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Which do you prefer to hear first? The good solar water heating incentive news in Maryland … or the bad solar water heating incentive news?
Frankly, the bad news is much less complicated, so let’s tackle that first.
The bad news: Maryland’s state rebate for residential solar water has been gutted reduced from $1,500 to $500, effective for applications received after 5 PM on June 2, 2011.
Ouch.
Click for larger image. Map from www.SRECtrade.com
The good news: Residential solar hot water systems installed after June 1, 2011, will qualify for SREC payments. Nice, eh? Err… Except, many readers may be wondering what the heck an SREC is, and, more importantly, how much is it worth?
First things first: What is it?
An SREC (sometimes known as a “Green Tag”) stands for Solar Renewable Energy Certificate.
Similar to carbon credits, Maryland utilities are mandated to produce a certain amount of renewable energy every year.
If they can’t produce that clean power through their utility-owned wind and solar projects, then they have to pay for someone else’s clean power.
Thus, an SREC is a certificate that proves to the State that a solar system has generated 1 megawatt-hour (or 1000 kWh) of solar power. Of course, the utility needs a lot of these puppies, not just one or two.
And how much is an SREC worth?
Depends. Right now, there’s a market-based system, so the price can vary from month to month. These days, one SREC in Maryland is worth around $250, according to SRECtrad.com, a great SREC info resource.
Historically, Maryland only allowed the energy produced by solar PV systems to count as an SREC. But now, effective June 1, solar hot water systems also count… with some qualifications.
Eligibility requirements:
Must be a Maryland residential solar hot water system that is NOT used for pool heating or Jacuzzis. Â Only home water heating.
System must be installed on or after June 1, 2011. (However, the program doesn’t start until January 1, 2012, so no cash generation until then.).
The system must be certified OG-300 by the SRCC with collectors that are certified OG-100. (Check our online catalog for qualifying systems.)
Since solar hot water production is generally measured in BTUs (British Thermal Units)
The solar production must be measured by a meter that converts BTUs to kilowatt–hours, and
The meter must meet the required standards of the International Organization of Legal Metrology. (Naturally, our SunReports meters meet all qualifications, the company confirms.)
So, ballpark, how much can a typical residential system earn in SRECS per year with a solar hot water system? Obviously, that’s going to vary by the type of panel, insolation, the yearly weather, location, etc.
However, a typical system with two collectors may produce around 4 SRECS a year, which means around $1,000 in a typical home owner’s pocket.
One more thing: Just in case you have a big house with a large system, the state limits your SREC payments to a maximum of 5 per year, so about $1,250 at current Maryland SREC rates.
So, although the upfront rebate has been substantially reduced, Maryland lawmakers have made up for it by making solar water heating eligible for SRECS. And don’t forget that residents will also qualify for the Federal Government’s 30% tax credit.
Spread the word, Maryland solar installers! SRECS (cash!) is coming to solar hot water.
No matter what you think about the current presidential administration, the current US Department of Energy is huge proponent of solar technologies under Secretary Steven Chu, a Nobel Prize winning scientist. Case in point is the DOE’s development of Solar Heating and Cooling Roadmap, which should be released in its final version this year.
We wanted to share a few of the charts in the draft of the roadmap, which show how solar is being used around the world, its potential in the U.S., and our “take-away” from these graphics.
Chart 1: First, let’s look at the number of solar hot water installations in the U.S., from 1974 to 2010. As many solar water heating veterans and arm chair historians recall, there was a big boom and a bust in solar water heating in the 1970’s and early 1980’s. The boom was driven by energy independence incentives driven by the OPEC oil embargo. The bust was a result of the embargo ending and President Reagan ending those subsidies. The take away: The US needs pro-solar policies and incentives in order to grow solar water heating consistently.That’s why Free Hot Water is a member of SEIA, and we urge you to support them, as well.
Chart 2: Now, let’s look at the water heating energy sources in the U.S. As we can see, solar is a sliver in the chart, natural gas takes up 54%, but there’s that 39% of the U.S. who are using inefficient and expensive electricity to heat their water. The take away:There’s a huge untapped electric water heating market ready to be replaced by solar water heating. Build a marketing message to those customers.
