Article Republished By Javier Troconis
This article is written in the second half of 2014 and it would seem that the best time to install solar… was about a year or two ago.
Now, since most of us do not posses the ability to travel back in time while many like me, are hindsight experts, let us learn from the past and try to see what would be the second best time, shall we?
First, let’s see the ‘why’ of the initial claim. Well, years ago solar was an expensive proposition and it wasn’t for the faint of hearts. One needed to be an ideologue to go there, it was expensive and although it was a proven technology, there weren’t many systems already in operation that one could show or see to make that financial leap… Then gradually, it started gaining popularity, first in Europe and in Germany in particular and then in Asia and in the United States. More and more manufacturers came online in China, driving prices down. At one point, just like with athletic achievements, everybody among solar professionals in California, was looking at who would be the first manufacturer/distributor that would dare break the $1.00/watt price barrier and get closer to the elusive ‘Grid Parity’, a point where the cost of solar would equal the cost of electricity produced by burning fossil fuel!! Of course the two are correlated and considered miles stones in the drive to make solar PV more and more popular. At the same time, installation prices (the other big component of the price of a system) went down and sub-contractors who were employed by various solar companies to perform the installation work, were feeling downward pressure as well, as more and more general contractors and electricians started to learn the fine art and science of proper solar installation. Soon enough, the $1.00/watt that a sub was charging the prime solar contractor, was broken. At the same time the incentives offered by local governments (in CA) were still decent going down gradually from $2.50/watt to $2.20 to $1.90 to $1.55… gradually decreasing as the Megawatts were gradually consumed by each consecutive step. At the same time, something obscure called: Accelerated Amortization was offered to businesses by the Federal Government. This, on top of the now famous, 30% Federal Tax Credit which is still in effect and that we are going to talk about later again. Soon enough there were too many solar panels in the market at really low prices and THAT, dear reader, was the best time for businesses to install solar on their roofs or in their parking lots to shade the parked cars and arm wrestle that huge electric bill!!!
The ‘Great Recession’ was long gone. Banks were already solar savvy enough to recognize a safe investment when they saw one and were willing to lend. The incentives mandated by the State of California and offered by the Publicly Owned Utilities (PG&E, SCE and SDG&E) were still significant, the accelerated amortization was still in effect AND there was the 30% Federal Tax Credit (not to mention the availability of Schedule-R rate addressing the subject of demand-charges, which is a significant portion of a commercial electric bill. This subject though, is being addressed in a separate dedicated article.)
Fast forward to 2014, well, the local incentives (unless you are within the territory of a municipal utility) are gone, the accelerated amortization is gone too and to add insult to injury, there are less solar panels available in the marketplace so prices went up some. So is it, “too late”?
First of all, the sun shines as bright as it did a year or two ago. It shines on average even a bit more, given the horrible drought and lack of clouds (OK, sorry, that was uncalled for). But seriously, we are becoming increasingly aware of the tangible resource that is the sun. Aren’t we?
Did you know that although our electricity demand keeps going up, in the last few years, all the solar that has been already installed CURBED COMPLETELY, SO FAR, THE NEED TO BRING ONLINE NEW FOSSIL FUEL POWER PLANTS? This is due to the fact that solar provides the most electricity EXACTLY when it is most needed, summer-mid-days!!!!
Second, If you, a business-owner or executive are risk averse, you trade catching ‘tops’ and ‘bottoms’ of trends in exchange for a more secure investment. Well, now we are clearly out of the woods as far as risk is concerned, ask your banker if you don’t believe me!
You know how a few years ago every Prius owner could drive in the carpool lane? Now, you have to own a fully electrical car and even those are numbered!
Third, right now and up to the year 2016 you are given a gift from the federal government. Thirty-percent of the value of the solar system (or any other renewable source for that matter) can be taken as a tax credit that can be used all at once or broken up into as many fiscal years as one wishes, as long as the system is installed before that deadline. (If you are a non-for-profit organization there might be some other arrangements, using member donors tax appetite. For one, some of those local rebates that we’ve been talking about earlier, are still there.)
Fourth, most commercial-solar companies that are out there now (and I happen to be affiliated with some of them) are solid. The ones that didn’t know how to manage properly went out of business or back to the continent from which they came from. Most of the ones around are lean and mean. They know how to provide a very professional and long lasting solar system at a great price.
Fifth, AB327… ah?
AB327 is another extra help that the legislator in CA managed to provide to all of us, solar seekers against Darth-PG&E-SCE-SDG&E-Vader. It’s a kind of light-saber that ‘grandfather’ net-metering prices. It forces the above utilities to credit us, home and businesses, for ANY kilowatt hour (kWh) that we produce through solar as much as they would charge us, if we were to get it from them. And not a cent less. Those utility companies hate solar and would do anything to make it less attractive, well, for the moment, they failed. Read about it here: http://cenergypower.com/blog/assembly-bill-327-california-net-metering-in-transition/
Sixth, Last but not least, As we have discussed, there isn’t much room for prices to go down, they have already bottomed out both on the hardware and workmanship side. Now, the only waiting that one should do is for the proposal to be presented, the ink on the contract to dry and your turn in the installation cue to come…
Congrats, our life-giving star is now also powering your business!