWhs of AC Electricity in in DC in one year one year INSTALLED COST: ~$18,800 INSTALLED COST: $7,500 12.6 square feet 200W PV panel rated 40 square feet, glazed panel at 1000 Watts/m2 Wholesale $780.00 CEC rating, 182 peak Watts DC $/sq ft = $19.50 Wholesale: $870.00 Rated at Delta T 36 deg F, clear day, $/sq foot =$ 69.05 44,000 Btu/day Output CEC rating 14.4W/ft2 = 12.89 kWh/day CEC 6 hour day output* = 322 Watt hours/ft2 86.4 Watt hours/ft2 * 6 hour output at the rating is over generous What helps PV is the Carnot inefficiency of the electric power sector, so one kWh generated replaces ~3 kWh of primary energy 6 IRS Residential Renewable Energy Tax Credit Last DSIRE Review: 10/07/2008 Incentive Type: Personal Tax Credit Eligible Renewable/Other Technologies: Solar Water Heat, Photovoltaics, Wind, Fuel Cells, Geothermal Heat Pumps, Other Solar Electric Technologies Applicable Sectors: Residential Amount: 30% Maximum Incentive: No maximum limit beginning in 2009. Solar water heating: Federal Economic Recovery Act 2009 eliminated a $2,000 limit. No cap. Fuel cells: $500 per 0.5 kW. Small wind: $500 per 0.5 kW, up to $4,000. Geothermal heat pumps: $2,000. Carryover Provisions: Excess credit may be carried forward to succeeding tax year. Eligible System Size: 0.5 kW minimum for fuel cells. Equipment/Installation Requirements: Solar water heating property must be certified by SRCC or by comparable entity endorsed by the state in which the system is installed. At least half the energy used to heat the dwelling's water must be from solar. Geothermal heat pumps must meet the requirements of the Energy Star program. Fuel cells must have an electricity-only generation efficiency greater than 30%. Authority 1: 26 USC § 25D Date Enacted: 8/8/2005 (Amended 2006, 2008) Effective Date: 1/1/2006 Expiration Date: 12/31/2016 Authority 2: H.R. 1424: Div. B, Sec. 106 (The Energy Improvement and Extension Act of 2008) Date Enacted: 10/3/2008 Effective Date: 1/1/2008; elimination of the solar electric credit cap effective 1/1/2009 Expiration Date: 12/31/2016 Authority 3: IRS Form 5695 & Instructions: Residential Energy Credits http://www.solar-rating.org/ratings SRCC c/o FSEC Certification must 1679Clearlake Rd be renewed Cocoa, FL 32922 annually (321) 638-1537 Fax (321) 638-1010 System Name System Model Cert # FTL Freeze Energy Savings SOLARAY TE40P-80-1 1993001C -60° F 2400 kWhr/year PRICING FOR 40 SQUARE FOOT ARRAY SOLAR WATER HEATER Federal Tax Credit Effect: .30 x $7,449.00 = Credit of $2234.70 Net cost $5214.30 At 16 cent/kWh electricity, savings amount to $400.00 FLAT PLATE SOLAR SYSTEM INCENTIVE EFFECT Array size 2289 Sq Feet Panels SunEarth EC 40 Solar Energy Delivered per Year 5563.35 mmBtu (Illinois) Estimated Installed Cost $63.00 $/ft2 Installed cost for system $144,207 5-year MACRS Depreciation Schedule System cost $144,207.00 Year Depreciation Schedule Fed Tax Credit Incentive $ 43,262.10 1. 20.00% Net $100,944.90 2. 32.00% Depreciation Basis $122,575.95 3. 19.20% Net cost with depreciation $ 59,692.70 4. 11.52% 5. 11.52% $ 24,515.19 Year one depreciation 6. 5.76% $ 39,224.30 Year two depreciation $ 23,534.58 Year three depreciation $ 14,120.75 Year four deprecation $ 14,120.75 Year five depreciation $ 5,814.43 Year six depreciation $ 121,330.00 Sum depreciation 0.34 Business income tax rate $ 41,252.20 Value of depreciation RENEWABLES & EFFICIENCY CORPORATE DEPRECIATION Federal Modified Accelerated Cost-Recovery System (MACRS) + Bonus Depreciation (2008-2009) Applicable Sectors: Commercial, Industrial Authority 1: 26 USC § 168 Date Effective:1986 Authority 2: 26 USC § 48 Eligible Renewable/Other Technologies: Solar Water Heat, Solar Space Heat, Solar Thermal Electric, Solar Thermal Process Heat, Photovoltaics, Solar Hybrid Lighting, Landfill Gas, Wind, Biomass, Renewable Transportation Fuels, Geothermal Electric, Fuel Cells, Geothermal Heat Pumps, Municipal Solid Waste, CHP/Cogeneration, Direct Use Geothermal, Anaerobic Digestion, Microturbines Under the federal Modified Accelerated Cost-Recovery System (MACRS), businesses may recover investments in certain property through depreciation deductions. The MACRS establishes a set of class lives for various types of property, ranging from three to 50 years, over which the property may be depreciated. A number of renewable energy technologies are classified as five-year property (26 USC § 168(e)(3)(B)(vi)) under the MACRS, which refers to 26 USC § 48(a)(3)(A), often known as the energy investment tax credit or ITC to define eligible property. Such property currently includes: a variety of solar electric and solar thermal technologies fuel cells and microturbines geothermal electric direct-use geothermal and geothermal heat pumps small wind (100 kW or