Thursday, August 14, 2008

Subsidizing Solar at 77 cents on the dollar

Congressman Harry Mitchell has been out touring new solar energy installations highlighting the need to renew their tax credits. Since the story provides a lot of information, let's run the numbers.

Marvin Borsand of the Body Sculpting Center, 2255 N. Scottsdale Road, paid $180,000 to install a 30-kilowatt system at the south Scottsdale business in January.

"It's made a very significant difference for us, much more than we expected," Borsand said. "We originally thought they'd pay back (in) maybe seven years. It's down to about four now."

The federal government rebate covered 30 percent of Body Sculpting's costs of the panels and their installation.

The business also received credits from the state and from the Salt River Project, which issued a one-time $66,000 rebate based on kilowatt-hours saved by the solar panels.

The 30% federal rebate covers $54,000 of the $180,000 cost. The state tax credit is 10% covering another $18,000. SRP kicked in $66,000 so the net cost of the system to the business was $42,000 or 23.3% of the total. A 30 kw system generating power 8 hours a day for a year offsets the purchase of 87,600 kwh of electricity at a rate of around 15 cents per kwh. That saves the business about $13,100 a year which pays for a $42,000 investment in less than 4 years.

Rick Kidder, Scottsdale Area Chamber president, accompanied Mitchell. "If we can start to use more solar here and reduce our carbon footprint in the process and save a little money, it's a win-win-win," Kidder said.

While it's a win-win for those directly involved, the taxpayers and other SRP customers get stuck with over 77% of the bill.

I don't understand how something is sustainable when it requires a subsidy of 77 cents on the dollar to entice businesses to use it.

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