I recently gave a talk for the Montana Sustainable Business Council on the incentives available for energy conservation.  I touched on federal and state tax credits, utility based grants and rebates and the state of Montana DEQ Revolving Loan Fund for renewable energy.

In the talk I mentioned that there has been some question as to whether the 30% federal tax credit for renewable energy installation (which is no cap and can be carried forward for multiple years), is to be taken on the gross cost of the system or the net cost (after applied utility grants) of the system.

Turns out it’s either — depending on your system, residential or commercial, according to Kenton D. Swift, PhD, CPA, Associate Professor of Accounting, The University of Montana, School of Business Administration.

He was in the audience at my talk and was kind enough to approach me afterward to further discuss this question.  After some research he got back to me via email with the following information:

I wanted to give you a little information about one part of your presentation. When a homeowner installs a solar pv system, and receives a utility rebate, they need to reduce the cost of the system by the utility rebate before calculating the 30% federal tax credit. For instance, if the system costs $13,000 and the utility rebate is $6,000, the credit would be 30% of $7,000 or $2,100. This is actually the way you calculated the credit in your presentation, but you hinted it might be possible to take the 30% credit on the full cost. This seems to be a common confusion.

There are actually two separate 30% federal income tax credits, one for personal residences (IRC Code Sec. 25D), and one for business (IRC Code Sec. 48). Generally, the credits are the same except for this one issue about netting utility rebates. The law requires that the rebate be netted against the cost before calculating the 30% credit when taking the residential credit (IRC Code Sec. 25D). I have attached a recent letter from the IRS chief counsel’s office which describes this netting process. Again, it is the same way you actually did your example at the meeting, which is great.

For the 30% federal BUSINESS credit (IRC Code Sec. 48) there is no specific requirement to net the utility rebate against the cost of the system, before calculating the credit. Actually, there does not seem to be any current law explaining what to do. Thus, I believe that when taking the business credit, most taxpayers take the credit on the full cost of the system, before utility rebates. This is a better result than one can get when calculating the residential credit.

I hope that helps to clarify a confusing issue, which you have handled very well.

Someone at the meeting also asked about the property tax exemption for solar pv systems in Montana. Kent went on to clarify that “such systems are exempted from property taxes for 10 years.”

At SBS Solar we go to the DSIRE database for all of this information and have even been referred to this site by the IRS when we called them about the above questions!  This is also the site that Kent relies on for much of his information, or confirmation of information.  He notes that he has “checked their information for many states, and it always seems to be up-to-date, when I compare their explanation to state law.”

Feel free to be in touch with SBS Solar on your energy conservation incentive questions, or to get a project started in Montana.

What follows is a great Q&A with a recent install for Bert Lindler and Kristi DuBois:

1.  Why did you decide to install solar panels?

When we first bought our home, we realized that the south-facing roof offered an opportunity for solar photovoltaic panels and solar hot water.  We want to minimize our environmental impact and installing solar panels is one of the easiest ways to do so.

Kristi feels strongly that every south-facing roof is wasted space that should be generating electricity.  Industrial forms of “green” energy like commercial wind and solar farms impact a lot of habitat for wildlife, or in the case of solar farms, replace the habitat completely with solar panels.  Rooftop solar units have no effect on natural habitat, so they are a much greener way to meet our energy needs than industrial energy facilities.

We were considering refinancing our home to take advantage of low-interest rates at about the time we were reminded of the subsidies available for installing solar photovoltaic panels.  Once we had the roof evaluated for solar power potential and had received a bid for the installation (along with an estimate of the subsidies), we knew we wanted panels.

8-panel, 2kW Solar PV system

2.  Did you encounter any challenges during the installation process?

The first challenge for us was approval from the homeowners association for our installation. Our installer prepared drawings showing the appearance of the eight panels mounted on our roof. We took to the drawings to our immediate neighbors and discussed our plans. All but one of the neighbors were supportive and the remaining neighbor said that while he didn’t want to look at solar panels on our roof, he understood why we wished to install them and would respect whatever decision the homeowners association reached. The association’s architectural review board approved our request.

The next challenge was a couple of tall non-native trees growing in our yard. We were considering having them removed anyway, but did so promptly after we learned that they would shade the panels. We still have some shading in winter from our aspen trees, but the effects on our power production are minimal. We left the trunk of one of the trees standing as a wildlife snag.

