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solar energy

Don’t Take My Green Tax Incentives! Part II-Solar

by Gina Garrison on June 24, 2008

After I posted about potentially canning my un-green bathroom remodel and using the money budgeted for it to purchase solar panels I looked for information on solar tax credits to help me decide if I could afford them. 

Solar water heater and solar panel tax credits expire December 31, 2008.  Apparently there is a bill to extend them which has passed the House but not the Senate.  Come on, fellas!  I need more time! 

If you are feeling the pressure to rush out and get solar panels like me, checkout the Database of State Incentives for Renewables & Efficiency (DSIRE).  Click on your state to see a comprehensive list of green incentives.

Here’s another great site with a tool that will estimate the cost of a solar installation as well as what it will save you and how well your area can utilize solar energy.  I contacted my electric company to get the total kilowatts I used over the last 12 months, along with the my average bill for Summer, Spring, Winter and Fall so that I could find out what a proper system would cost me (and save me).

Here’s what they recommended for my house based on the information I input into their estimator.

ESTIMATED SYSTEM SIZE

The system size best for your situation will vary based upon product, building, geographic and other variables. We encourage you to work with a Solar Pro who can better estimate the system size best for your situation. We estimate your building will need a system sized between 3.60 kW and 5.40 kW of peak power. This estimate assumes the mid-point of this range.

Solar Rating:

Good
(4.466 kWh/sq-m/day)

Solar System Capacity Required:

4.50 kW of peak power (DC watts)

Roof Area Needed:

450 sq-ft

And here’s what they say the system would cost as well as how much it would save me over time. 

ESTIMATED SYSTEM COST

This is only an estimate based upon many assumptions. Installation costs can vary considerably. We encourage you to work with a Solar Pro who can provide you with a more detailed cost estimate. We estimate that a 4.50 kW peak power system will cost between $32,400 and $48,600. This estimate assumes the mid-point of this cost range.

Assumed Installation cost:
(before rebates, incentives or tax credits). See the Cost Notes, below!
To recalculate, enter a value for assumed cost/watt installed and press “enter” on your keyboard.

$40,500


 
 
 
 
 
 
 
 

 

Top of Form

assuming $/watt

Bottom of Form

Expected Commonwealth Edison Co Utility Rebate:
(Limited to not exceed state max. incentive amount)

($ 0 )

Expected IL State Rebate
(Maximum: $10000)
(Limited to 30% of cost)

($ 10,000 )

IL State Tax Credit/Deduction

($ 0 )

Federal Tax Credit:
(Installation type: Residential )

($ 2,000 )

Income Tax on Tax Credit:

$ 0

YOUR ESTIMATED NET COST:

$ 28,500

Monthly Payment (6.5% apr, 30 years):

$ 180

SAVINGS & BENEFITS

Increase in Property Value:

$9,020

Exempt from Property Tax:

YES

Accelerated (5 yr) Depreciation:
(Installation type: Residential )

No

First-year Utility Savings:
Since this is not a business application, these savings are in after tax dollars. So, your realized savings may actually be higher!

$451

Average Monthly Utility Savings:
(over 25-year expected life of system)

$63

Average Annual Utility Savings:
(over 25-year expected life of system)

$757

25-year Utility Savings:

$18,925

Internal Rate of Return (IRR) of system:

-1.0% to 4.0%

Return on Investment (ROI):
(with Solar System ave. cost set as asset value)

158%

Return on Investment (ROI):
(with Property appreciation set as asset value)

500%

Internal Rate of Return (IRR):

-1.0% - 4.0%

Years to Break even:
(Includes property value appreciation)

15 years

Years to Break even:
(Assuming no property value appreciation)

23 years

Greenhouse Gas (CO2) Saved:
over 25-year system life

113.0 tons
(226,000 auto

According to this estimate my net expense after the tax credit and state incentive would be 28,500.  Holy Mackerel!  And if my property value does not increase, it would take 23 years for me to break even on this purchase.  15 years if my property value goes up.  The life of a solar panel system is about 25 years.  Who can afford this?  Not me! 

I’m not even sure I believe this estimate is anywhere close to what it would actually cost.  My house is only around 1200 square feet so that seems like an awful lot of money to install solar panels that will only provide 50% of my household energy.  Plus, I found a site that said my out of pocket after all incentives would be around $4000.  To settle this discrepancy, I’m planning to contact an actual solar panel installer to get a proper estimate.  Once the estimate is complete,I’ll share the results here. 

I would love to hear from a reader who has solar panels.  How much did you pay for them?  How big is your house?  Do you regret it?

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