less) combined heat and power (CHP). The provision which defines ITC technologies as eligible also adds the general term "wind" as an eligible technology, extending the five-year schedule to large wind facilities as well. In addition, for certain other biomass property, the MACRS property class life is seven years. Eligible biomass property generally includes assets used in the conversion of biomass to heat or to a solid, liquid or gaseous fuel, and to equipment and structures used to receive, handle, collect and process biomass in a waterwall, combustion system, or refuse-derived fuel system to create hot water, gas, steam and electricity. The 5-year schedule for most types of solar, geothermal, and wind property has been in place since 1986. The federal Energy Policy Act of 2005 (EPAct 2005) classified fuel cells, microturbines and solar hybrid lighting technologies as five-year property as well by adding them to § 48(a)(3)(A). This section was further expanded in October 2008 by the addition of geothermal heat pumps, combined heat and power, and small wind under the The Energy Improvement and Extension Act of 2008. 5-year MACRS Depreciation Schedule Last DSIRE Review: 02/19/2009 Year Depreciation Schedule 1. 20.00% 2. 32.00% 3. 19.20% 4. 11.52% 5. 11.52% 6. 5.76% 50% FIRST YEAR DEPRECIATION FOR 2009-10 The federal Economic Stimulus Act of 2008, enacted in February 2008, included a 50% bonus depreciation (26 USC § 168(k)) provision for eligible renewable-energy systems acquired and placed in service in 2008. This provision was extended (retroactively to the entire 2009 tax year) under the same terms by The American Recovery and Reinvestment Act of 2009 enacted in February 2009. To qualify for bonus depreciation, a project must satisfy these criteria: the property must have a recovery period of 20 years or less under normal federal tax depreciation rules; • the original use of the property must commence with the taxpayer claiming the deduction; • the property generally must have been acquired during 2008 or 2009; and • the property must have been placed in service during 2008 or 2009 (in certain cases, in 2010). If property meets these requirements, the owner is entitled to deduct 50% of the adjusted basis of the property in 2008 and 2009. The remaining 50% of the adjusted basis of the property is depreciated over the ordinary depreciation schedule. The bonus depreciation rules do not override the depreciation limit applicable to projects qualifying for the federal business energy tax credit. Before calculating depreciation for such a project, including any bonus depreciation, the adjusted basis of the project must be reduced by one-half of the amount of the energy credit for which the project qualifies. For more information on the federal MACRS, see IRS Publication 946, IRS Form 4562: Depreciation and Amortization, and Instructions for Form 4562. The IRS web site provides a search mechanism for forms and publications. Enter the relevant form, publication name or number, and click "GO" to receive the requested form or publication. *Note that the definitions of eligible technologies included in this entry are somewhat simplified versions of those contained in tax code, which often contain additional caveats, restrictions, and modifications. Those interested in this incentive should review the relevant sections of the code in detail prior to making business decisions. DATABASE OF STATE INCENTIVES FOR RENEWABLES AND EFFICIENCY MAP Tax Credits for Renewables / April 2009 SOURCE: www.dsireusa.org DC Personal tax credit(s) only Corporate tax credit(s) only Notes: This map does not include corporate or personal tax deductions or Personal + corporate tax credit(s) exemptions; or tax incentives for geothermal heat pumps. Puerto Rico also offers tax credits for renewable energy systems. TYPES OF IN-STATE INCENTIVES FOR SOLAR THERMAL AND PHOTOVOLTAIC SYSTEMS • Residential Direct Incentive (grant) • Residential Tax Credit • Residential Tax Deduction • Non-Residential Direct Incentive • Non-Residential Tax Credit • Non-Residential Tax Deduction • Sales Tax Exemption • Use Tax Exemption • Property Tax Exemption • Property Tax Credit • Loan • Renewable Energy Certificates (RECS) D.C. REBATE PROGRAM DSIRE LISTING Last DSIRE Review: 03/06/2009 Incentive Type: State Rebate Program Eligible Renewable/Other Technologies: Photovoltaics, Wind Applicable Sectors: Commercial, Residential, Nonprofit, Multi-Family Residential, Private Schools Incentive Amount: $3/watt for first 3 kW installed capacity $2/watt for next 7 kW installed capacity $1/watt for next 10 kW installed capacity Maximum Incentive: $33,000 per site per program year Eligible System Size: 1 kW-DC minimum; system must be sized not to exceed on-site