3. How long will it take for your system to pay for itself?

If the price of electricity stays in the range of 10 cents per kilowatt-hour and our photovoltaic system produces 2,289 kilowatt-hours of electricity each year as estimated, the system should pay for our cost of installation in 15 years (the system has a 25-year warranty).  If the price of electricity goes up, the recovery period may be much shorter. If the price of electricity goes down, we may never recover the cost of installation.

Our cost was much less than the system’s total cost of $12,629. We received a subsidy of $6,000 from Northwestern Energy for our 2-kilowatt installation and federal (almost S2,000) and state income tax refunds ($1,000).

Our system includes microinverters that  convert the DC electricity produced at each panel to AC electricity we can use in our home or return to the grid for use by other Northwestern Energy customers. The microinverters reduce the risk that more than one panel will be affected by shading and are provide real-time monitoring of the power being produced by each panel.

Our account is credited if we produce more electricity than we use (only likely during the summer). This arrangement allows us to receive full benefit of all the power we produce without requiring us to buy a bank of batteries to store power.

We do expect that our home will be easier to sell and may command a higher price because of the panels.

4.  How do you see your solar panels contributing/fitting into the larger Missoula effort against climate change?

Our purchase reflects our personal values, greatly influenced by subsidies offered by the power company and federal and state governments. Even though Missoula’s solar energy potential is not as high as in areas with more sun, our community could reduce our environmental impact if more of us took advantage of the subsidies that turn roofs into power plants.

What sort of lessons has the process of installing your own solar panels taught you?

Snow melts quickly off our south-facing roof. We had expected the snow to melt just as quickly off the panels. It doesn’t. The panels, mounted an inch or so above the roof, have cold air beneath them.

We use a pole-mounted plastic snow rake to clear snow from the panels and onto our deck.  The deck never used to get shoveled, but it does now.

In general, we were extremely lucky. The cost of solar panels has dropped dramatically in recent years and the cost is still dropping. The installer handled the $6,000 reimbursement from Northwestern Energy so we didn’t have to pay that cost up front. The remaining up-front costs weren’t a problem because we refinanced our home loan when interest rates were at record lows.

The panels were installed on schedule at the agreed-upon cost.  Within a week after our panels were operating, Northwestern Energy installed the special meter that gives us credit for the electricity we produce.

During December, our solar panels produced just 18 percent of the electricity we used, but as the days became longer, the panels produced 30 percent of the electricity we used during January and 43 percent during February.

We enjoy having the panels and we’re happy to see them producing more electricity as the days keep getting longer.

Bert Lindler and Kristi DuBois

The Cleveland Museum of Natural History has a remarkable new exhibit.   Coined the future of green building technology, the museum has sponsored a “smart home” that has been designed to meet Passive House standards and will seek Passive House certification when placed in it’s permanent location.

The museum had over a hundred partners participate in the design, build, financing and furnishing of the home and garden that is now open to the public to tour on the museum campus.  As typical to Passive House specifications it is extremely air tight, super insulated, contains no thermal bridges, and does not need a conventional furnace.  The home instead is heated and cooled with a small ductless air source heat pump.

Though the home was not seeking well known LEED certification, it was designed with LEED  criteria in mind and has many features that address the overall environmental impact of the building, besides energy usage.  It is also seeking “Green Communities” certification which was developed by Enterprise Community Partners, a national funder of neighborhood redevelopment.

–

Alexander (Zandy) Sievers, SBS Project Technician
RESNET Home Energy Rater
NorthWest Energy Star Homes Verifier
NAHB Green Building Verifier
T/(406)396-2661, zsievers@sbslink.com

SBS has had a wonderful and successful time on the side-order list for the City of Missoula’s Green Blocks energy saving program.

We began work back in the Fall of 2010 by getting 2-inters from the University of Montana’s COT Energy Program and got them fully trained on doing a basic solar site assessment.

Our Team ended up doing over 120 assessments over the course of 3-months last fall.  They braved blazing sun, side-ways rain and blowing snow from October – December.  But, it was well worth it.

This spring 2011 marked the final phase of this project.  The City added about 60-90 participants to get to their total count of 300.  We got ourselves another COT Energy intern for this past Spring and he went out and did about 48 more solar site assessments.

