Media / Press Releases
BOTTOM LINES / SOLAR BUSINESS SUBSIDIES NEVER BRIGHTER
April 30, 2004
Kevin Post, Business Editor
Press of Atlantic City, The (NJ)
I guess you could say the forecast is for sunny days ahead for solar power companies in New Jersey.
Solar power is probably filed in the back of your mind with technologies like fusion and hydrogen power, whose promising future is always just a decade away.
Solar seemed to forever be waiting for lower costs, better efficiency and higher utility rates to become competitive with Conectiv.
Consequently, state and federal governments have provided substantial subsidies to encourage people to install solar electric generators on homes and businesses.
Here's the great news: Improved solar collectors and higher utility rates have boosted the return on such installations, but not quite enough yet to signal government to scale back the subsidies.
We're in a sweet spot right now that we'll never be in again: big rebates and tax breaks, durable efficient equipment and electric utility rates freed by deregulation to head much higher.
Michael Cafiero's LBI Solar company installs residential electric systems. It's an easy sell, since the state rebates about 70 percent of the cost of such systems or about $550 per watt generated.
"I only ask customers for their 30 percent share of the cost," Cafiero said this week. He files the paperwork and gets the other 70 percent directly from the state.
That's not all.
A new renewable energy credit from the state provides for payments to solar owners for 10 years.
"Even a small system that cost $7,100 will probably get $300 a year in renewable energy credits for 10 years," he said. "Even without that program the economics were fine. Now it's totally the right time."
And that's with utility rates where they are and that small system replacing about $500 a year in electric bills. If rates go up (If? IF!?) the savings will be that much greater.
Cafiero said solar systems pay for themselves in eight or nine years. Since the solar panels are guaranteed for 25 years (and he thinks they'll last about 50), the long-term savings are substantial.
The picture for business is just as good or better.
The state rebate is a little less - 60 percent of the installed cost - but businesses can claim a lucrative federal tax credit of 10 percent of the remaining cost.
And any cost not rebated or covered by the tax credit can be written off as a business expense, further reducing taxes.
That's not all for businesses, either.
SolarWorks NJ of Turnersville, for example, is installing an 85-kilowatt system on the high-tech South Jersey Healthcare Regional Medical Center in Vineland. It will have more than 450 Sharp solar panels and should supply most of the hospital's electricity, SolarWorks CEO Steve Masapollo said.
Whenever the system produces more electricity than needed, it will earn money for the hospital by supplying power to the grid.
Businesses don't even need to buy the systems themselves.
Through the Sun Free Program, a joint venture between SolarWorks NJ and Sun Edison, a business provides a suitable solar collection site and investors purchase and install the solar system.
For just a $10,000 system management setup fee, a business can be equipped with a $1 million solar system guaranteed to save the business 10 percent of its power cost. "That could easily save them $40,000 a year," Masapollo said.
There is one essential qualification for business and residential solar systems: A surface (a roof in almost all cases) that isn't shaded, and faces somewhere between east, south and west.
And there's one more big benefit.
Solar is the ultimate clean energy.
Masapollo figures the South Jersey Healthcare system will reduce carbon dioxide emissions alone by the equivalent of 40 cars a year.
It might all sound too good to be true, but I think it's just too good to last.
As utility rates go up, rebates will come down. It will still be a good deal, but perhaps never as good as now.
Copyright, 2004, South Jersey Publishing Company t/a The Press of Atlantic City