Chart 3: Let’s move on to energy usage for residential energy. Between space heating, space cooling, and water heating, there’s an amazing 72% of the pie chart that could be replaced with various solar thermal technologies. The take away:Again, the U.S. has so much potential for clean solar water heating technology, but they just don’t know it. More marketing and strong solar policies are needed to help grow demand.
Chart 4: We love this one: A survey of 21 countries by the International Energy Agency, Solar Heating and Cooling. Program shows actual uses of industrial solar thermal systems, demonstrating the wide range of potential uses for solar thermal technologies. The take away:If you’re looking for commercial solar thermal applications in the US, here are some of the industries to target.
I wish I had the exact answer to that question. All of the research regarding consumer attitudes toward solar is generally PV related, rather than solar hot water related. At the same time, solar hot water has some obvious challenges, especially in the residential space.
1) Solar hot water competes with dirty (and cheap) natural gas. With the exception of Hawaii, natural gas is currently fairly inexpensive right now. The amount of hot water that an average residential customer uses typically makes for a slower return on investment. Check out our solar hot water calculator, plug in the numbers for any state for residential, and you see for yourself.
Some solutions: Either home solar water heating systems have to become less expensive or natural gas prices have to rise. While the latter solution may appear to be a long shot, recent news about the environmental cost and abuse of hydraulic fracturing (fracking) may add more cost pressures on natural gas when stricter Federal regulations are enforced, but that remains to be seen.
2) There are fewer local and federal incentives for solar hot water. While California has just passed some generous rebates that make solar thermal very attractive for commercial customers, the incentives don’t apply to pool heating and take up perhaps 25% of the cost of residential systems. The 30% Federal investment tax credit can also help reduce up front costs, but only to non-pool heating applications. While that extra 30% is great, it generally benefits those who often owe taxes at the end of the year.
Some solutions: One solution would be to make the 30% tax credit refundable, so that you could get money back from the IRS if you were due a refund. As it stands now, the credit can be carried over for 5 years, but that’s a difficult sales case to make. In addition, governments could increase the rebate amounts for solar water heating systems, making a faster ROI. Finally, local and federal governments could allow the 30% Federal ITC to apply to pool heating, opening a huge opportunity for Western and Southern states, where pools are largely not being used due to cold weather and the high cost of heating them during the non-summer months.
3) Solar hot water has fewer marketing resources. While I genuinely appreciate the money and time that SEIA put into its solar generations videos and PSAs, solar water heating was barely mentioned throughout the series. Most of the images and statements were all PV related.
Some solutions: It would be great if SEIA and other solar organizations would dedicate a campaign or three or four to solar water heating for homes and businesses. In addition, it would be great if solar water heating manufacturers could increase their marketing budgets. Given the lukewarm demand in the residential sector, it’s understandable why manufacturers are tightly holding the purse strings for now.
4) More financing options for solar hot water. It’s wonderful how there are so many solar leasing and PPA (a.k.a. home solar agreement) options for solar PV today. The same cannot be said for solar thermal. These arrangements take the sting out of the upfront cost of solar PV and would do the same for solar hot water consumers.
Some solutions: Obviously, solar PPA companies and venture capitalists could design more programs for solar thermal, but banks and venture capitalists have to find the right financial formula. Reviving PACE programs could help, as well, but that appears to still be in recovery mode. Additionally, solar PV companies that currently only offer solar leases and solar PPA’s of PV could expand into solar water heating.
The good news is that even without high subsidies, solar water heating does make financial sense for large commercial applications, such as apartment buildings, hotels, hospitals, etc. The disconcerting news is that these venues are still largely unaware of solar hot water and solar thermal financial benefits. Even when they are aware of the cost savings, they must find the courage and the financing to move forward.
Those are my general observations. Admittedly, they’re not based on hardcore market research data, but just my experience hear at Free Hot Water, and talking with other solar thermal installers.
Got more challenges or solutions? By all means, please add to them here in the comments section below.
Question: Can I get any solar rebates or tax credits retroactively?