Half way through this phase we saw an 18% REDUCTION in the cost to install solar, plus the state and feds decided to KEEP the tax credits in place for renewable, Northwestern Energy gave us a dozen more $6k grants to hand out to customers in good standing, and the MT DEQ revolving loan fund keeps on chugging along (although they are 8-10 weeks out on funding).  To top it off, SBS starting taking credit cards for deposits.

The wet cold spring made for a slow start, and with the unseasonably cool summer, folks were not thinking about solar.  But with the aforementioned incentives, and a little 90 degree weather, we are in full swing.  Over half of the installs we’re doing in July and August came from Green Blocks leads and SBS is now booked out until September.

Thanks to the City of Missoula for this great opportunity!  We’d love to do it again.

If you’re interested in information about solar – get in touch: www.SBSlink.com or info@sbslink.com.

While there certainly has been a lot of talk lately about the weather, and whether global warming is real or not, the concept of climate change is certainly on our minds (or should be).  It seems that catastrophic weather events are more prevalent than ever: from tornadoes to floods to tsunamis, earthquakes, mudslides and volcanic eruptions.

In response to these major weather events, and in an effort to gain some knowledge, I have been doing some summer reading.

First on the list is a behemoth of a book – and worth the hundreds of pages – Hot, Flat and Crowded by Thomas Friedman. Simply put: We are getting hotter as a globe from fossil fuel energy dependence.  We are getting flatter as a world through wireless technology.  We are getting more crowded as a world through population growth. This book points out, more than ever, the mounting global energy crisis with the advent of a larger-than-life working-class in major cities around the world,  namely China and India.  It also details some very viable ways we could remedy the current situation and prevent total global melt-down – like applying the idea of a smart grid to our utility use and billing, efficiency and renewable now (not later), government mandates and crackdown for laziness in getting on board, and even suggesting that the USA needs to getting into a race w/ China to “out green” one another – akin to the space race with former USSR that put a man on the moon in short order.

Another great read, and a bit shorter, is an  article in Rolling Stones:  “Al Gore: Climate of Denial: Can science and the truth withstand the merchants of poison?“  This article addresses the question of whether we are all in denial about climate change or not.  Former Vice-President Al Gore emphatically says “Yes, we are in denial.”  The final paragraph states:

The climate crisis, in reality, is a struggle for the soul of America. It is about whether or not we are still capable — given the ill health of our democracy and the current dominance of wealth over reason — of perceiving important and complex realities clearly enough to promote and protect the sustainable well-being of the many. What hangs in the balance is the future of civilization as we know it.

And finally, the shortest of all the reads, an article from Newsweek: “It’s still the Economy, Stupid. 14 Ways to put America back to Work” by 42nd President Bill Clinton. In June 2011 in Chicago, the Clinton Global Initiative (CGI) focused on America for the first time, inviting business and political leaders to make specific commitments in support of the former president’s jobs blueprint, which he details in this article. Here Clinton outlines his plans for economic stimulation.  Interestingly enough, the first half circled around energy efficiency and the funding there of.  Namely, #2 Cash for Startups, #3 Jobs Galore in Energy, #4 Copy the Empire State Building, #5 Get the Utilities in on the Action, #6 State-by-State Solutions, and #8 Paint ‘Em White.  And, really, all fourteen talk about energy conservation relating to economic stimulus in one way or another.

So sit back, try to relax and enjoy the reading.  (Then change out all your light bulbs to CFLs and LEDs, install a solar array and fix that leaky faucet.)

According to the Bitterroot Star, last week the the fifth home by Ravalli County Habitat for Humanity was completed and keys handed over to the owners. The new home is on Cherry Street in Hamilton and now belongs to Travis Sanderson and his family.

Much of the materials for the home were donating, including a Solar PV system – made possible through the work of Sustainable Building Systems (SBS) and Northwestern Energy’s Solar PV grant.  This system will reduce the family’s prior heating bill of $350/month in winter to around $80/month.

Read the entire coverage from the Bitterroot Star here.

After a PV module industry wide cost reduction, sourcing a lower cost mount system and dealers giving better pricing on all balance of system components, SBS has new numbers for potential Solar PV customers in MT that represent up to a 25% reduction in installed costs for PV systems!

