by Laura Combs, ESL Business Development Director

For those considering investing in solar energy for their business, non-profit or home, really thinking about and understanding what solar panels can do for you can be confusing. If you are like I was, you think that solar energy is a great idea but you can’t quite see how it actually benefits you financially. Few people are fluent in kilowatts (kW), kilowatt hours (kWh), demand charges and other energy terms, and most of us definitely don’t think about them every day or even once a year. They are something reported on our electricity bills to be glanced over as we get to the bottom line. But they matter!

Your Bill

While most of us just focus on the final figure, it’s important to understand the terms.

For residential, it’s relatively easy. We are assessed fixed charges (monthly fee or rider – most frequently a REPS or Renewable Energy Portfolio Standard rider) and the variable or volume charge, which relates to the amount of energy you use and is shown as kilowatt hours on your bill. Kilowatt hours can vary dramatically month-to-month depending on how much energy your house consumes. You can see a sample residential Duke Energy bill here: Reading Your Residential Bill. We encourage all of our customers to read their applicable rate schedule (an explanation of fixed and variable charges), which you can view here: North Carolina Index of Rate Schedules. Dividing the total amount of the bill by the number of kilowatt hours used will give you the “blended” rate of what you pay; it is a blend of the fixed and kilowatt hour cost.  Keep in mind that your fixed rates are going to stay the same each month (unless the Utility Commission allows Duke to change them), and your kilowatt hour use will vary based on what you actually use. The blended rate serves as the baseline when determining how solar energy offsets your monthly electricity charges.

Commercial customer’s bills are more complicated because the utility assesses the fixed charges, the variable kilowatt hour charge, as well as a “demand” charge. The demand charge is the fee determined by the highest amount of power drawn from the grid during any interval (typically 15 minutes) during the billing period. A sample Duke Energy bill is here: Reading Your Business Bill.

For some commercial rates, such as Medium General Service (MGS), kilowatt hour costs are fixed/not variable ($.0706 per kWh), and the same for the demand charge ($5.86 per kW).

The rate is tiered for some types of customers, such as Small General Service (SGS), which is the rate for many small churches. This means that the more kilowatt hours that you use, the lower the cost per kilowatt hour. For example, for SGS the first 750 kWh is the most expensive at over $.10 per kWh, but the price drops as more kilowatt hours are consumed. And there are even more complicated rate structures!

Don’t worry about understanding it all now - we can help you figure it out. But understanding how you are charged for energy at home and at your business can help you understand how to reduce your costs.  Solar is one such way - so how does it do that?

The Solar Panel

Let’s start at the solar energy baseline – the solar panel. Solar panel output is measured in watts (W). A premium, new, fixed solar panel produces between 300W and 400W per hour, depending on the manufacturer, the model, the location and the weather. North Carolina averages about 4.5 hours of peak, usable solar energy per day. If your home or business is unshaded and the panels are facing south and weather conditions are optimal, a panel will produce approximately 1.4kWh per day for every solar panel installed.

Another way to think about it is in kilowatts – which is the measurement that you find on your business account bill. A 10kW solar panel system (between 25-35 panels depending on the manufacturer) will produce about 14,000 kWh a year. A good rule of thumb is that for every kilowatt of solar you install in North Carolina, approximately 1,400 kWh are generated with ideal conditions. A kilowatt hour production estimate for your system, worthy of another blog post, is based on weather data coupled with technical data of the specific panel, as well as the orientation of the building. The estimate is critical to understanding how a solar energy system will impact your bill.

Net Metering

Fortunately for everyone, the North Carolina Utilities Commission requires Net Metering from Duke Energy, as it has been shown to benefit all customers. Here’s how that works: Let’s say you decide to put a system on your home, place of worship or business, but you are generally out of the building during normal business hours. What happens to those unused kilowatt hours generated by your solar panels?  Because your system is producing kilowatt hours every sunny day, if you are not there to consume them all, the kilowatt hours will flow directly to the electricity grid! This is where Net Metering comes into the equation. Net metering can get a bit complicated, but at its most basic, it describes a billing mechanism between a utility and a customer who is self-generating power. It involves a bi-directional meter that registers when 1) a customer consumes utility grid-supplied power and 2) when their self-generating system is supplying power back to the grid. When the meter is spinning backwards (Yay!) utilities will often credit solar customers for these kilowatt hours at the retail rate, which is the same rate at which you purchase it.

Putting it All Together

Energy use by homes and businesses can vary for a number of reasons, and as we discussed, rate structures for businesses add another layer of complication. We do know that when you install solar, you may purchase significantly less kilowatt hours from Duke Energy and, therefore, save money!

If you have a business that primarily operates during the day, you will also see a reduction in your peak demand charge because your solar panels will be producing and offsetting your maximum energy draw from the utility grid. A school, for example, can see upwards of a 30% reduction in its demand charges because the school’s peak demand is likely when the sun is producing!

If your business has a fairly constant load or demand that is higher in the evening - think hotels/hospitals - or facilities that operate 24 hours a day, seven days a week - solar is not going to have a dramatic impact on demand because your “peak demand” may be at a time when the solar panels aren’t producing and are unable to offset your power draw from the grid. That said, you will likely be able to take advantage of net metering and your system will pay for itself and save you money.

In summary, every kilowatt hour matters! Before investing in solar technology, we recommend reducing your energy consumption. Harvard University has great recommendations here: Top 5 Steps to Reduce Your Energy Consumption. When you are ready to invest in your own green energy power plant, we are here to help you think through your choices.

If you have any questions, please feel free to reach out. Thank you for reading!

