SYSTEM INCENTIVES & FINANCING

LIPA Area Residential Solar PV Electric Power Generation Systems Incentives & Financing Options

Incentives typically offset or fund up to 70% of the investment in a net metered residential Solar PV system. In some cases even more. The tax free return on investment overall can be quite high, often 13% or better.

Some or all of the initial investment or the post incentives net, may often be financed at a low interest rate over time, allowing a homeowner to start saving money as soon as it is installed - paying less per month than they were paying to the utility for electricity. Sometimes special financing offers provide a no deposit and no or low interest period.

In some situations the system may even essentially be free, paying no more than you did when you made your utility payments over time, but with solar the payments eventually go away completely.

Those who do not want or do not qualify for financing, those who prefer to only finance for a short period of time or to pay the post incentives balance off immediately (to avoid financing's interest costs and increase ROI), often experience a system payback of as little as 4 to 10 years, providing free, clean renewable energy for decades afterwards that is not subject to fuel spikes or utility rate increases.

Good financing options include structured home equity loans or equity lines of credit, featuring low interest rates and in many cases the interest will be tax deductible.

A qualified LISEIA Member Contractor will provide a homeowner with an assessment of each site, a proposed system that is custom designed & appropriate to the home based on best local practices and weather records, possible options to consider and an explanation of the likely economic benefits for you to review with your tax professional.

There are three readily available incentives most LIPA customers may take advantage of. A Utility Rebate from LIPA, a Federal Investment Tax Credit and a New York State Tax Credit.

1. LIPA Rebate.
As of April 2011 the LIPA rebate was $1.75 per DC watt of installed panels. A 10,000 watt system can have a rebate of as high as $17,500.00. The rebate is limited to 10,000 watts or the watts needed to produce a maximum of 105% of the home's prior year's recorded usage, whichever is lower. The rebate cannot exceed 50% of the total system price.

A larger system up to 25,000 watts is allowed, but LIPA's rebate will not apply to any extra watts. The rebate is not taxable income. Some contractors accept the rebate on assignment from LIPA, so that you do not need to lay that money out and wait for a rebate check from LIPA post installation.

2. Federal Investment Tax Credit.
The homeowner receives a 30% tax credit on the post rebate net amount. There is no cap on this.

3. New York State Investment Tax Credit.
The homeowner receives a 25% tax credit on the post rebate net amount. There is a $5,000 cap on this and it only applies to a homeowner's primary residence.

A homeowner who is not paying Federal or State taxes (certain retired individuals may be exempted) may not benefit from one or both tax credits. Tax credits apply to the filing for the fiscal year in which the system is placed in service, but can often be spread over multiple years if necessary. While LISEIA and solar contractors can suggest what incentives may be available, a homeowner must always consult his or her tax professional to confirm eligibility.

When investing in solar, ask if there are any additional incentives including other rebates, grants, property tax abatements, special low cost loans or other financing. This may come from the utility, local, state or federal government. That information is usually listed on www.dsireusa.org along with details for the three incentives listed below.
 
In the LIPA area of Long Island, residential net metered solar PV electric power generation systems can be as large as 25,000 watts (25kW or 25 kilowatts) in compliance with NYS Net Metering provisions. Few approach that size. Typical single residence home systems ordered in 2010 and 2011 were in the 4,000 to 10,000 watt range.

There are many factors that affect the size of the system. A system is normally designed by your LISEIA Member Contractor to offset some or all of the home's expected electrical consumption, based on the total kilowatt hours of usage measured over the prior 12 months. With net metering your produced power avoids an electrical bill at the full retail rate, for each kWh produced. You can oversize the system, but there is little incentive to do so as the excess power over your normal consumption is purchased at the end of the year at a lower rate, not full retail.

System size and design takes into account the amount of unshaded roof space available, type of roof, budgetary limitations and aesthetic considerations.

The total price of a system varies widely, as there are many factors involved. There is no 'standard' price, though the total cost of systems in general has dropped substantially in recent years due to a reduction in the cost of the equipment & materials.

Some key factors in the current cost of a system include:

1. Difficulty and complexity of the physical installation.
Some houses allow for very simple, fast, cost effective installations. Others require special equipment, electronics and materials, as well as safety equipment for workers such as scaffolding, special mounting systems, trenching, hidden conduit, etc. A four story home with a slate roof, steep pitch unwalkable roof with numerous architectural elements and shade, skylights and vents, may be far more labor intensive than a one story walkable roof with asphalt shingles. If the home has severe shade issues, requires custom racking, micro inverters and trenching, these are all additional potential costs.

2. Solar module, racking, inverters and monitoring.
These are the major components in a solar PV system. The brand, model, style, quality, durability, efficiency, warranty period & terms and many other equipment based factors have an impact on cost. Size of the system often makes a difference, as economies of scale come into play. Smaller arrays generally cost more per panel than larger arrays. A solar panel/module that produces more power per square foot, often costs more than one that produces less per square foot. A system that is installed with high end racking and an optional flashing system will have a higher materials cost than a base racking system installed without flashing. Monitoring systems and their complexity and range of capabilities can add to the cost.

