THE TRUE BENEFITS OF SOLAR IN 2009!
Thousands of homeowners in California reap the advantages of solar electric systems by reducing their current and future electric costs. You’re already paying for electricity, but what tangible benefits do you have to show for it? Become an owner, not a renter, and invest in your own green power plant.
Gain Independence from Utility Companies
In 2006, the highest tier residential electric rates jumped 30–60% in one year! Most experts agree that electric rates will continue to climb faster than inflation. As your own energy provider, you lock in power at a fraction of the current charges and prevent future rate hikes. A solar power system will allow you to free yourself from the utility company and the instability of global energy markets.
Solar Power is Cheaper than Utility Power
Installing a solar power system is equivalent to prepaying for 40 years of power at a fraction of the cost you currently pay. The cost/unit of energy you pay now is higher than what you would pay with solar. As rates increase in the future, this difference will increase, leading to even more savings over the life of a solar energy system.
The Government Pays for a Large Portion of the Cost
The government currently offers two significant financial incentives. The California Solar Initiative (CSI) offers a sizable upfront rebate. These rebates usually cover 20–30% of the total system cost. Investments in residential solar electric systems are also eligible for a $2,000 federal tax credit.
Sunlight Can Make Your Meter Spin Backwards
When your system generates more electricity than you’re consuming, your utility meter will actually spin backwards. You accrue credit with your utility company at the same rate they are charging you. This allows you to reduce your electric bill and drive it toward zero.
Solar Power Systems Are Dependable
Photovoltaic (PV) cells were originally developed for use in space, where repair is extremely expensive, if not impossible. PV still powers nearly every satellite circling the earth because it operates reliably for long periods of time with virtually no maintenance. Once installed, the solar power system requires little or no maintenance (especially if no batteries are used), and will provide electricity cleanly and quietly for 25 to 40 years. Our solar panels carry a 25–year manufacturer warranty on their production.
Solar Power Is Better for the Environment
Generating electricity from solar energy reduces your consumption of fossil fuels, which decreases pollution and greenhouse gas emission. By switching to solar power, you will combat global warming and reduce our nation’s dependence of foreign energy sources. Even a small solar electric system has a significant environmental impact. For example, a 2.5kW solar system reduces CO2 emissions by an amount similar to that which would occur by planting 1 acre of trees, or the amount of CO2 emitted by a passenger car driving 7,800 miles per year.
The Time to Go Solar is Now!
Here are some of the key features of the stimulus package that benefit solar. In addition to these explicit benefits, there are many areas of spending that could include spending on solar, but aren’t required to. The bill was signed by President Obama on February 17, 2009. We’ve included the section references if there are any areas you would like to see in the specific language of the American Recovery and Reinvestment Conference Report.
- For 2009 and 2010 projects, solar projects that are eligible for depreciation or amortization (typically those owned by corporate tax filers) can receive a 30% upfront cash grant in lieu of the 30% tax credit. The 30% tax credit for individual filers (i.e. residential systems) remains unchanged. The Treasury Department will administer the grant program and is required to pay out each grant within 60 days of the receipt of each application [Section 1603]. The grant is not subject to federal taxes [Section 1104]. There’s no word yet on whether the grant will be assignable. The same eligibility of the investment tax credit applies; in particular, this means that governmental and non-tax paying entities aren’t eligible. Almost all PV applications should be eligible, with the lone exception being swimming pool heating.
- For 2009 projects, corporate tax filers can claim 50% bonus depreciation expense [Section 1201(a)]. The remaining 50% of the depreciation basis is expensed according to the 5-year MACRS schedule. The depreciation basis is still 85% of the total system cost (the total system cost less one half of the 30% federal grant) [Section 1104].
- The cap on solar hot water heating equipment has been removed, making it eligible for the full 30% tax credit (but not the grant) [Section 1122].
- Projects that benefit from subsidized financing will not have their federal grant reduced [Section 1103]. This will put tax-backed municipal loan programs on safer ground.
- A 30% tax credit for factory equipment used in the manufacture of renewable energy equipment (including solar). The total budget for this tax credit is $2.3 billion [Section 1302].
In October 2008, the Energy Improvement and Extension Act of 2008 extended the tax credits once again (until December 31, 2016), and a new tax credit for small wind-energy systems and geothermal heat pump systems was created. In February 2009, The American Recovery and Reinvestment Act of 2009 removed the maximum credit amount for all eligible technologies (except fuel cells) placed in service after 2008.
For more detailed information concerning the residential renewable energy tax credit, follow this link to the Database of State Incentives for Renewables & Efficiency (DSIREUSA.org).