Solar energy presents a welcome relief to the financial strain being felt all over the country by skyrocketing electric bills. In addition to the cost incentives immediately available, making the switch to solar presents many other benefits. It’s a great boost to the value of your property, and that value boost is non-taxable in many locations, such as New York State, where your property taxes are not allowed to increase because of a renewable energy system. It’s a tremendous financial investment that positions you to reap the benefits of free energy for years to come and take your ROI to a new level. And of course, you’re reducing your carbon footprint, helping the environment, and becoming part of the green energy solution that is making our planet a better place to live.
Keep reading to find out how much we can help you save!
DISCOVER YOUR STATE’S INCENTIVES
Click on your state in the Smucker’s service map to learn more about what’s being offered to help you save money on your alternative energy installation. We have plenty of experience dealing with Federal and local government offerings of all kinds, and we’re prepared to help you offset as much of your system expense as possible.
FEDERAL TAX CREDIT
The federal government offers a tax credit (known as the Solar Investment Tax Credit) on systems that begin construction before December 31st, 2019 for 30% of the system cost, with no cap (a limit of $2,000 was removed from residential systems back in 2008). It’s important to note that this is a credit and not a deduction; a deduction is removed from your taxable income, but a credit is directly removed from your final tax liability. If the 30% exceeds your total tax liability for that year, it can be rolled over to the following year and further deducted from your liability for that year. Currently, the 30% credit period ends on December 31st, 2019 and gradually ramps down over the following three years to 10%, after which it ends completely for residential systems and stays at 10% for commercial systems for the foreseeable future.
With these changes on the horizon, now is the time to move on making the switch to clean energy. Contact a Smucker’s representative today to find out how much you can save by going solar
Net metering is another money-saving aspect of going solar that more and more states are integrating into their clean energy policies; 43 of the 50 states have adopted net-metering policies as of 2015. The basic principle is as follows: excess electricity generated by a solar system can be fed back onto the grid and credited to a customer in two ways: (1) it can be reserved as stored or “banked” production with the local utility that the customer can draw down from when his system isn’t producing electricity, and (2) further excess electricity beyond the customer’s consumption can (in some states) be sold back to the power provider. This excess, when sold back, is typically sold at a wholesale rate to the utility and is capped in some states (such as in New York, where the overage limit is 10%). Generally speaking, 10% of production is where your system size stops being financially advantageous due to the added cost of sizing up the system.
Net metering is the basis behind the statement “making the meter run backward.” During peak production hours, your solar system will be generating more electricity than your current needs are, thus making the meter numbers accumulate in a negative direction, creating a credit on your bill (more info on this on our FAQs page). It’s important to remember that your solar system is sized for the whole year, based on 30 years of historical weather data from your region. You will still have an electric bill in the winter (the highest-usage months), but you’ll run a negative in the summer months that will bring you back to zero over the course of a full year. Utilities have a “true-up” month, usually April, where they will pay you for any excess you generated beyond 100% of your usage for the year. This excess is typically paid at a wholesale rate.
Virtual/remote net metering is a great way for individuals with multiple facilities or locations to install a system on the most suitable site (economically and geographically) and reap the benefits across their various meters. Virtual net metering allows companies and organizations to have one centrally-located system produce for multiple meters under the same ownership so that only one system is necessary to offset energy consumption for multiple facilities, then proceed to sell the excess production back to the local utility. Solar systems for multiple meters are sized to accommodate the power needs of all the buildings it needs to offset. If you’re a business or organization with several buildings connected to different meters, you stand to benefit in a big way from the benefits that net metering and virtual net metering offer.
Smucker’s Energy works with you to get your system approved with the local utility for net metering, as well as setting up inspections with the utility before the system is switched on—so it’s all handled for you from start to finish.
USDA REAP GRANT
For rural small companies, local government offices, and agricultural businesses (such as farms), the United States Department of Agriculture instituted a grant/loan program in 2003 that sought to assist these institutions in establishing clean, renewable energy sources (like solar systems and wind generators) that would ultimately lead to massive cost savings. With the USDA now accepting grants year-round (with yearly deadlines on April 30th and October 31st), Smucker’s stands ready to help you save thousands on your eligible solar or wind installation by handling the applications for the grant start to finish. If you qualify for a USDA grant, you may be in a position to save over 50% of your base system cost with the Federal tax credit and other local incentives taken into consideration.
The grant program (called the Rural Energy for America Program, or REAP) is for up to 25% of the total solar or wind system cost, with a cap of $500,000. Eligibility is limited to small businesses (as defined by federal standards), farms, land-grant universities and colleges, government offices, and electric cooperatives and public power companies located in designated ‘rural’ bounding areas by the USDA (agricultural producers are not limited to the rural bounding areas). There are a few guidelines to keep in mind when calculating grant eligibility:
- The USDA REAP is a “competition” grant, meaning that grants are non-guaranteed and are organized according to the requested amount (below $20,000 and above $20,000, also referred to as “Unrestricted”). Applicants within their respective categories are essentially competing against each other for grant money. Grants are paid out according to technical merit, energy efficiency, project readiness, and more. There are specific annual application deadlines for the grant—for 2016 and presumably, beyond, the $20,000 or less deadline is October 31st, and the Unrestricted is April 30th(similar to Tax Day, these dates automatically adjust to the closest following business day). The USDA conducts an on-site inspection of all awarded systems, and following approval, they send their grant payment via the SAMs systems as soon as “[the applicant] fully utilizes the funds from [their] matching share” (per the USDA website). Projects must start construction within 24 months of receiving the grant.