consumption Equipment Requirements: System must be new and have a performance meter; larger systems must have a performance meter with remote communications capability. System must carry a one-year warranty and meter must carry a five-year warranty. Installation Requirements: System must be grid-connected and installed by a licensed contractor; one-year warranty on installation required Program Budget: $2 million/yr for fiscal years 2009-2012 Ownership of Renewable Energy Credits: Customer-generator Funding Source: Sustainable Energy Trust Fund (public benefits fund) Expiration Date 09/30/2012 Project Review/Certification Projects may be reviewed by an independent evaluator or DDOE Web Site: http://green.dc.gov/green/cwp/view,a,1244,q,461562.asp Note: DC has said it will offer incentives for solar thermal systems. Under consideration is a $1.50 per Watt of a solar water heating system rated capacity. Exactly how this will be calculated remains open. If a thermal panel produces 12,900 kWh of energy per day, over an 8 hour day output is 1613 Watts per hour and a possible incentive could be $2,420. Stay tuned. D.C. REBATE PROGRAM DESCRIPTION Summary: In February 2009, the District Department of the Environment (DDOE) introduced the Renewable Energy Incentive Program (REIP), a rebate for solar photovoltaic (PV) and wind energy systems. The REIP is funded through the Sustainable Energy Trust which is supported by a public benefits charge on utility bills. By the end of 2009, DDOE plans to introduce incentives for additional technologies, including solar water heating, solar space heating, geothermal, and methane/waste gas capture. Most PEPCO customers within the District of Columbia are eligible for incentives under this program; however, the federal government, the D.C. government, and public schools are specifically identified as ineligible. Systems must be at least 1 kW in order to qualify and should be sized not to exceed on-site energy consumption as measured for the previous 12 months. There is no maximum system size, although incentives are capped at $33,000 per site per fiscal year. The current incentives for solar and wind energy systems are as follows: $3/watt for first 3 kW installed capacity $2/watt for next 7 kW installed capacity $1/watt for next 10 kW installed capacity Applicants must get a site assessment and conduct a prequalification application to get a reservation number. Once the prequalification application is approved, the applicant must complete a final application. If funds run out for a given year, applicants hold their place in line for one year with their reservation number and may receive funding the next year. The system must be completed within six months of the award date. If the system is not completed, the applicant may get a six month extension. If the system is not completed at the end of the extension, then the rebate must be returned to DDOE. Projects must be located within the District of Columbia and applicants must be customers of Pepco. Projects receiving incentives must be grid-connected and must follow the interconnection, operation, and metering guidelines set by Pepco and the DC Public Service Commission. Large systems must have remote communication capabilities for monitoring of the performance meter. For more information, please view the program guidelines Contact: Green Energy DC District Department of the Environment Energy Division 51 N Street NE Washington, DC 20002 Phone: (202) 673-6700 E-Mail: email@example.com Web Site: http://ddoe.dc.gov/ddoe INCENTIVE BASED SOLAR ENERGY COST PERSPECTIVE Here is a way to look at the value of your solar system over time. Results PV watts simulation 2,0 kilowatt PV System, south facing 25 degree tilt Month Solar Radiation kWh/m/day) AC Power out (kWh) 1 3.13 316 2 3.91 348 3 4.66 448 4 5.46 490 5 5.67 502 6 6.16 529 7 5.89 507 8 5.58 489 9 5.02 434 10 4.38 403 11 3.15 290 12 2.61 250 Year 4.64 5006 kwh/year System is predicted to generate 5006 kWh of electricity per year. Net system cost with incentives = $8,165.94. (does not count effect of taxable grant) Over 10 years with no maintenance costs, the cost of electricity from this investment in solar equals $0.163/kWh. This is about the amount Maryland PEPCO customers now pay with all their charges. Electricity costs are likely to rise faster than inflation in the coming years, so in the 10 year period, the solar electricity should be cheaper than Pepco rates from the first year on. Over 20 years with cumulative solar electricity output at 85% of predicted year-one output (panels lose efficiency over time, are guaranteed at 80%), the cost of electricity generated equals $0.096 per kWh. MARKET FOR SOLAR RENEWABLE ENERGY CERTIFICATES Brokers will buy kWhs produced