Questions and answers for Community Solar programs
Q. What is the cost per watt?
A. Initially 4.00 per watt (For Solarize Dummerston if we sell 150kW it goes down to 3.80 per watt). Then there is the 30% Federal Tax credit, which brings the cost down to $2.80 per watt, OR LESS, for businesses you can also take a 7.2% Vermont Energy investment tax credit. Also for businesses you can deduct 80% of the cost of the investment in Community Solar in what is know as Accelerated Depreciation or Modified Accelerated Cost Recovery System (MACRS) This brings the cost below $2.50 per watt for commercial customers. Soveren likes to quote $2.00 a watt because they include a free 30 year warranty and maintenance plan.
Q. What is the solar adder?
A. depends on the system size;
For systems <15KW-The Solar adder is set by Vermont law at 5.3 cents per killowatt hour (KWh). So for every kWh you generate you get the base rate of 14.7 cents plus the additional .053 for a total of 20 cents per kWh.
14.7¢ + 5.3¢ = 20¢
For community solar, (and any installation larger than 15KW) because the entire farm is greater than 15KW the solar adder is set by Vermont law at 4.3 cents per kilowatt hour. So for every kWh you generate you get the base rate of 14.7 cents plus the additional .043 for a total of 19 cents per kWh.
14.7¢ + 4.3¢ = 19¢
Q. Will I continue to get the adder even if the government changes the rates?
A. The solar adder is for 10 years from when you start generating power from your panels.
This bonus lasts for 10 years from the commissioning date for all projects completed in 2015.
Q. What about the Solar Adder, I hear it is going away?
A. The solar adder is mandated by law for 10 years, from the date you sign up.
It went down in 2014 and will go down again in 2016. See above.
Q. How do I get my electricity to my house?
A. Since this is a solar farm, the panels are set in an ideal location, and produce power very efficiently; this power is fed into the grid. The power generated by your panels feeds the electric grid in one location, and you draw power from the grid at another. Think of it as a giant pool of liquid energy: you pour in a cup at one place, and remove a cup at another. As far as the power company is concerned, it doesn’t matter how near or far these two locations are to each other because they’re part of the same electric grid. This is the beauty of Vermont’s “Net Metering” legislation, which is what makes Community Solar possible.
Q. What is the timeline for this project?
A. You can sign up now, and before the solar farm comes online you will be able to purchase panels. There are several projects in Southern Vermont. One should be online this summer, with additional projects to be completed in the fall.
Q. What is the cost for deposit?
A. $500 a kW is the required deposit amount the balance is due when the field is commissioned.
Q. How much will the system cost?
A. You can view the cost here, it varies by how much electricity you use in a year: http://soverensolar.com/vcs-quote/
Q. Should I purchase more panels than I need so I have a cushion for the future in case I want to add a heat pump?
A1. NO – If in the future if you decide to use a heat pump, after weatherizing your home, you could buy more panels very easily, but to purchase more than what you need now with the idea that someday you will use more electricity is not something we advise. That approach ties up money that could be used on weatherization (incentives are available for that too) or other efficiency improvements.
A2. We don’t recommend purchasing more than you currently need because GMP is not obligated to compensate you for excess power generated. We are currently working with the utility to make it easy to purchase more panels in the future if your power demand increases.
A3. Legally you cannot take the tax incentive for more panels than you need for production of your electric needs.
Q. Can I get a check if I do not use all the power generated?
A. Perhaps. You can request a check, but the power company is voluntarily sending those, there is no law that states GMP will have to send you a check in the future.
Q. Is there a warranty beyond 30 years, what happens after 30 years?
A. Good question. On installations that have land owner approval for the extension, a new project (new panels and inverters) may be installed. You could come and get the old panels which will still be generating close to 80% of their power. Depending on the progress with Solar power there might well be other options in 30 years.
Q. Is there a buy-out option?
A. Yes, Soveren Solar will help you with a buy back of your panels at a pro-rated price, up to a set number of years.
Q. What if I want to sell my panels later?
A. We hope you will keep them, but if you must sell your panels Soveren will purchase them back, or you can sell them in a private sale.
