Here is my out-of-pocket, installed cost for a
grid-tied, solar PV system (without “battery
backup”) at my home in Brewster County:
Gross installed system cost
for a 1kW solar PV system: .....$6,000
less incentives:
AEP PVcash rebate
@ $1.30/watt..........................($1,300)
30% residential PV Federal
tax credit....................................(1,410)
less total incentives...............($2,710)
Net, out-of-pocket cost.....$3,290
An AC-power production measurement
gizmo and associated web-application supplied
by the PV equipment manufacturer (included
in the all-in system cost) allow me to review
online the hourly/daily/monthly solar PV pro-
duction as well as to monitor the condition and
health of each of
the four 250-watt
solar PV panels in
my 1kW system.
As a measure
of investment via-
bility, the market-
place in solar PV
long has focused
upon the “cash
payback period.”
That is the num-
ber of years it
takes to reach
“break-even”
when aggregate
utility bill savings
equal the out-of-
pocket, original investment cost. Assuming a
modest, year-on-year, 2% hike (compounded
annually) in electric utility rates, it would take
me about 15 years to re-coup my PV invest-
ment. The market’s present emphasis upon a
short “payback period” is, I think, a false met-
ric which reflects the hope by oldster-empty
nesters (who constitute the main buyers today
for residential solar PV) that they will live long
enough to justify their investment.
Another way to measure return-on-invest-
ment (“ROI”) in solar PV is the “net present
value (NPV)” method used in capital budgeting
analysis. An NPV analysis shows over the esti-
mated 25-year life of the solar PV system I
would recover (in today’s dollars) both my ini-
tial $3,290 out-of-pocket cost as well as capture
an additional 5.00% ROI. The actual ROI is
higher than 5.00% because the present value of
projected, future renewable energy credits
(“RECs”) over 25-years are not yet subject to
Federal income tax. The “tax-equivalent yield”
from my RECs will reach a whopping 6.67%
ROI (or 5.00%/1-.25 Federal tax bracket) over
the course of my 25-year investment in sun-
shine! I will receive a stream of monthly RECs
on account with my retail utility provider, as if
the RECs were annuity income whose dollar
amount floats with amount of electricity pro-
duced by my system at the current electric util-
ity rate.
Investing in a solar PV system clearly is not
comparable with short-term aims by investors
who seek quick trading gains and maximum
liquidity. You cannot re-sell on the open mar-
ket a PV system which you just bought. It is a
long-term investment based upon assumptions
about the estimated, useful life of a PV system
and whether solar PV represents a capital,
leasehold improvement which increases the
market value of your house. (Possibly the fitting
comparison lies in which market you care to
entrust your money: In the razzle-dazzle paper-
chase on Wall Street, or in a solar power-gen-
erator in your own backyard?)
For
credit-
worthy buyers
who
cannot
afford to pay
entirely in one fell
swoop, commer-
cial banks in West
Texas
will
finance the pur-
chase of a resi-
dential PV sys-
tem. While loan
interest expense
reduces ROI in
solar PV, interest
expense associat-
ed with a home
equity
line-of-
credit is tax- deductible. The Texas tax code,
moreover, allows homeowners an exemption
from any additional property tax which arises
from the increased property value associated
with the installation of “solar energy devices for
non-commercial use.” Separate Federal legisla-
tion expires, however, on December 31, 2016,
which currently supplies homeowners through
the end of 2016 with a 30% residential PV
Federal tax credit.
The languages of kilowatt-hours and capital
investment analysis are technical and tedious.
Here is the bottom line: Not all energy sources
lie beneath our feet. Renewable energy sources
lie also in the heavens above. And if he spoke
Spanish what might Henrik Ibsen say today to
people who live on the Last Frontier? “Viva Big
Bend solar!”
Eat more
raspas!
Murphy Street Raspa
Ice cream. Gifts. Mexican
folk art. Cold things to drink.
Hot things to drink.
Mon, Tues 12-5
Wed 11-6 • Thur 11-7
Fri, Sat 11-8 • Sun 1-5
100 W Murphy St • Alpine
432-837-5449
NECTAR
COMPUTERS
Servicing West Texas with comprehensive
and experienced support since 2003
202 N 11th & Ave E, Alpine Texas • www.nectarcomputers.com
432 837 3021 • Support Cell: 432 386 7811 • Mark Hannan, Owner
Kick off your holiday season
with Eve’s Garden B & B
We invite you to a pot luck party
the evening of Saturday Nov. 22
With LIVE MUSIC by
famed Austin and Terlingua minstrels:
Guy Town & The Flying Sombreros
Eve’s Garden will provide snacks and beer.
Bring a treat if it’s easy. Everybody welcome.
It’s a free show, but tips for the band encouraged.
11
Ave C, N 3rd St • Marathon, TX
432 386 4165 • www.evesgarden.org
Cenizo
Fourth Quarter 2014