2013 Photovoltaic Solar White Paper. Geography: Tennessee, Mississippi and Alabama TVA Footprint

Transcription

1 2013 Photovoltaic Solar White Paper Geography: Tennessee, Mississippi and Alabama TVA Footprint Asset Types: Commercial, Medical Office Buildings, Retail, and Industrial Prepared by: Jeff O Connor, Inman Solar Memphis jeffo@inmansolar.com

2 Introduction: The objective of this white paper is to provide an overview of the incentives, programs, costs, and benefits of solar system installations for Mid-South businesses in For an owner able to take advantage of available incentives, a solar installation will provide a 3-5 year ROI, a 40-year revenue stream, a hedge against increasing energy prices, and aid in building the public image of a company or organization s commitment to environmental stewardship. With federal incentives and TVA s energy buy-back program, 2013 offers a financially appealing and energy-sustainable option for many business owners. Generally speaking, if a business owner can affirmatively answer the following questions, solar should be considered: Is the business located in the TVA footprint? Is the building owned, rather than leased? Is the business a for-profit company (rather than a church, school or government entity)? Are tax credits financially appealing to the business s tax situation? Is the roof less than 10 years old and location free from shade? Would the business benefit from positive pro-environment exposure like news articles, on-site kiosks, and/or industry events? Overview: 2012 was an extremely busy year in the Mid-South for the PV Solar Industry. A record number of local businesses and organizations were able to greatly enhance their financial bottom line by installing PV Solar to their roofs, parking lots, and/or grounds. It is anticipated that 2013 will see an even greater number of solar installations. Three primary factors have led to this strong increase within the Mid-South: Federal incentives, including tax credits and accelerated depreciation Favorable buy-back programs and other incentives via TVA Reduced cost of panels, through the consolidation of panel manufacturers and increased competition among manufacturers Further details on each of these areas are included within the following pages.

3 2013 Federal Incentives: There are two federal tax incentives available when installing a PV Solar system on a For-Profit commercial building: Federal Tax Credit: Qualified solar projects receive a tax credit equal to 30% of all expenditures associated with the solar project, with no maximum. The credit can be taken in one year or over time. This is a credit against federal taxes; not a reduction in taxable income. For building owners in higher tax brackets, this incentive is very attractive. Additional information on this tax credit can be found at: Depreciation Deduction: Under the Federal Modified Accelerated Cost-Recovery System (MACRS), PV solar owners may depreciate up to 85% of the cost of the entire system over five years. Typically, this deduction results in a reduction in taxes equivalent to 25-30% of the solar system cost. Additional information on accelerated depreciation can be found at: Each individual s tax situation is unique, and it is recommended that any business owner contemplating a solar installation consult his or her tax advisor for specific analysis TVA Performance-Based Incentives: TVA has recently finalized their new performance incentives for These incentives are immediately available to all TVA-based businesses: Green Power Providers: This program is a 20 year contract to purchase power produced by the solar array. Below rates are for 2013 and escalate yearly with retail rates and is capped at 50kW per building. TVA also provides a $1,000 first-month credit to get started. 10kW 50kW = $.19/kWh for years Retail rates years Renewable Standard Offer with Solar Solutions Initiative: This program offers contract terms of 10-, 15- or 20-years for projects from 51kW 20MW. Below rates are for 2013 and escalate yearly 1.5 3%. 51kW - 200kW = $.12/kWh 201kW - 1MW = $.10/kWh 1+MW - 20MW = $.06/kWh

4 Overarching requirements for acceptance into the TVA program include: Contract term of 20 years Payments from TVA to owner are via credits on the building s electrical bill Commercial projects require NABCEP certified companies (such as Inman Solar) to manage the installation(s) Program is limited to a total capacity of 9MW in 2013 Detailed application process, which Inman Solar coordinates on behalf of clients Cost of System Over the past several years equipment costs have fallen and panel efficiencies have increased. These two factors have fueled solar installation growth in the Mid-South and throughout the country. With market consolidation and tariffs, industry analysts predict equipment prices have now leveled off. Further, the quality of solar panels made today have production numbers per square foot that are more efficient than ever before. While every installation is unique, sample turnkey costing is provided below. 50kW PV System Assuming TVA/MLGW customer and 34% corporate tax bracket for MACRS Financial Information: Fully Installed Turnkey Solution Cost $3.60/watt or $180,000. This is the total cost before incentives and the only amount due. Federal Tax Credit 30% or $54, % of which can be used in year 1! TVA up front Installation Incentive $1,000. MACRS depreciation deduction over five years is $52,020. Green Power Providers estimated incentive total over ten years is $144,000. Estimated revenue generated over 50-year life of system is $755,000 Payback/ROI is 4.8 years and the IRR is 15.2%. Production Information: Estimated yearly power generation 68,750kWh. Equates to 9 cars off the road, 41,250 gallons of water saved, 13.8 acres of trees saved (4,600 trees), reduction of 50.8 tons of CO2, 610 lbs of NOX and 142 lbs of SOX.

5 About Inman Solar Inman Solar is a NABCEP certified installer providing turnkey (EPC) solutions. Scope of work for each assignment includes: Initial Financial Analysis Incentive Application Paperwork Detailed Design and Engineering Drawings Purchase of Equipment with Leveraged Scale Turn-Key Project Oversight and Execution Final Inspections Inman Solar has multiple offices throughout the southeast, including Memphis. Lunch and Learn educational sessions, initial site surveys and financial analysis are provided complimentary for any business owner interested in a possible solar installation. For further information, please contact Jeff O Connor. Jeff O Connor Inman Solar Memphis jeffo@inmansolar.com