Tuesday, April 19, 2011

10,000 kWh

In same way that you notice when your car rolls past 100,000 miles, we noticed that our clean energy generation system hit the 10,000 kWh milestone this week. The system has been in operation for less than two years and has consistently performed beyond our expectations. We have a "buy all, sell all" system which means that we buy every watt that we use and we sell (back to the utility) all of the power that we generate. We get paid for that power two ways. One, our utility pays us wholesale rates for the power and two, a clean energy company pays a premium rate for the clean power.  In 22 months of operation, we have earned $3,250.00 from the clean energy company and another $450.00 from wholesale power sales. Without taking the value of the tax credits into account, we are making a 7.4% return on our investment. If I immediately offset our investment by the significant state and federal tax credits (which we realize, but not right away), the return on our investment goes up to a whopping 21.3%. If you are doing better than that in the market right now, will you please send me the name of your broker?

There are caveats, of course.  The clean energy company is very slow to pay (but they do). Our energy generation system is the first in our county and I had to work with our planning board to write a new ordinance that supports these systems. The federal tax credit is realized in the first year but the state tax credit is spread out over 5 years. A good spot with generous solar access is required (we designed and oriented a shop building specifically for this purpose). Lastly, our initial investment was a bit lower than most as my father and I installed the system and just hired a professional to set up the inverter and grid tie-in. Still, we find that our system is well worth the effort.

Another way to look at the financial value of a clean energy generation system is to check the time line on seeing your initial capital back. At that point, you still own the system and its capability to continue to produce energy and revenue for decades to come. Without tax credits, our system would pay us back in 13.4 years.  With tax credits, 4.7 years.

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