SOLAR
HOT WATER
COSTS AND INCENTIVES
From our observations, Solar Hot Water Heating
systems seem to range in cost from $9,000.00 to $16,000.00. The
systems Solar Energy Solutions, Inc. installs generally range in
price for $10,000.00 to $12,000.00. This price is higher than many
and lower than others. What we feel we offer better than most, is
our hands on approach to each and every install. Even before a job
is started we bring to each potential project 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.
There are a couple of technical specifications concerning your
potential solar site which one has 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 only really
meant to incent solar systems placed on 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
8am to 6pm. One’s 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 the incentive. Every
year Solar Energy Solutions, Inc. installs system which fall outside
of the ideal scenario the incentives are set up to support. The
incentives are great, but not essential an installation.
Before we go any further we should probably address the irrelevant
yet omnipresent issue of… Payback. Simply put, there is none.
Just like a car, TV, deck, hot tub or whatever, the payback is in
having something you want not on recouping the costs. However, unlike
any of the aforementioned things, there are strong economic reasons
to considering going solar. A Solar system will quadruple in value
over the course of 10 years due to energy prices quadrupling every
ten years or so. Solar systems will give you a 1% to 5% return on
investment that is completely risk free and tax free. That is pretty
exciting. 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.
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 an entity was formed in 2005. It
exists and 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 in price
incentive varies by system performance and utility area. It varies
system 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 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 reduction in price incentive from the Energy Trust.
For Example: If you had Solar Energy Solutions, Inc. install a system
that cost $11,000.00 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 $1,020.00
reduction in price incentive. This $1,020.00 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
$9,980.00.
$11,000.00 Installed cost
- $1,020.00 Minus Energy Trust Incentive
$9,980.00 Equals your out of pocket cost.
Remember, different systems qualify for different incentives bases
upon performance and utility.
The Oregon Department of Energy has been on the cutting edge of
encouraging people to go solar with tax credits since 1986. Oregon’s
state income tax credit program for solar has always been an example
to the rest of the nation as one of the best. 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
$1,500.00. 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 you state income tax liability. For Example: Say you have
paid the State of Oregon $4,000.00 in taxes throughout the course
of the year. Because of deductions and allowances, say you get $500.00
back. Well, if you install a solar hot water heating system, you
can get back up to $1,500.00 additionally. 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. Remember, you 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 $1,500.00 tax credit when I installed
my solar hot water system in 1992. In 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 peaked 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 final place currently available for solar incentives is the
Federal Government. Until the end of 2008, there is a 30% Federal
Income Tax Credit up to $2,000.00. Unlike any of the other incentive,
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. Unfortunately, the Federal
Tax Credit for Solar is going away by the end of 2008. So unless
it is renewed, it is gone and systems must be installed and functioning
by the end of 2008.
To summarize. If Solar Energy Solutions, Inc. installs the Solar
Hot Water Heating System mentioned above for $11,000.00 it would
qualify for the Energy Trust of Oregon reduction in price incentive
of $1,020.00. A State income tax credit of $1,500.00 and a Federal
income tax Credit of $2,000.00. This means under this scenario,
there would be a total of $4,520.00 in incentives. This would ultimately
bring your total system cost down from $11,000.00 to $6,480.00
$11,000.00 (Installed Cost)
- $1,020.00 (Minus the Energy Trust reduction in price incentive)
$9,980.00 (Out of pocket cost)
- $1,500.00 (State Income Tax Credit)
- $2,000.00 (Federal Income Tax Credit)
$6,480.00 (Net Cost!)
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