Laura Combs

lcombs@eaglesolarandlight.com and (919) 275-2245

Laura Combs is Eagle Solar & Light’s Business Development Director in North Carolina. She has a Master’s degree in Urban and Regional Planning, with a specialty in Environmental Planning. Laura is a former environmental non-profit employee who worked to recover the endangered Florida manatee, is very aware of the need for maintaining slim overhead and maximizing funds, and she is very grateful to bring her knowledge and skills to Eagle Solar & Light and its customers.

by Steven Gambla, Eagle Solar & Light PV Associate

The Federal Solar Investment Tax Credit (ITC) is an alluring incentive given to the owners of photovoltaic systems in the United States. If you are a tax-paying citizen or business entity in 2020, 26% of the cost of your new system can be credited back to you on your federal tax return. The origin of the credit was a result of the Energy Policy Act of 2005. The goal of the credit is to incentivize clean, renewable energy in the United States as a way to combat pollution and global climate change. It has been a successful incentive, evident by the amount of installed photovoltaic systems increasing from 79 Megawatts in 2005 to 14,762 Megawatts in 2016.

Between 2006 and 2019, the ITC was at a strong 30%. At the start of 2020, it dropped by 4%. Unfortunately, it is set to drop even more unless Congress realizes that they are making a mistake by letting it die off. By 2021, the credit will be 22% and that will be the last year residential customers can utilize the incentive. Starting in 2022, only commercial customers can utilize a 10% credit on their system.

So let's do some quick math to understand the ITC better. Jim has decided to get an off-the-grid photovoltaic system on his house in 2020. The batteries in his system will only be charged by solar energy, allowing them to be included in the credit calculation. A contractor has quoted him $20,000.00 to design and build the system. Let's also say that Jim owes the Federal government $5,500.00 in taxes for 2020. If he decides to go through with the project, he would only owe $300.00 in taxes ($5,500.00 minus 26% of $20,000.00).

As you can see, the ITC has the potential to drastically reduce the payback period for a photovoltaic system by saving the owner money when tax season comes around. Although there are conflicting opinions as to whether this is the right way to incentivize solar energy, it does seem to be working. So what is the point that I am trying to make? Go solar this year before time runs out! It is unlikely that Congress will be extending the ITC anytime soon. If you went in to the future and realized that a company's stock was selling for $500.00 per share in 2025 and only $5.00 per share in 2020, you would probably go back to 2020 and buy all of the stock that you could fit in your budget. This is a similar concept with a solar investment! The incentives and electricity bill savings you lock in now will be worth a lot more in the future when the incentives are non-existent and electricity prices skyrocket! So contact Eagle Solar and Light today if you are interested in getting a photovoltaic system and we will lock you in to the 26% ITC before time runs out.

 

 

Solar Planning by Laura Combs

While the world is pausing to wait out Covid-19, those of us not on the front lines have time to think a bit more deeply about our next steps. And it seems that the Earth is getting a bit of a breather too. Interestingly, here is the European Space Agency’s video compilation showing the changing air pollution levels in China this year:

Nitrogen Dioxide Emissions December 20, 2019 - March 16, 2020.

While many people are working from home and thinking about how to improve or retool their businesses,  churches, schools or non-profits, this is a good time to take a look at solar and how it can save you money, increase resilience, and reduce your carbon footprint to help decrease the impact as seen in the Space Agency’s video.

Churches, Non-Profits and Schools

North Carolina adopted a law (HB 589) in 2017 that created a solar rebate and clarified the rules around third-party leasing. The rebate can be up to $75,000 depending on the system size and can be applied to a solar lease or a purchase. Duke Energy customers such as churches, nonprofits, and other tax-exempt entities like schools and municipalities, can take advantage the rebates until 2023.

Choosing whether to lease or purchase a solar system is guided by the individual analysis of each organization’s financial goals. Leasing, when coupled with the Rebate, is generally the preferred financial option for tax-exempt organizations because it does not require significant additional resources outside of the operational budget. Organizations love the hassle-free leasing option because Eagle Solar is responsible for the operations and maintenance during the lease term!

Companies

Companies can take advantage of the Rebate, but the program is first come, first served and the designated rebate amount is claimed within hours of being made available in January of each year due to intense corporate demand. Fortunately, businesses often choose to go green without the Rebate as the financials of solar still compare favorably!

There are several reasons for this, and a critical piece of those factors are the tax incentives for businesses. The federal government created an incentive to make solar purchasing easier via the federal Investment Tax Credit, or ITC, as well as accelerated depreciation of the asset. These tax incentives can equal up to 50% of the cost of solar installation. Organizations that are considering solar purchases should act in 2020, when the ITC enables them to deduct 26 percent of the cost of installing solar systems. This incentive will be reduced to 22 percent in 2021 and then permanently set at 10 percent in 2022.

If a business does not have the tax liability to fully monetize these tax benefits, a lease, as described above, can be a great option. The business can lease a system from Eagle Solar and immediately get both the financial and environmental benefits of solar without paying the full cost of the system.

Leasing or Purchasing Solar – Which is the right choice?

Eagle Solar performs an in-depth analysis of your organization’s energy use, building orientation and surroundings, and available incentives to help determine whether leasing or purchasing a solar system is most cost effective. We provide that analysis to you, along with our recommendation. {We view our role as solar facilitators- not sellers- as we want to be a trusted advisor.}- So you can expect us to tell you when the system does and does not make financial sense.

When you are ready to see if solar is a fit, please give me a call at (919)275-2245 or email at lcombs@eaglesolarandlight.com.

Wishing you all strong health during these difficult times.

Sincerely,

Laura Combs