Q. Are my panels transferable?
A. Definitely YES, at this time there is no formal mechanism to “transfer panels” we anticipate that demand in the solar farms will grow as people use more clean electricity.
Also the energy credits produced by your panels can be transferred to any account in GMP territory.
Q. What is the smallest amount I can purchase?
A. One panel is about 265 watts, it is $4.00 per watt. So that is $1060 per panel.
Q. Can I add more panels later?
A. Yes, if you purchase more during one project then we just add on to your group. If you purchase during other Community Solar Projects than we will virtually “move your pool” to the new project, so all your panels are in one location.
Q. Do I get a bill of sale for the panels?
A: The signed contract is the bill of sale.
Q. Why is there a 150kw limit on solar farms
A. Above 150kW there is a higher expense to connect to the grid, and there are delays to prepare the lines and transformers in some cases. So the sweet spot for community solar right now is 150kw. this may change as different types of projects come on line.
Q. What scheduled maintenance costs will I be responsible for?
A. NONE. While there will be scheduled maintenance and repairs costs, you won’t be responsible for any of them for 30 years. Solar panels use a device called an ‘inverter’ to transform the Direct Current (DC) electricity that they produce into Alternating Current (AC) power that most of us use in our homes and businesses. These inverters have a limited lifetime, and a warranty that is often only 10 years. Soveren has factored in the cost of replacing these systems as well as other maintenance including re-tilting the panels seasonally to maximize production and occasionally washing dust off of them. So there will be no surprise costs to you down the road.
Q. What about insurance?
A. Insurance is now included in the upfront cost for VCS panels. There are no additional fees for participants for 30 years!
Q. Are tax credits and other subsidies available for me?
A. In a Soveren Solar installed Vermont Community Solar project, you get to take advantage of ALL available tax credits and as a business you also get State incentives. Here’s what you qualify for: solar panel purchasers qualify for a 30% federal tax credit based on the cost of their panels. It is like having a check made out to the IRS that you can use to pay your taxes. If it cannot be entirely used in the first year, the tax credit can be carried forward until used up.
Q. How do tax credits get documented?
A: There is a form you fill out when you file your taxes next year to claim the tax credit. It is specifically to claim renewable energy tax credits but there are different forms for personal and business use. Any accountant will be able to help.
Here are some links:
Form 3468 Investment Credit for businesses Instructions
Form 3468 PDF Investment Credit for businesses
Form 5695 Residential Energy Efficient Property Credit Instructions
Form 5695 PDF Residential Energy Efficient Property Credit
Q. Can renters qualify for the 30% federal tax incentive?
Q. Is solar good for businesses?*
A. In addition to the above, businesses may qualify for a 7.2% VT state business tax credit. In addition, businesses may take accelerated depreciation on 85% of the cost of their panels over a five year period. Businesses may also qualify for a REAP grant from the USDA to cover 25% of the cost of their purchase. Contact Anna at Soveren Solar for further details on the REAP application process. All other present and future subsidies, grants or energy credits associated with the Vermont Community Solar project remain the property of the project developer. See the Solar Business page.
Q. How do I know if my business qualifies for the 7.2% VT State business tax credit?
A. Vermont offers an investment tax credit for installations of renewable energy equipment on business properties. The credit is equal to 24% of the “Vermont-property portion” of the federal business energy tax credit. For solar, this constitutes a 7.2% state-level credit for systems placed in service on or before 12/31/2016. After this date, solar technologies will be eligible for a 2.4% credit.
The key issue is that this credit is tied to the federal ITC and not the personal tax credit BUT it is an individual state credit. That means that the solar project has to be for a business (to be eligible for the federal ITC), but the state credit needs to be taken on an individual return. C corporations (and others) can’t use this state tax credit as they file a corporate return and not an individual return.
And, of course, you need the state tax liability, but you do have 5 years to use it.