- Site usage must be considered at least 51% commercial (or otherwise eligible) power to apply for the grant. For properties that are both residential and commercial in nature, the grant can only be calculated based on the percentage of electricity used commercially. In other words, if a farm and a home are on the same meter, and the farm uses 60% of the electricity fed to that meter, the USDA grant amount will be calculated using a number that is 60% of the system cost—not the total system cost. If there are separate commercial and residential meters, only the commercial meter is eligible for the grant.
- There are three grant application tiers: projects costing under $80,000, projects costing between $80,000 and $200,000, and projects costing over $200,000. Each tier has its own application form that needs to be submitted, but Smucker’s Energy works closely with you to correctly fill out and submit each form according to your system specifications.
Over $60 million in grants and loan guarantees was awarded in 2015 after the USDA expanded their program and budget even further to encourage submission and streamline the application process. The REAP Program continues to serve as one of the premier incentives for qualifying agricultural entities looking to transfer to affordable, renewable energy.
RECS, SRECS, AND AECS
WHAT ARE THEY?
If you’ve spent any time researching the financial aspects of the solar market, you’ve no doubt run into the conversation regarding RECs—Renewable Energy Credits, also known as Solar Renewable Energy Credits (SRECs) and Alternative Energy Credits (AECs). Although a lot of confusion can stem from the various names and resources, the important thing to understand, first off, is that these are all one and the same. They are credits (and we’ll refer to them hereafter as SRECs), monitored by a state-specific tracking system, that are generated by your PV system’s energy production—for every megawatt hour (mWh) your system produces, you receive one SREC from the tracking entity your system is registered with. A 15-kilowatt system in the Northeastern United States will produce, on average, about 18,000-kilowatt hours of production over the course of a year—or approximately 18 SRECs.
WHY DO THEY HAVE VALUE?
In an effort to encourage clean energy, many states have passed legislation requiring the power companies inside their borders to show proof that a certain percentage of their sold energy is coming from renewable or clean sources. This proof of clean energy can either be produced by the power company itself (with its own solar energy systems) or acquired from private solar energy producers with the purchase of their SRECs. Power companies are charged an Alternative Compliance Payment (ACP) for not meeting the minimum “clean” percentage, and SRECs continue to hold value in their market as long as they are cheaper for the power companies to purchase than the ACP imposed by the state for not meeting the minimum threshold. So when your system generates SRECs, they are generating a valuable commodity that can be sold on the SREC market—further aiding in expediting your system payback time. This is why large systems, such as commercial and agricultural installations, stand to benefit in such a big way from registering in the SREC market.
HOW MUCH IS AN SREC WORTH?
Like the stock market, an SREC’s value is always changing, depending on many factors including supply and demand, the state’s clean energy minimum, the ACP charge, and more. All of these factors are specific to the state and its policies, so for example, an SREC in Pennsylvania may not be worth as much as an SREC in New Jersey (and, generally speaking, your system can only be registered within one state). At the time of this writing, a Pennsylvania SREC was worth approximately $40, and a New Jersey SREC was worth around $200. This means that for your 15-kilowatt system, you could expect to make between $700-$750 annually on the sale of your SRECs in Pennsylvania, and about $3,600 in New Jersey.
WHAT STATES HAVE AN SREC MARKET, AND WHY IS THERE SO MUCH VALUE DISCREPANCY BETWEEN STATES?
As of this writing, Delaware, Massachusetts, Maryland, New Jersey, Ohio, Pennsylvania, and the District of Columbia have SREC markets (with some neighboring states allowing systems installed within their borders to register with select states that have markets—see SRECTrade.com for an in-depth breakdown). The reason for such wide gaps in value state-to-state is similar to the explanation for what gives an SREC its value in the first place: different states have varying degrees of demand for SRECs (some markets have been flooded), and different states have varying levels of strictness in their clean energy policies imposed on local power providers (affecting the SREC’s overall value). These factors and more all contribute to how much a state’s SREC is worth at a given time, and different states are simply at different points in the cycle of the SREC.
WHAT HAS THE VALUE OF THE SREC DONE HISTORICALLY, AND WHAT IS IT PROJECTED TO DO?
Generally speaking, the establishment of an SREC market takes place near the beginning of a state’s solar surge—or rather, it creates the surge. Very high SREC prices increase the overall solar investment, meaning the SREC starts high and begins a very slow and gradual downward trend. However, as national and local governments continue to make the shift towards clean and renewable energy, more and more policies are established to encourage its growth—including raising the percentage of energy each state wants to be generated from renewable sources. As soon as that percentage increases, power companies are required to purchase more SRECs to satisfy the minimum, and the market value of the SREC spikes back up. The life of an SREC is cyclical, and states, where the value is low, are simply waiting for the minimum threshold to be raised by the legislation.
The bottom line is that SRECs, whether high or low, hold value, and the return of their sale is money for the system owner that wouldn’t be had otherwise.