Are you considering a photovoltaic system for an upcoming 9% project, located in one of the areas served by SDG&E, SoCal Electric, or PG&E? The combination of financing currently available makes solar electric persuasively cost-effective. For ease of arithmetic, let's take a look at a 100 kilowatt system - a 100,000 watt system. That generating capacity would serve the total electric demand of approximately forty 2- and 3-bedroom apartments in San Diego County. Demand will vary, of course, based on location, and is closely tied to the choice of appliances, and how much air conditioning is required.
Photovoltaic ("PV") electric production is spoken of in two ways: Direct Current ("DC"), and Alternating Current ("AC"). Our homes and businesses run on AC; while PV systems produce DC, which is converted to AC. The current market price of a PV system is approximately $9.75 per AC watt, so our 100,000 kilowatts will cost in the neighborhood of $975,000. So, how are we going to finance this expense? There are very helpful tools available to affordable housing developers.
The California Energy Commission has been subsidizing PV installations for some time, but more recently, it made special provisions for affordable housing developments. The theoretical system under consideration will qualify for a CEC affordable housing rebate of about $350,000. TCAC is also supporting PV development. A qualifying 9% project, which incorporates a photovoltaic system capable of providing at least 50% of the project's residential electric requirements, can apply for a 5% project basis boost, resulting in a finance source potentially worth even a bit more than the CEC rebate. The system could be almost 75% paid-for at this point.
Next, we'll look to Washington for federal energy tax credits, which have the potential to provide 30 percent of the cost of the system after the CEC rebate (about 20% of the gross system cost), bringing us to a surprising 90% of the cost of the system. Now we'll see if we can make up that gap with adjusted debt financing, as a lender will understand the savings of energy expenses which the project will enjoy. A recent Sun Country project is projected to generate savings in excess of the added debt, in as little as three years.
The examples given are approximations, and advice regarding specific projects should be sought from a qualified tax consultant, but there is the potential for an ambitious PV system to be not just "green", not just a hedge against future energy cost increases, but also practically self-financing.
Peter Bridge is a LEED certified Project Manager with Sun Country Builders.
