Wednesday, September 10, 2008

Tax Credit Ends Dec. 31:

Get an Installation Guarantee

Anyone contemplating getting solar power installed at home or at work needs to get off the dime. The solar investment tax credit, part of the Energy Policy Act of 2005, expires December 31, 2008.

For homeowners this means losing a 30% tax credit on the cost of a photovoltaic system, capped at $2000. Commercial entities will lose a straight 30% solar investment tax credit.

For large PV systems, say, 500kW or more, it is unlikely there is enough time left to install and commission systems by year's end. Design, engineering, environmental reviews (if necessary), procurement of components, installation, inspections and commissioning are time consuming even on a fast track schedule.

Get a guarantee

Several large entities like water treatment plants and military bases require bid bonds in their requests for proposals (RFP). Bid bonds are a financial guarantee by a surety to the project owner, that the contractor will honor his bid price, enter into a contract and supply the required performance and payment bonds. The bid bond amount is usually 5 to 20% of the total bid amount. If the contractor fails to honor his bid or cannot furnish the performance or payment bonds, the surety is liable for the difference between the first and second bidder up to the face amount of the bond.

As the solar industry is still relatively new, many solar integrators have not built enough credit history in their businesses to even be bondable. Although this deters some newer (smaller) solar integrators, it also tempers a potential bidder's urge to submit an unrealistically low estimate just to land a project.

If you are about to go solar and are counting on the federal tax credit, get a guarantee it will be installed AND commissioned by December 31. Require a bid bond by your installer for a project over 50kW. Otherwise, get a written guarantee from the installer (or an addendum to the installation contract) that the system will be finished by the deadline OR the contractor either will pay $2000 or deduct it from the final payment if the deadline is not met.

There is already a run on PV system components as a glut of systems are being rushed to completion. Procurement of panels for some dealer/installers is already dicey in several areas. Simply stated, delayed installation may or may not be the installer's fault.

For those of you who will still install with or without a tax credit, I commend you. But for those who need incentives to make a PV system financially feasible, take charge of your position. It's your money.


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