Sunday, October 12, 2008

Incentives, Oversupply Could Mean Great Solar Deals

Now that the federal solar investment tax credit has been extended (see Oct. 5 post below), it's time to size up what your state has in the way of incentive for photovoltaic (PV) systems. This information and more can be had at the Database of State Incentives for Renewables & Efficiency (DSIRE) compiled by North Carolina State's Solar Center. For further reference see Related Links at the beginning of this blog.

Besides the federal tax credit available in all 50 states and territories, eleven states provide incentives from both state and utility resources. These states are California, Florida, Indiana, Maryland, Massachusetts, Minnesota, Oregon, Pennsylvania, South Carolina, Wisconsin and Wyoming, plus the U.S. Virgin Islands. New Jersey had an attractive PV rebate program but ceased taking reservations in August. Details for each program are delineated at the DSIRE site. The remaining of states fall under three categories: state-only incentives; utility-only incentives; or neither incentive programs underway (the federal tax credit still applies.)

OK, but how would an average homeowner or business owner put this into perspective? For the sake of simplicity and the range of PV installation prices around the country, let's figure a price of $9 per AC watt installed. This includes all engineering and design, permitting, panels, inverter, racking, AC/DC disconnects (where required), and installation (labor). A typical family in California can use a 4kWAC system. At $9/watt the gross price (less sales tax, if not exempt in your state) is $36,000. The federal solar tax credit of 30% reduces the cost by $10,800 and an average rebate now is around $2.50/watt or $10,000. Net cost after incentives would be $15,280 or about 42% of the original cost. As a business investment, rebates are taxed as income by the IRS but not, to my knowledge, for individual homeowners. Also, in California a PV system is not added to your home's assessed value for property tax purposes. It is suggested to consult with an attorney or CPA about this issue if you're in another state.


Last Monday Goldman Sachs downgraded the stock of both First Solar and SunPower, two of the nation's leading solar panel makers. The reasons Goldman Sachs gives are oversupply issues and a lack of European subsidies.

"The risk of oversupply in the solar market will soon become a reality as considerably less generous demand subsidies take hold just as a wave of supply and tight financing hit the market," said Goldman Sachs analyst Michael Molnar in a client note. "We believe that liberal subsidies of the past in markets like Germany and Spain are unlikely to be replicated in the future given fears of their ultimate cost in a bad world economy."

"We strongly believe that SunPower and First Solar are two of the best solar companies in the world and that both will be part of the growing solar industry for years to come," Molnar wrote. "However, in our view, even these companies will face headwinds in a market that is oversupplied with modules." (, Oct. 7)

So this winter or spring could be an ideal time to go solar because panel pricing could be the best ever so far. But as a fellow solar associate of mine said today everything could be in good supply next year except money. Still he says, if you have it solar power is a great long-term place to put it.


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