3. Permitting, system approvals, engineering documentation and certifications.
Local permitting, building department procedures, inspections, related engineering and miscellaneous paperwork & filing requirements vary. Municipal requirements and compliance can affect overal system cost. In a few areas no permit is required, in others there is. In some extensive filing requirements and layers of review exist, including for tree removal. Most of Long Island has improved greatly in terms of supporting solar installations and removing previous barriers to implementation. Most municipalities now encourage solar as it has tremendous public health and environmental benefits, improving quality of life and reducing the cost of living on Long Island.

4. Contractor & Company.
The best business practices of responsible and experienced solar companies, with state of the art equipment and shade analysis systems, the expertise and ability of the sales, design, installation and customer service staff, all affect the cost of the installation and how well the system will perform over the decades for the homeowner.

LISEIA Member Contractors are highly qualified, licensed, insured and trained professionals who have signed an ethics document and are held to the highest standards. They regulary attend industry meetings to stay current on code changes and best practices, in order to assist a homeowner in selection of an appropriate system, installation approach & options. We encourage homeowners to request multiple estimates and interview more than one contractor to ensure they get the optimum solution. Of course they should consider having a solar system installed by a Blue Ribbon LISEIA contractor, the best and most qualified professionals on Long Island! Quality begins at home.

5. Long Term System Costs.
Modern residential PV systems are extremely reliable and have little or no maintenance requirements requiring ongoing contractor intervention or homeowner cost. With a properly installed, quality system, you are less likely to have future maintenance or repair costs outside of the warranty period. Systems with a longer and better warranty, provide peace of mind and a lower likelihood of required out of pocket future repairs. Panels often come with performance guarantees of up to 25 years. Properly installed systems protect and extend the lifetime of your roof.

A solar PV system is an investment that will provide decades of reliable, clean, safe power when properly designed, serviced and installed. It is important to consider the differences between a good value and a cheap installation. We all look for good value, as we should. Few of us however would buy a cheap parachute!

What is the gross price of a system before incentives? While that is not nearly as important as the final out of pocket cost post incentives (if any), the reliability and production of the system or the services provided by the company that stands behind the system and has adequate staff to provide superior customer service, it is still a good question.

There isn't a definite price range and total price will vary based on the site, also as the cost of materials goes up and down. So while you should invest in a system based on the value it presents and its suitablity to your home and your specific requirements, we can give you an idea of some extreme ends of the possible ranges.

It is rarely a good decision to make a purchase based on the price per watt. If price were all that mattered, we'd all be driving used Yugo's. Performance, quality, reliability, safety and aesthetics do matter. So price per watt is probably the least important factor in your decision, value and quality should be the main considerations. A solar electric power system is a major investment that will serve your home and protect you from high fuel costs for decades. It will also increase the value of your home, the usual guidline being the annual savings expected over 20 years.

However if you are comparing systems purely on a cost basis, divide the total gross price before incentives by the total system watts, you will get a price per watt.

It is difficult to provide a definite range of residential systems using price per watt, as there are so many other factors, just a few are listed above. Currently in our area, many solar systems range in price from as low as roughly $4.50 per watt up to $7.50 per watt or more, if you convert from total price to price per watt.

According to LIPA's website a typical average size system price could work out to around $5.80 per watt. At that rate a mid size 6,000 watt/6kW system would have a gross price fully installed of $34,800, less a $10,500 LIPA rebate, less $12,290 combined federal and state tax credits. Final post incentive net cost to the homeowner of only $12,010 with approximately 65% of the system funded by incentives!

Installed in a shade free area facing due south at a 35 degree panel angle, the system could produce approximately 7,628 kWh (kilowatt hours) per year. In the LIPA area you are likely paying between 19 and 25 cents per kWh when all of the taxes, fees, fuel surcharges, PILOTS, Shoreham assessment and other charges on your bill are taken into account.

If we assume $ .21 per kWh for this example, at today's electric rates the savings in the first year would be $1,600.00 in the first year. If the cost of electricity never rose again (unlikely) the balance of the system would be paid back in 7.87 years. The return on investment would be in the neighborhood of 13%.

LISEIA member contractors are currently offering a $500.00 discount for contracts signed through 6/30/2011, to further reduce the investment. The coupons may be downloaded from this website.

Of course if electric rates rise due to increased cost of fuel and other factors (very likely) then your return on investment will be larger and your payback faster.

Your exact cost, sizing and economic return will be dependent on what size array you get, how efficient the modules are, how difficult your installation is and many other factors. Some systems of the same size will cost more or less than the example given.

Based on options and other factors mentioned previously, including sales in effect. A lower price for the same size system, assuming production is the same, will result in a faster payback and a higher economic return. A higher price for the same system a longer payback and lower economic return.

Four extreme examples follow with pricing from the extreme ends of the per watt ranges above, only to give you an idea of what systems may cost, these do not represent the typical system or actual retail pricing.