Can Solar PV panels help me reduce my energy costs?
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Note: This post by James Hasselback first appeared here with the title, “Solar PV Panels, can they help me reduce my energy costs?”
Business is booming in New Hampshire. We have the lowest unemployment rate in the country. These jobs run the gamut from healthcare, government, education and, among others, skilled manufacturing and industry. This influx of industry has brought with it a concern from both business leaders and politicians that the cost of electricity in New Hampshire is prohibitively high, inhibiting potential economic growth in our state. While, on average, utility electric rates trend on the high end in New Hampshire, photovoltaic solar energy is a solution which is often forgotten or discounted, even though it provide reliable and cost-effective electricity to businesses, municipalities and residences across the state, in addition to diversifying energy sources and reducing transmission costs for all New Hampshire ratepayers.
Our state’s solar industry has grown rapidly over the past decade. According to the Solar Energy Industrial Association (SEIA), there were more than 1,184 full-time New Hampshire jobs focused on solar in 2016 and more than 9,000 residents generating their home electricity with reliable, renewable energy on a daily basis. A concrete example of this growth is Revision Energy, which has expanded from two guys operating with a pickup truck and garage in 2003 to a company with around 170 full-time employees and five locations throughout New England in 2017. Solar is not just for homeowners, however. More and more businesses and municipalities are recognizing the substantial economic and social benefits of a solar energy system.
ReVision Energy and many other solar development companies have partnered with New Hampshire business and municipalities to install over 20 megawatts of photovoltaic solar energy capacity in 2016 alone. That’s over 70,000 solar panels in the Granite State! According to the Environmental Protection Agency’s greenhouse gas equivalency calculator, these solar installations are equivalent to offsetting nearly two million gallons of gasoline consumption or the carbon sequestered by nearly 17,000 acres of forest, each and every year. Aside from the significant environmental benefits, there is the real and vital economic benefit to the companies who invest in solar power, providing millions of dollars statewide in annual energy savings with no negative impact on utility ratepayers.
From an individual business perspective, the capital budget savings a photovoltaic system can provide are substantial. According to the US Department of Energy and US Energy Information Administration, commercial electricity rates in New Hampshire average 12.36 cents/kWh, and industrial rates average 11.82 cents/kWh. On average, the 40-year cost of energy from a photovoltaic solar system is less than $0.03/kWh, more than 75% savings from utility prices if they remain flat over the next four decades. If history is our guide, we can continue to expect utility electricity prices to increase, making solar energy systems even more economically attractive as future electricity rates rise.
How can solar provide such meaningful capital expense savings? An excellent question and one ReVision Energy commercial design representatives often hear. The primary misconception is, “Solar doesn’t work in New Hampshire,” which is unequivocally false. The key factor in solar electricity generation is latitude. While we here in New Hampshire are blessed (some may say cursed!) with an alpine environment and latitude of 43 degrees, so is Germany at 51 degrees—a full 8 degrees farther north. A more accurate comparison is the French Riviera, well-known for sunbathing celebrities, which shares our 43-degree latitude. In 2016, Germany was able to achieve 90%+ of the country’s electricity usage with renewables, where in New Hampshire we stand at less than 2%. So, we can be confident that our geography, climate and location is not our barrier to solar generation, but instead legislative policy and customer education.
Solar energy is a proven electricity generation resource in New Hampshire utilizing equipment with 25-year warranties to provide a safe and reliable energy investment. Factor in federal tax benefits (26% of project cost), tax depreciation incentives (20-26% of project value) and cash rebates from the NH Public Utilities Commission valued at up to 25% of the project cost. In short, the economics are extremely attractive, with commercial projects typically becoming cash flow positive in 4-6 years and receiving significant tax advantages along the way. With no moving parts and minimal maintenance, a solar energy system can easily have a 40-year lifespan, essentially providing 34 years of free, carbon-neutral electricity.
