By: Steve Gendreau, P.E., Ex DTC MEP Manager, Vice President, and Principal — Growing up, I thought that by 2015 highways would be comprised of hover cars flying at different elevations, people would be directly connected to the internet through chips inserted into their brains, and buildings would evolve into flower-like hybrids to perform their own version of photosynthesis to generate electricity. While these visions may still be out of technology’s grasp at the moment, harvesting energy from the sun is very much a thing of the present, and it comes in the form of photovoltaics (PV).
Photovoltaics derive their name from what they do – convert sunlight (photons) directly into electricity (voltage). This is achieved through a process known as the PV effect, in which certain materials such as silicon release electrons upon the absorption of photons. An electric current is caused by the ejection of these electrons, which can be converted to usable electricity to power almost anything – from handheld calculators to sophisticated space satellites, and somewhere in the middle of that range, homes and other buildings.
Photovoltaics are an entirely renewable, green technology. That fact alone makes them attractive to anyone interested in implementing them in their building structures to become more environmentally responsible. PV necessitates minimal land usage as most are located on existing rooftops, they use no water, and do not create hazardous emissions, unlike traditional methods of generating power. There are also substantial financial incentives available for businesses and home owners who decide to adopt PV as a part of their energy source.
PV also stands among the most cutting edge and “cool” technologies available today. While the first “solar cell” received a U.S. patent in 1888, progress in PV technology was stunted until the mid to late 2000s – and it has taken off sprinting since then. Today, PV panels produce about a third more energy than they did ten years ago, and are far more adaptable for installation to different structures. Notoriously “high tech” companies have installed huge amounts of PV, including Apple, who announced their purchase of a 130-megawatt block of solar energy in March of this year, reinforcing its image as a rising and innovative company.
Added encouragement for PV comes directly from the government; for example, the state of Connecticut and the local utility companies offer money back to those wishing to install solar panels through its Zero Emission Renewable Energy Credit (ZREC) project. Additionally, the federal government offers a 30% Investment Tax Credit to offset system costs, as well as tax advantages in the form of MACRS depreciation. When all is said and done, the payback period for tax paying entities installing PV systems is well under 10 years. For those that do not pay taxes, such as government entities or non-profits, the best method of harvesting these incentives is through the use of a power purchase agreement (PPA).
Essentially, a PPA is an agreement between a home or business owner and a third party who agrees to install a PV system on the owner’s property. In return, the property owner commits to purchasing the power produced by the PV system. The property owner pays zero dollars out of pocket, and the third party sells them power at a rate that is less than what they are already paying the utility company. This is currently in the range of 5-10 cents per kilowatt hour, depending on system size. The third party designs, installs and maintains the system for the duration of the term, typically 15-20 years. This type of arrangement also locks in the utility rates for the duration of the term, typically at a ~1% escalation per year. Talk about a no brainer!
Before installing roof mounted PV systems, however, certain considerations must be made as to whether or not it makes sense. The building must have a (mostly) clear south-facing view to maximize its exposure to sunlight. In addition, a roof must be both large enough to accommodate a moderate amount of PV panels, and new enough that it will not need to be replaced within the PPA term. The roof support structure must be strong enough to handle the additional weight of the PV system, which must be calculated by a structural engineer. The building’s electrical usage must also be carefully analyzed, as the system should not be sized any larger than is needed to provide 100% of the building’s needs over the course of a year. If excess power were to be produced (over the course of a year), you would be selling to the utility company at an extremely low rate – too low to recoup the costs you incurred to install the oversized system.
Currently, when building owners ask me for advice on how they might implement PV into their facilities, I typically recommend they hire a solar developer to do a PPA. There are many technical and financial complexities to installing a highly efficient system that go beyond the scope of this article, but experienced developers have the expertise needed to squeeze every last cent out of PV systems. Fortunately, you don’t have to reach out to distant companies in notoriously solar-friendly states like California and Arizona for PV either – skilled developers with this kind of expertise are located locally here, in the North East. One such developer that I have worked with for years (Greenskies Renewable Energy based in Middletown, CT) has over 100 megawatts worth of PV system in various stages of development – the equivalent amount of power required to power more than ten UConn Storrs campuses or well over 10,000 homes.
So you’re probably saying “It couldn’t be that simple,” right? Well, it actually is – for now. We are in a unique moment in time where this “no-brainer” opportunity exists. The tax incentives and subsidies are what make PV financially viable at the moment, and those will not exist forever. Unfortunately, the 30% federal tax credit is expected to be reduced to 10% at the end of 2016. This will result in increased overall installation costs, and associated sell rates. Additionally, solar panel costs are increasing due to stiff tariffs imposed by the US government.
That means there is no time to lose. PV was somewhat of a new frontier a decade ago, but today it is a developed, environmentally responsible, and cost efficient technology that you can trust. As PV improves and becomes more widespread, the incentives that fostered its growth are becoming less and less necessary, and subsequently are being phased out. That being said, they haven’t been completely pushed out of the picture quite yet. Don’t wait until solar energy has become the default source of power Choose to invest in PV now and enjoy the best of both worlds – tremendous financial rewards, and cutting edge tech blooming to its full maturity.