If you couple the new lower prices with a $6000 Northwestern Energy PV grant, the 30% Federal Tax credit for renewable energy and the $500/$1000 (single/couple) State Tax credit, the costs are lower than every before.

And here in Montana, we can add to that a 10-year, 4% financing option (oac) from the MT DEQ revolving loan fund for renewable energy.

For a 2kw, 9 module system, total cost to the customer is in the $12,000.00 range.

After incentives this is roughly 3,200.00 out of pocket.

This on average powers about 25-40% of the average Montana home.

Here is an example of plausible breakdown for that $12,000 system

$12,000 GROSS
- $1000 (deposit to SBS to begin work)
=$11,000 NET
-$6,000 (NWenergy PV grant)
=$5,000 – Financed w/ MT DEQ loan
120-months
4%
=$51/month

Yes, that is correct, for at little at $51/month for a 10-year period, you can cover up to 40% of your energy bill. Awesome.  Check out this PV for more information: SolarPVFinancing-Basics-final.

And, when you file your taxes at the end of the year on that system, you’ll still get the $1800 Federal credit and the $500/$1000 state credit back.  You can keep these to use however you’d like, or put that money into your DEQ loan for early pay off (there is not penalty for early pay).

For a free solar site assessment, or to learn more, contact us at SBS today: info@sbslink.com, www.sbslink.com, 406-541-8410.

To get a general estimate of your solar or other renewable energy needs, try our Solar Calculator here.

As a company with a NABCEP Certified Solar Installer, we are one a few companies in the state that qualifies for special $6,000 grants from Northwestern Energy for Solar PV installs. We’ve been granted access to 11 such grants and have already allocated a few of them.  Our goal it to have them all in install mode by Halloween.  If you have been considering Solar PV, this sort of assistance really starts to make it affordable, especially coupled with State and Federal Tax Credits.

Consider that the average US home uses 9000 kWh (kilowatt hours) of power per year.  This is roughly 26.5 kWh per day. For example’s sake, we’ll say 25 kWh, which would be easy to obtain with minor energy retrofits).  If you figure that we have, on a annual average in Western Montana, 5-hours of sun per day to make energy from, that would mean we’d need to produce 5 kW of energy from that system, per hour, to get to 25 kWh.
5 kW x 5 h = 25 kWh

Now consider that the average panel produces 185 W.  This would mean the 5.5 panels would be needed to produce 1 kW.
185 W x 5.5 panels = 1000 W
1000 W = 1 kW = 5.5 panels

So, to get to the 5 kW system we’re looking for, the average system would require 27 panels.
5.5 panels = 1 kW
27 panels = 5 kW

Now, most folks are not interested in offsetting 100% of their energy quite yet.  Here in Missoula we have annual net metering.  This means that you are assessed a bill each month depending on how much energy your system will put back in the grid (i.e. in January that might only be 10% and in July it could be 120%).  At the end of the year your total usage and production are assessed.  If you produced a deficit of energy, you will already have paid that amount through your monthly billing.  If you produced a surplus, well, you’re neighbor thanks you for putting clean, solar energy back into the grid.  But, at this point, Northwestern Energy doesn’t pay you back.  That’s not to say they won’t someday, with energy rates increasing at 4.4% on average.   However, since they currently do not pay you for your surplus, we usually design and install systems that cover 90% or less of your annual energy needs.

So, back to the example above.  Take the 5 kW system.  Let’s say we only want to go with 75% coverage.  We’re now at 3.75 kW (or 3750 watt system).  At an average rate of $5-$8, per watt, installed, we’ll use $6 in this example.
3750 W x $6/W = $22,500

Now, apply the $6000 Northwestern Energy Solar PV Grant, 30% Federal Tax credit, and $500 per MT tax payer credit (so, $1000 for most households):

$22,500 (gross)
- $6,000 (NW Energy)
- $4,950 (30% Federal Tax Credit)
- $1,000 ($500/person MT Tax Credit)
_____________
=$10,550 (net)

This is, of course, just an example.  But is a good indicator of what’s out there today.  If you don’t have tax liability this year, the tax credits can be carried forward for up to 5 years.  There are also other incentives and tax deductions out there, as well as some forms of revolving loan financing that can be applied to either the net or gross amount.

By designing and/or building above and beyond the new IECC 2009 energy code you will set yourself and your business apart.  And in the process, your high-performance buildings also improves the comfort, safety, health, durability, and affordability of your projects.