by PV system owners to sell a RECs market. The kilowatt hours a homeowner’s PV system generates can be used by a utility company that is required to have a certain amount of its power generated with solar energy. Some believe that RECs will eventually replace state incentive programs and that RECs will create incentives that will help expand the solar market more rapidly (They have in California). An issue is “RECs and Additionality.” Critics contend RECs let others who should or could invest in renewable energy avoid such expense by “buying” the output that other investors have made. The other side is that RECs are an incentive for those with the means to invest in renewable energy systems when they might not have without this additional income. The Renewable Energy Credit (“REC”) Market A RPS is a state regulatory regime, authorized by statute, which requires the suppliers of electrical energy to customers within a state to provide a certain percentage of such electrical energy through renewable energy (“RPS Requirements”). To meet these requirements suppliers can (1) produce the required percentage of their electricity from a renewable energy facility, (2) purchase what are termed “renewable energy credits” (“RECs”), or (3) pay an alternative compliance payment (“ACP”). REC FACTORS RECs are credits associated with the production of one megawatt-hour (“MWh”) of electricity generated from a qualified renewable energy generating resources, as defined by state statute. These RECs are then purchased by electrical utilities in order to meet a state’s RPS Requirements. RECs are therefore commodities; their value quantified by (1) the state RPS Requirements for which they are purchased , (2) the value of the state’s ACP, and (3) the supply and demand of RECs in that specific state. Because RECs may be produced in one state and utilized in another, their values can vary dramatically. As such, RECs have no intrinsic value but typically their price hovers somewhere below the state’s ACP. SRECs SRECs work exactly the same way as RECs, although SRECs tend to be worth much more because state ACPs for the SRECs are higher. For example, a homeowner with a photovoltaic (“PV”) panel (commonly known as a solar panel) on their rooftop could earn one SREC for each megawatt of electricity that the photovoltaic panel produces once the PV panel was certified and the homeowner became a qualified generator. Generally, states have different classes of RPS Requirements for different technologies. In 2007, for example, Washington D.C. required that all suppliers of electricity to customers within the city supply around four percent of all electricity from renewable energy resources. However, the RPS Requirement was split into Class I, Class 2, and solar technologies. For the purposes here, the RPS Requirements for solar energy are most important. In 2008, the DC’s RPS Requirement was .001%, which means that .011% of all electricity in Washington DC must come from solar energy. ACP The ACP is a state-specific compliance fee charged to a Supplier by a state for every MWh of electricity the Supplier is required to produce from a renewable energy resource. As discussed, most states have Class I, Class II, and solar RPS Requirements, different percentages for each group of technologies. As such, these states also have differing ACPs for the different classes of technologies. Because solar technology is the most complex, and most expensive, the ACP values associated with SRECs tend to be highest and SRECs tend to be most valuable. Value: Locally, Capital Sun knows of one company offering $200.00 per megawatt hour, which is equal to 20 cents per kilowatt hour. Nationally, RECs values have ranged from a few cents to forty cents a kilowatt hour, It is still an evolving new commodity in the market. MARYLAND SOLAR ENERGY GRANT PROGRAM Last DSIRE Review: 07/29/2008 Note: Due to the high level interest in this program, funding for this program has been exhausted for the current fiscal year. New applicants will be put on a waiting list for future grants in the event that additional funding becomes available. The current waiting list can be accessed at the program website listed at the top of this page. Incentive Type: State Rebate Program EligibleTechnologies: Solar Water Heat, Solar Thermal Process Heat, Photovoltaics Applicable Sectors: Commercial, Residential, Nonprofit, Local Government Incentive Amount: Solar PV: $2.50/watt Solar Water Heating: 30% of the installed cost Maximum Incentive: Solar PV: $10,000 Solar Water Heating: $3,000 Eligible System Size:Solar PV maximum: 20 kW; Minimum sizes for both solar water heating and solar PV vary by sector. Equipment Requirements: Solar PV systems must meet applicable UL, IEEE, and