Aside from immediate savings, solar energy systems provide significant value to businesses that are budgeting for energy-intensive operations. While the deregulation of the state’s utility market has allowed for energy supply companies to provide competitive rates, they are, ultimately, subject to the variable utility market. A solar energy system can eliminate that risk and variability and provide 40 years of reliable and bankable electricity expense costs that any CFO would appreciate.
A ReVision Energy customer, Mr. David Greer, CEO of Wirebelt Company of America in Londonderry, states, “Manufacturing companies have many cost centers, and electricity can be a large cost. Generating 40% of our own energy is like a huge relief valve. It is a cost center we no longer worry about, no matter what the electric utilities do with prices.” Mr. Greer and Wirebelt, a fourth generation family-owned, ISO 14001 certified facility, has utilized solar as a method to reduce local operational costs in a competitive manufacturing environment.
In addition to material financial advantages, photovoltaic solar systems can also provide social and marketing benefits in a competitive business environment. Annette Lee and Nicole Carrier, co-founders of Throwback Brewery in North Hampton, saw both financial and consumer value in partnering with ReVisionEnergy on the installation of a 48kW array, which offsets approximately half of the brewery’s annual electricity usage and provides a visible and tangible differentiating factor from their competitors.
Many of us enjoy a tasty, craft-brewed beer. But a growing percentage of consumers are looking to spend their dollars with businesses that are making a tangible commitment toward social responsibility. This is also true for major retailers and buyers who are looking to realize new sustainability purchasing targets. Solar energy systems do just that in a highly-visible and authentic manner, while also providing significant financial benefits to businesses owners.
This, of course, is reliant on reliable and forward-thinking legislative action in our state. While solar electric incentives are attractive, they are also uncertain in New Hampshire’s legislative environment. To continue the unprecedented job growth and commercial and industrial electricity savings, we require clear and deliberate legislative leadership.
There is another common misconception about solar energy, that it is dependent on government subsidies to be cost-effective. While the existing federal and state incentives improve the economics, that is not unique to solar as an energy resource. Conventional fossil fuel energy resources historically have received and continue to received billions of dollars annually in government incentives. Because solar energy is a long-term investment, long-term and forward-thinking legislative policies are important to the continued growth and success of our state’s renewable energy industry. New Hampshire has in place a 10-year energy strategy that focuses on modernizing the grid, energy efficiency measures, fuel diversity and choice and transportation options. We need our leaders to act on this strategic plan so all residents and business can share in the success of a clean energy transition, keeping our state pristine while providing the economic development opportunity we know is there. When dollars stay in the local economy, everyone benefits.
Because of the rapid increase in solar demand and limited state funds in New Hampshire, the state rebate is currently on hold while the Public Utilities Commission (PUC) determines the amount of funds available for the new fiscal year that began July 1. ReVision Energy is cautiously optimistic that full or partial rebates will be available for projects under contract by September 1. In the event rebate funds are reduced, it will somewhat extend the payback period, though larger, commercial projects will still generate five- or six-figure savings and provide the least-expensive, long-term rate of electricity available while greatly reducing the reliance on fossil fuels.
In June, the PUC issued a long-awaited ruling on solar net energy metering (NEM). The rule is a compromise which resolves uncertainty around the Granite State’s solar energy policy, and reinforces the basic argument of solar advocates—that solar generates value for the grid well above wholesale rates – as well as calling for important pilot projects which will help regulators design future solar policy so that the market sends accurate price signals to ensure that distributed energy resources, such as solar electricity, continue to be deployed in a way that saves everyone money and also reduces pollution.
Solar electric systems in New Hampshire provide a unique opportunity for business to achieve the coveted triple bottom line: people, planet and profit. New Hampshire businesses who invest in solar can realize an immediate benefit to the people, with employees and customers who see their differentiating value in powering their operations with reliable, renewable energy. They see an intrinsic value to the planet in the positive environmental benefits via carbon reduction and distributed generation of a renewable energy resource. And, not insignificantly, profit in which a solar energy system in New Hampshire can provide important capital budget savings. ReVision Energy, a Certified Benefit corporation with locations in New Hampshire, Maine and Massachusetts, welcomes the opportunity to answer any questions. Learn more at revisionenergy.com.