Anyone building a new home after June 2010 will have to meet the requirements of the 2009 International Energy Conservation Code® (2009 IECC) for residential buildings. Not only does SBS know WHAT the code requires, we also specialize in HOW to meet it and how to go BEYOND with energy conservation.

Bring yourself up to speed on the significant changes with help from this document on the City of Missoula’s website.  And take a look at our flier on MEETING THE CODE.

Customer Name, location, system size:
Keegan Eisenstadt, Rattlesnake Valley, Missoula, Montana, 3450 watt solar PV system

What turned you on to Solar?

My father was a solar energy engineer in the 70s-80s in New Mexico.  They have had water heating panels on their house since then.  Additionally, my own work at ClearSky Climate Solutions is related to changing the course of climate change – which is predominantly driven by human demands for energy.  The clear need for more distributed generation of power from renewable sources is the most important element to reducing the emissions of greenhouse gases, and leaving a more stable world to my children.  Solar is a great way for me to practice what I preach, and also get a great price on power for my house!

SBS is an innovative, Missoula company that is looking at a holistic approach to analyzing and reducing energy use (and greenhouse gas emissions) of planned and existing structures.  My company works to mitigate carbon footprints with its clients, and a linkage to SBS was a natural for us.  Once I started learning more about what SBS does, I realized that I needed them to install a system on my home.  The solar system install team at SBS proved to be smart, capable and thorough.  I also think they are genuinely as excited about my system as I am!!!  I know they log into my system’s internet monitoring pages to see how it is performing, not daily as I do (which is great fun!), but at least weekly.

Racking system in, panel get ready!

What were your goals for this system?

My goals for the system were threefold: 1) make my house a laboratory for how to mitigate climate change with distributed generation of renewable power (which is something I have thought about, talked about, and worked towards for years), 2) give me a better-than-market price on electricity – which it will certainly do, and 3) provide an educational/outreach opportunity for my community to see just how easy it is to make your own power!

The financial incentives available right now for installing domestic alternative energy systems are good: 30% federal tax credit, $500/tax payer state tax credit, NorthWestern Energy grants, and low interest loans available.  My system will be financially paid off in 10 years, using a 4% fixed loan from federal stimulus money.  The system payback, from the energy created will be between 8-12 years, depending upon how fast prices for energy rise, and the panels on my system have a 25 year warranty.  So, my house will make roughly 1/3 of it’s power for free from about year 10 until 25.  That’s a good power bill!

Josh setting the first panel. Check out the nice lines on those racks and micro-inverters.

What do you like best about your system?

Actually, I’m surprised by this answer.  I had no idea how much more aware of energy use in my house I would become.  I now see/feel the house using energy….literally with the real-time monitoring tools that are part of the installation.  I turn on the stove, microwave, the stereo and I can see the kilowatts used jump.  It is amazing……I know that the mot

or in my refrigerator uses about 95 kW, that a big light fixture in the living room is 225 kW, that the microwave and clothes dryer are huge energy HOGS.  Frankly, I wasn’t really aware of those things before.  I never really internalized the energy demand of things in my house that way.  Even being interested in these things, I hadn’t internalized them in a tangible way.  It is such a surprise, and I am really enjoying it.  I’m sure in time, I will be happier with the cost savings….but right now, I am learning a lot and feeling great about it!

We just finished installing a 3450 watt solar PV system in the Rattlesnake where we employed 16 Enphase micro inverters. Micro inverters offer several advantages over more conventional string inverters.

Micro-inverters, monitoring and mountains...

Each solar module power production is optimized individually so little module mismatching occurs.  As well, if one module is shaded from a nearby tree, this one module will have reduced output, not the entire series string of modules as with the larger string inverters.  This advantage alone makes a huge difference but the pluses don’t end here.

The Enphase engineers designed one of the coolest monitoring programs found in the PV world.  Each individual module reports its power output over the existing AC output wiring to your in home computer or with internet service, this data is directed to the company’s website where current and cumulative data is displayed and stored.

A good graphic says a thousand words so if you are interested check out this link to the Enphase monitoring examples.

For more information on Solar or to talk with Dan:

Dan Brandborg
NABCEP certified Solar installer dbrandbog@sbslink.com