Professionally installed PV systems in our area run about $10 per peak watt. For the system I sized for our net zero-energy building, I was looking at an investment of almost $68,000. My first thought was, “Yikes! Where am I going to get that kind of money?”
I considered the possibility of finding a third-party investor, who would buy the system, take the tax credits, utility incentives, and depreciation, and then lease the equipment to our business. In turn, we’d pay rent on the system for a cost roughly equal to the projected energy savings. However, since this option is generally used with larger systems, I had trouble finding a third party interested in our relatively small project. I did eventually have one taker, but in the end, the buy-out provision of the lease asked for “fair market value,” which could have been $50,000 or more with appreciation—more than I was willing to pay. I didn’t want to end up paying for the system twice.
Instead, I found unsecured private financing at 7%. A low-interest loan through the state of Oregon’s Solar Energy Loan Program would have come with a slightly more competitive rate, but the terms required that I take out a second mortgage on the building—which didn’t appeal to me. Though I was not wild about taking on such a large loan, the numbers were less daunting once I factored in all the tax credits and incentives: an $8,580 rebate from the Energy Trust of Oregon; a $11,670 federal tax refund (30% of the system’s cost, less the Energy Trust of Oregon incentive); and a $27,000 state tax credit taken over five years.
In the first six months of the loan, I recovered about half of the loan amount. By the time all the credits come in, I will have covered nearly 80%. With all the incentives, the actual tax reduction from depreciation, and the value at current electric rates of the energy saved by the system, I estimate full payback in seven years. It was that easy. With just a few pushes of the pencil, I went from “Yikes!” to “Done deal!”