Here is the language from the statute:
32 V.S.A. § 5822. Tax on income of individuals, estates, and trusts
(1) A taxpayer shall be entitled to a credit against the tax imposed under this section of 24 percent of each of the credits allowed against the taxpayer’s federal income tax for the taxable year as follows: elderly and permanently totally disabled credit, investment tax credit attributable to the Vermont-property portion of the investment, and child care and dependent care credits.
(2) Any unused business solar energy investment tax credit under this section may be carried forward for no more than five years following the first year in which the credit is claimed.
Q. Can I afford to go solar?
A. If you can afford your electric bill, you can afford a loan payment (replacing your electric bill) paving the road to free electricity.
Q. What if I don’t have the upfront cash, does it make sense for me to get a loan?
A. This situation comes up often, and really needs to be looked at individually. Soveren is working with Green Mountain Credit Union and others to provide unsecured loans that will make borrowing to purchase a system cost less than your monthly electric bill. Call the solar coach (Daniel Hoviss 802 254 1410) to help you crunch the numbers. Solar is much more affordable that you may think.
Q. Why are ‘seasonally adjusted’ solar arrays a better deal?
A. Most large solar arrays are build on what is called ‘fixed rack’ mounting structures. The panels are fixed in place and do not move. Soveren Solar has made the decision to use a panel racking system that allows panels to be tilted seasonally. This allows for better electricity production because the panels are facing directly towards the sun more of the year. It also increases winter production after a snow storm — the panels are oriented with a steep slope to catch the winter sun, which means that they also shed snow better. We estimate a 15-20% increase in electricity production with our arrays over an average home solar installation. This system does require regular maintenance to get that added performance, but the cost is factored into the whole project and we are happy to create local, permanent jobs.
Q. Is any part of the system locally produced?
A. Yes! Soveren fabricates our racking or mounting system at our shop in Dummerston VT.
Q. What is your philosophy of building on farmland?
A. This is an important question, and different people have different views. Certainly we prefer to build solar arrays on what are called ‘brownfield sites,’ areas of land that are degraded and cannot be used productively. We also like to use land in industrial parks. This seems like a good fit. Agricultural land we look at on a case-by-case basis: can we use the edge of a field? Is it prime agricultural land? Will the income from the lease help the farmer substantially? Can we work with the farmer to obtain multiple simultaneous uses — solar with grazing of animals, or berry crops? On one level we see solar as just another crop — electricity, but we also understand that good soil cannot be replaced. But a solar array is not like a housing subdivision, it can be easily decommissioned and removed if future conditions warrant it.
Q. What if I move out of the area, can I sell my panels?
A. You own the panels and you can sell them at any time, but note that you can still receive the solar electric credits if you move to another town anywhere in Green Mountain Power’s territory (most of Southern & Central Vermont). If you ever do want to sell, Soveren will maintain a list of potential buyers who are interested in owning a part of a Community Solar farm and will help you with the transaction. Instead of selling your panels, it is also possible for you to have the credits they produce transferred to another user who would pay you monthly for the energy.
Q. How does a not-for-profit benefit more under a Community Solar model?
A. There is now an option for non profits and people that do not pay any taxes to purchase panels at $3.00 a watt. You would not be able to take any federal tax incentive off the top, and you would not own the panels for 6 years. But after that it is just like the standard option.
Q. What if Soveren goes out of business?
A. For every community solar installation a separate LLC company is created for that project. Each company has it’s own accounts. A portion of the installation is reserved to create a cash flow that will service that project and cover all maintenance and repairs. So, Soveren need not be around to ensure that the installation will be properly cared for. In the unlikely event that Soveren does decide to close its doors, they would ensure that a new manager was arranged for and that the transition was seamless on all accounts.
Q. What does Soveren do with the Renewable Energy Credits (RECs)?
A. With Vermont Community Solar, your electricity usage is offset by the electricity generated by your solar panels. The renewable attributes (RECs) of this electricity will be sold by Vermont Community Solar to keep the cost of your panels affordable.