SOLAR
HOT WATER
COSTS AND INCENTIVES
From our observations, solar hot water heating systems generally
range in cost from $9,000 to $16,000. The systems Solar Energy Solutions,
Inc. installs generally range in price from $10,000 to $14,000.
The reason for the price difference is due to the complexity of
the installations.To find out more on how these systems are sized
and work, click here or go to our FAQ
page for solar hot water. Our prices are higher than some and lower
than others. However, what we feel we do better than all is our
hands-on approach to each and every aspect to each and every install.
Even before a job is started, we bring to all potential projects
personal and courteous customer service. This is something we provide
all along. We pick up our phones. If we are going to be late
or if there is some deviation from expectations, we are on the phone
discussing it. We also like to think of our installations as pieces
of art, masterfully installed. We care about the quality of the
components used and the eye for detail installations should have.
Site Specifications
There are a couple of site-specific technical specifications concerning
your potential solar site which you need to be aware of. One of
the first things you want to think about when considering solar
is how good of a solar site you have. The incentives that exist
are really only meant to incent solar systems placed in the most
optimal of locations. In other words, in order to get your hands
on these incentives, your house has to have a roof that has access
to 75% or more of the yearly sun. This means you really can’t
have any shade falling on the roof where you want your solar system
installed from 10 am to 4 pm. The roof does have that 25% leeway,
but it gets used up pretty fast.
The other specification to be aware of is the life left remaining
on your roof. The Energy Trust, especially, wants the roof your
solar system goes on to have at least 15 years or more left remaining
on it. If this is not something you can remember or verify and the
roof life is a bit iffy, you should call a home inspector or a roofer
to come on out and take a look at things. Make sure they leave you
something in writing as proof you have 15 years or more left remaining
on your roof.
Finally, don’t feel you can’t go solar just because you
don’t have a perfect solar site and are not eligible for all
the incentive. Every year Solar Energy Solutions, Inc. installs
systems which fall outside of the ideal scenario the incentives
are set up to support. The incentives are great, but not essential
to an installation.
Economic Reasons to GO Solar
Before we go any further, we should probably address the persistent
issue of payback. Simply put, payback isn’t the issue, because
a simple arithmetic calculation of up-front costs versus reduced
monthly expenses just doesn’t capture the relevant factors.
Just like a car, TV, cell phone, or whatever, the real payback is
in having something that does something for you, not recouping the
costs.
However, unlike any of the aforementioned things, there are strong
economic reasons to considering going solar. Solar systems will
give you a return on investment that is completely risk free and
tax free. On top of this, your solar investment will triple or quadruple
in value over the course of 10 years due to energy prices tripling
or quadrupling every 10 years or so. And, solar systems increase
your property value by the cost of the systems, yet because of the
incentives, only cost you a fraction of that total. Of course, my
favorite incentive is conservation. If conservation is not on your
mind even a little bit and simple payback the only thing of relevance
to your decision to go solar, solar may not be for you.
Solar Incentives
There are currently three entities which incent the installation
of solar hot water heating systems: the Energy Trust of Oregon,
the Oregon Department of Energy through a state income tax credit,
and the federal government with a federal income tax credit.
The Energy Trust of Oregon is funded by money it receives
through PGE, Pacific Power, and Northwest Natural Gas. There are
also a number of smaller utilities that pay into the program. These
utility companies take 3% of the money we pay them in our bills
and redirect it to the Energy Trust. The Energy Trust then redistributes
this money into renewable energy and energy conservation programs.
The way this pens out for solar is in direct reduction in price
incentives. The reduction varies by system performance and utility
area. It varies by system because the incentive is a performance-based
incentive and different solar hot water heating systems produce
different amounts of energy savings. It varies by utility company
because a Monarch butterfly landed on a budding rose that was then
plucked and placed on Jim Morrison’s grave. In other words…we
don’t know. What we do know is, the greater the energy savings,
the greater the price incentive from the Energy Trust. For example:
If you had Solar Energy Solutions, Inc. install a system that cost
$11,000 and if your primary hot water heater was heated by electricity
in PGE land, and you installed our highest-performing Solar Hot
Water Heating system, you would qualify for a $1,120 price incentive.
This $1,120 comes right off the top of what you would otherwise
pay Solar Energy Solutions, Inc.. This means your net cost to Solar
Energy Solutions, Inc. would be $9,880.
$11,000 Installed cost
- $1,120 Minus Energy Trust incentive
$9,880 Equals your out of pocket cost
Remember, different systems qualify for different incentives based
on performance and the utility company involved.
The Oregon Department of Energy has since 1986 been on the
cutting edge of encouraging people to go solar by means of tax credits.
Oregon’s tax credit program for solar has always been an example
to the rest of the nation. Like the incentive from the Energy Trust
of Oregon, the state income tax credit is based on the performance
of a system. Different systems qualify for different tax credit
incentives. Also, like the Energy Trust, the state is only looking
to incent ideal solar scenarios. The Oregon Department of Energy
is a little looser than the Energy Trust and does not have a roofing
specification and allows lesser tax credits for systems mounted
on roofs with 50% to 75% of the annual available sun. The maximum
state tax credit for solar hot water heating is $1,500. You get
this tax credit incentive when you file your state income taxes.
Remember, this is a tax credit, not a tax deduction. Tax credits
are better than tax deductions because they come right off of your
state income tax liability. For example, say you have paid the state
of Oregon $4,000 in taxes throughout the course of the year. Because
of deductions and allowances, say you get $500 back. Well, if you
install a solar hot water heating system, you can get back an additional
refund of up to $1,500.
People are always complaining about how they never get anything
for their tax dollar. Here is a way you can get your tax dollar
right back into your pocket and install a solar system to boot.
But remember, you do have to pay a state income tax in order to
get the tax credit. If your income tax liability is low, the state
gives you up to 5 years to absorb the full amount.
I remember when I received my $1,500 tax credit when I installed
my solar hot water system in 1992. It was an afternoon in May and
I was doing some office work when I heard the mailman come to the
door. On this particular day he only had one piece of mail and it
was from the Oregon Department of Revenue. With one eye closed and
the other half open, I opened the letter wondering what the bad
news could be. But then, as I peeked inside, what should my wary
eyes see? A check for $1,500 bucks. Yippee! I said as I ran through
the offices yelling, “Isn’t government GREAT?!” How
often can a person yell that?
The Federal Government is the final place currently available
for solar incentives. There is a NEW, 2009, uncapped 30% federal
income tax credit. Unlike any of the other incentives, there
are no technical or solar site specifications on this incentive.
No matter how big or small your system is, how sunny or shady your
site is, how new or old your roof is, you qualify for the federal
income tax credit. However, it does assume you pay what is called
a minimum federal tax. So, it would be wise to talk to your tax
person first on this matter. But, assuming you qualify, it is, like
the state income tax credit, a dollar for dollar tax credit, going
against your federal income tax liability
Economic Summery
To summarize. if Solar Energy Solutions, Inc. installs the solar
hot water heating system mentioned above for $11,000 it would qualify
for the Energy Trust of Oregon reduction in price incentive of $1,120,
a state income tax credit of $1,500 and a federal income tax credit
of $2,964. This means under this scenario, there would be a total
of $4,580 in incentives. This would bring your total system cost
down from $11,000 to $6,420. WOW!
$11,000 Installed cost
- $1,120 Minus the Energy Trust incentive
$9,880 Out of pocket cost
- $1,500 State income tax credit
- $2,964 Federal income tax credit
$5,416 Net cost!
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