NEC standards; solar thermal collectors must be SRCC OG-100 certified. Installation Requirements: On-grid and off-grid PV systems are eligible; 70% of the annual solar path’s area must be shade-free throughout the year. Program Budget: FY05: $103,500 FY06: $75,000 FY07: $412,000 FY08: $675,000 (combined solar and geothermal rebate) FY09: $591,000 (combined solar and geothermal rebate) Summary Maryland Personal Tax Credit for Green Buildings Note: As of August 2008, all available credits had been allocated. Those interested in the tax credit are invited to fill out a pre-registration form on the program website to find out when new credits will be issued. Enacted in 2001, this income tax credit applies to non-residential and residential multifamily buildings of at least 20,000 square feet that are constructed or rehabilitated to meet criteria set forth by the U.S. Green Building Council or other similar criteria. Newly constructed buildings must be located on a qualified brownfields site, or in a priority funding area, and not in a wetlands area. Building rehabilitation projects are eligible if they do not increase the size of the building by 25%, or if they are located in a priority funding area. Credits apply to three types of alternative energy sources: photovoltaics (PV), wind turbines and fuel cells. Tax credits for alternate energy sources can only be claimed if they serve a green whole building, a green base building, or green tenant space. The tax credit amounts are as follows: * 20% of the incremental cost for building-integrated photovoltaics; * 25% of the incremental cost for nonbuilding-integrated photovoltaics; * 30% of the costs, including installation, for a fuel cell; * 25% of the costs, including installation, for a wind turbine; * 6% of the allowable costs for the construction of or rehabilitation to a green base building or green tenant space; * 8% of the allowable costs for the construction or rehabilitation of a green whole building. * Allowable costs cannot exceed $120 per square foot in the case of a whole building or base building and $60 per square foot in the case of green tenant space. Credits will be allowed for amounts spent on or after July 1, 2001, and will be available for tax years beginning after December 31, 2002. Applicants must apply to the Maryland Energy Administration (MEA) to receive an initial credit certificate. This certificate will indicate the earliest taxable year that the credit may be claimed and an expiration date. Any unused credit may be carried forward and applied for succeeding taxable years for up to 10 years. There are some restrictions on eligibility, and there is an annual cap on the total number of credits allowed. These provisions are scheduled to expire on December 31, 2011 MARYLAND PROPERTY TAX INCENTIVES * Anne Arundel County - Solar Energy Equipment Property Tax Credit * Harford County - Property Tax Credit for Solar and Geothermal Devices * Howard County - Residential Property Tax Credit * Local Option - Property Tax Exemption for High Performance Buildings * Local Option - Renewable Energy Property Tax Credit * Property Tax Exemption for Solar Energy Systems * Special Property Assessment for Solar Heating & Cooling Systems * Montgomery County Property Tax Credit for Solar and Energy Conservation DEFUNCT MONTGOMERY COUNTY PROPERTY TAX CREDIT FOR SOLAR First, only owner-occupants of residential property are eligible. Second, the dollar amount of the sum of credits granted by the County annually is limited to an aggregate $250,000 for solar energy systems and geothermal systems and $250,000 for energy conservation measures. The credits are dispensed on a first-come first-serve basis. If the relevant $250,000 limit is reached in a year, then the credit applications go on a waiting list and will be granted in order the following year. The amount of a homeowner’s credit in any tax year must not exceed the amount of the County property tax imposed on the property in that tax year. Geothermal: Ground source heat pumps for heating and cooling. Solar energy: Photovoltaic and solar thermal collectors for electricity and hot water and space heating. Energy conservation device: An energy saving device such as new caulking, insulation, furnace efficiency modifications, or water heater insulation. Standard household appliances, such as a washing machine or clothes dryer, ARE NOT eligible for the conservation credit. Credit Amount. The credit allowed under this Section for a solar energy or geothermal device is the lesser of: “50% of the eligible costs; or all $5,000 for a heating system or $1,500 for a hot water supply system.” We think this means that solar energy systems can earn a credit equal to 50% of the system cost, except for solar water