Companies mull solar options

Published October 19, 2015

Loudon County News-Herald – Jeremy Nash – October 18, 2015

While solar panel technology has been available for residential use for decades, commercial customers in East Tennessee stand to see the most financial benefit from the alternative form of power through available incentives and tax credits compared with pricey startup costs for individual homeowners, according to energy experts.

“The thing with solar is it’s a very front-loaded cost,” Brian Bickel, LightWave Solar director of sales and marketing, said. “So you’re basically buying all of that power in advance, right? So when you choose to install a system on your rooftop you have some front-loaded costs but basically the cost of the power that that generates over time is equal to essentially what you’re paying the utility because there’s a direct offset for that power.”

Recently LightWave Solar Electric LLC held a solar panel workshop at the Loudon County Visitors Bureau. Businesses from Loudon County and surrounding areas attended to gain a better understanding of how solar power could potentially affect their operational costs. LightWave Solar representatives were on hand to offer businesses a free preliminary estimate on how much installing solar panels would be for owners. A BB&T representative was also in attendance.

Bickel said LightWave Solar’s workshop was more focused on businesses because at the moment, solar power provides a better financial return for companies rather than individual homeowners, as businesses can take advantage of additional tax benefits and grant opportunities.

“So you invest money up front, and then as you’re getting offsets for your usage along the way the system ultimately pays for itself, and the length of time that it takes to pay for itself is different depending on each project, and the reason that is, is every project may have a different orientation as far as the way that their building is oriented due south,” Bickel said. “There could be trees involved in a certain project which would minimize the output of the system. So it’s very much a different type of outlook for every potential project.”

Bickel said Tennessee Valley Authority offers a Green Power Providers program that provides a direct offset to business owner’s power rates, plus a 2-cent premium. He said the premium that is currently part of TVA’s program will be eliminated after mid-November, so businesses or residents looking to apply should do so before the Nov. 18 deadline.

Bickel recommended turning paperwork in by Nov. 13 to allow time for the project to be submitted.

“So if you’re paying 10 cents, for example, for your power, you would be able to sell your solar back at 12 cents for the same kilowatt hour,” he said. “So there’s a premium payment that expires at the end of this year, and we just feel like it’s incumbent on companies like us to educate folks as much as possible about the available incentives that are there for that.”

Businesses participating in TVA’s 20-year program should be able to break even seven to eight years after placing the panels, while homeowners on average wait a little longer at 11 years for the system to pay for itself before they see a return on their investment, Bickel said. The average startup cost for residential could be anywhere from $15,000-$40,000 before tax credits and incentives.

“But typically the residential customers are willing to wait — the profile customer that does solar is somebody who’s really willing to wait a longer period of time to get that return than maybe your average electrical customer is,” he said, adding that 70 percent of LightWave Solar’s jobs are residential. “So if you know you’re going to be in your home for the next 15-20 years, you would be a good candidate for solar. But if you’re not sure that that’s the case or if you have a older roof or you just — not every homeowner is a good candidate for solar, I guess, is one way to describe it.”

‘No-brainer’

Other incentives include a federal tax credit, which assists in offsetting 30 percent of gross system costs. Bickel said that incentive expires at the end of 2016.

“So anybody who installs a system between now and the end of next year can claim a 30-percent tax credit so long as they have a tax liability there,” Bickel said. “So let’s say they install a $20,000 system. They would have a $6,000 tax credit, and they would have to owe at least $6,000 in taxes to claim the credit. If people have tax liability that they’re looking to minimize, solar can be a great way to take that tax money and just divert it into an energy program.”

In addition, businesses operating in agricultural fields or in small rural towns have an opportunity to apply for a U.S. Department of Agriculture grant, which can cover 25 percent of the system cost, he said.

“If they claim 30 percent from the taxes and 25 percent from the grant, now over half their system is paid for,” Bickel said. “Businesses can also depreciate the system over six years. Another 28-30 percent of that value that they can claim back over a five-year depreciation scale. At the end of five years they’ve got 30 percent tax credit, 25 percent grant potentially and then another 30 percent of the system recouped in depreciation,” he added. “I mean, it’s a no-brainer, and that’s why we really focus on businesses because we can draw a very clear return on investment for them.”

‘Clean energy’

Knoxville-based Odle & Young Architects representative Steve Young said he had an interest in solar power dating back to the 1970s, and he was curious to see how economically viable the system could be for his business.

“Solar in concept is free energy and clean energy, so that’s a good concept,” Young said.

Soaring Eagle Campground owner Danny Fischer, based in Roane County, said he had considered solar power for a while but never really had the capital to spend on a power system. This year has been better. He said his business generates a large electrical bill, and he was looking to reduce it if possible.

“Just the fact that once you put the initial investment in hopefully it will continue to return for you,” Fischer said about the potential benefits of solar power.

Farragut residents Mark and Shirley Vaughan were looking into starting a business and wanted to do their due diligence before making a decision on solar power. Mark Vaughan said the business could be located in Loudon County.

“Most of what I’ve heard is from higher electrical rate markets and stuff where it’s much more — some great success stories, California, wherever, and I’m interested in learning about the (feed-in-tariffs),” Mark Vaughan said. “It might help me get financing for including solar and getting more approval from regulatory bodies and stuff for what I want to do because it includes solar. I mean I think there’s a lot of benefits from a perception standpoint.”

Keeping down costs

Wampler’s Farm Sausage first installed solar panels in 2009 and added more panels in 2011. President Ted Wampler Jr. said the company sells power generated back to TVA through Lenoir City Utilities Board, and both solar panel installation projects are part of TVA’s Green Power Providers program.

“We sell the power we generate, and of course, we use that income to offset our own utility bills, and so from a pure financial standpoint it’s helped us that way,” Wampler said. “It helps us at home, and all of our neighbors because our capital expenditure in solar panels helps hold infrastructure costs down because we’re putting power on the grid. And so that should be helping everyone’s electric bill, and then installing solar panels also helps us be a more sustainable company which helps the environment, all of our children and grandchildren.”

Wampler said the company saw a return on investment after a little more than two years on the first installation, and the second installation was “paying its own way.”

“We paid a very high price for the solar power, but we applied for the grants, and so that lowered the capital costs,” Wampler said. “So we got a pretty fast payback on that one, and then on the second one in ‘11 that system is basically — we’ve got a note at the bank for what we didn’t pay for and what we didn’t get back in investment tax credit, things like that, but that system pays for itself.”

Additionally, Wampler said the company had solar panels installed at the Knoxville Zoo and for Family Brands International LLC and Elm Hill Meats Inc. Out of the three locations, Wampler said the solar power generation amounts to 640 kilowatts.

Sweetwater Valley Farm owner John Harrison installed a 39.6-kilowatt system last year, which is made up of 128, 310-watt panels and is expected to generate more than 46,000 kilowatts annually.

“We just really looked at them on just plain rate of return, and they’ve provided a good rate of return,” Harrison said. “I think they’ve performed a little better than expected, and we just look at them as an investment like we would make any other investment in the business, but they’re just up there and (give) a good rate of return. Plus they give us a little bit of … being a public business like we are, they give us a little bit of positive environmental aspect of the business too. But really we sat there and looked at it being a good rate of return.”