heating systems, which are limited to a maximum credit of $1500.00. It appears the maximum credit for a geothermal system is $5000.00. Based on the language, it might be that a solar space heating system can also receive a credit of up to $5000.00. A property owner cannot receive more than 1 credit per fiscal year for more than 1 geothermal or solar energy device per property. For all energy conservation devices, the credit is a maximum of $250 dollars per property. The energy conservation credit is limited to $250.00 per year, but can be carried over for two additional years USEFUL FACTOIDS Solar water heating systems are sized based on the number of people that live in the house hold. The more people the more hot water that is required the larger the system will need to be. Federal income tax solar energy credit regulations requires that the system be designed to meet over 50% of the projected hot water load to qualify. Solar water heating systems can be purchased in DIY kit form for $4,000. Solar company Installed systems typically cost between $5700 and $8,500 depending on the system size and type and difficulty to install. Used flat plate solar collectors are available in limited quantities. The Maryland Solar Grant Program has to All solar water heating systems that are installed are accept a pre-application for solar water required to comply with local code regulations and in heating system before they will agree to Montgomery County must be inspected by the WSSC on pay out on a solar grant. completion of the installation. Permits must be pulled by WSSC registered Master Plumbers. Commercially available systems and Other jurisdictions have similar permitting components are typically tested by either requirements and inspection procedures to insure code the Florida Solar Energy Center and are compliance. FSEC certified or the Solar Rating and Certification Corporation. SRCC develops and implements certification programs and national rating standards for solar thermal energy equipment. 25 COMMERCIAL EXAMPLE FREDERAL SOLAR TAX CREDIT INCENTIVE PAYBACK, NO INFLATION IN FUEL COST 57.8 MMBtu delivered to load year 1 Output Nine EC32 SunEarth Flat Plate Solar Collectors 100000 Btu/therm $1.60 Cost / therm Avg 578 Solar therms to load per year 0.7 gas heating system annual efficiency 826 Gas therms replaced $1,321 savings year 1, no inflation $11,217 Estimated Net installed cost 8.5 years to incentive based simple payback, no inflation $15,345 10 year savings, cpi and gas inflator per NIST LCC Guide System cost $22,125.00 Local incentive $3,000.00 Capital cost net state incentive $19,125.00 Fed Inv Credit $5,737.50 Net for depreciation, $17,256.25 85% of net capital cost is depreciable Net with Depreciation $11,216.56 3451.25 Year one depreciation 5522 Year two depreciation 3313.2 Year three depreciation 1987.92 Year four deprecation 1987.92 Year five depreciation 993.96 Year six depreciation 17256.25 Sum depreciation 0.35 Business tax rate $6,039.69 Value of depreciation PERMITTING DC requirements: Plot Plan Drawing Historic District Review PV Systems Electrical Building Solar Water Heating Building Plumbing DCRA Plot Plan $ 30.00 DCRA Building permit solar system $924.60 DCRA Electrical permit $ 36.00 Electric Contractor $ 150.00 Structural engineer $ 600.00 Plumbing Contractor $100.00 DCRA Plumbing permit $ 26.00 Copies 11 x 17 $ 30.00 Staples copies of drawings $ 5.05 Staples ledger BW $ 2.77 $1,937.42 $0.47/Watt Plus staff time to execute drawings, go to permit office Butler Sun Wand Solar Hot Water System with PV Powered Pump 40 Square Foot Panel Area Heat Exchanger Into Existing 50 Gallon Gas Water Heater 2.05 Kilowatt Grid Tie PV System Bid How to Determine If a Home or Business Is Suitable for a Solar Energy System 1. Is there an area to put solar collectors that is relatively, or preferably, totally shade free? Is there a south-facing roof area to mount the collectors on that has a clear “solar window”? 2. The next step is to see if there are any solar obstructions to the south of where you are considering placing your solar collectors. Cabin John and surrounding neighborhoods, and other areas like Takoma Park- Silver Spring, are Urban Forested areas with mature tree canopy that has to be respected. Is the Property Designated a Contributing or Outstanding Resource in a Historic District? If so, then NO to solar on the streetscape façade. SUNPATH VARIES THROUGHOUT THE YEAR GREEN, SUSTAINABLE, DESIGN MAKES A BUILDING THAT WORKS IN HARMONY WITH NATURE AND DOESN’T WASTE ENERGY FIGHTING IT SIMPLEST PASSIVE DESIGN IS DIRECT GAIN 33 One way to do a quick site analysis is to look up the property address on google.com > maps.google.com.
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