Bill writes:
Hey Solar Fred,
I recently find your blog/web site and have the following question:
Q. I remodeled my California house in 2006 – took it down to the 2X4′s and new construction with 2×6, solar thermal, on-demand H2O, etc. I was able to get the marginal state rebates at the time when I filed my 2006 taxes. Based on some of the comments on your site, I am rigth to think that I can get some additional rebates IF my equipment is on the approved list?
Thanks,
Bill
Solar Fred Answers:
Bill,
Hate to tell you that you installed your solar system too early to qualify for any more solar thermal or solar PV rebates, but… that’s the case. To qualify for the new California solar water heating rebates, you must have installed your system after 7/15/09.
As to the Federal 30% investment tax credit, again, you must have installed your solar system after 1/1/09 to qualify for that tax credit.
The best authority for all of the requirements for all 50 states and the Feds are on the DSIRE website.
That being said, on behalf of California, thanks for being an early adopter and going solar anyway.
At the end of 2010, Congress passed and the President signed into law the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010. As part of this law, the U.S. Department of Treasury – Renewable Energy Grants program, sometimes referred to as “Section 1603” program, was extended for 2011.
So, what is this grant program and who can benefit from it? We’re going to do our best to give you the basics, and hopefully you can use resources below to apply—if you’re eligible.
What is it? As part of the original stimulus packaged passed in 2009, “Section 1603” allows commercial businesses to receive a 30% cash grant from the Feds instead of the 30% Federal Investment Tax Credit. (See prior blog post about the 30% solar ITC.) Essentially, the 1603 program allows for-profit businesses to receive a 30% refund off the gross cost of their solar system.
Who is eligible? The provisions are fairly broad—for businesses. That is, you can’t get this 30% solar grant if you’re a resident, a non-profit, or a government entity. You’ve got to be a business that pays taxes, though it doesn’t mean you have to owe taxes. Quite the opposite. Unlike the 30% investment tax credit, you actually get a check from the Feds, not just a credit that you can use towards paying your taxes.
For potential solar hot water customers, this means that you can own a hotel, apartment building, Laundromat, nursing home, for-profit hospital, car wash, and qualify for this 30% cash-back program from the Feds. On the other hand, if you’re a residential homeowner, a school, college, or non-profit hospital, for example, you will not qualify. However, if you own a single family rental home under an LLC or Inc. and want to provide solar water heating for your tenants, that will qualify. Also, if you are a real estate developer with multiple single family homes, purchasing a residential solar water heating system for each home will also qualify for the cash grant.
What kind of solar system is eligible? Pretty much, any solar system can be reimbursed except for solar pool heating and passive solar construction. So, if your for-profit business wants to heat or cool the building with a solar thermal system, now’s the time. Naturally, solar water heating is also eligible, as well as solar electric systems.
By when do I have to have solar system installed? Your solar system needs to be installed sometime between 2009 and the end of 2011. They’re also allowing construction on the system to have begun by 2011.
Grant applications must be submitted by October 1, 2012, however. The U.S. Treasury Department will make payment of the grant within 60 days of the grant application date or the date the property is placed in service, whichever is later.
Can I get the solar 30% 1603 cash grant AND the 30% Investment Tax Credit too? No. It’s one or the other, and don’t even think about trying to do both. The IRS knows all. However, you are still eligible for any local or state rebates, so that’s nice. Also, you can receive any other local or federal tax benefits (other than the 30% investment tax credit.)
The swimming pools and Jacuzzis are in constant need of hot water.
In the past, water-heating costs were just the cost of doing business. You had to pay your gas utility bill, and that was that. Today, California Fitness Centers have a new and very cost-effective solution: Installing solar hot water.
Below is a real-life example of a solar hot water installation at a California fitness center that pays an average of $2,200 a year in hot water costs, excluding the pool heating costs. (At this time, the pool heating portion of hot water costs is not eligible for state and federal solar rebates.)
Thanks to Federal and state incentives, the payback time is in 5.45 years—and remember that solar hot water systems can last 25 years or longer with very little maintenance. So after year 5.45, this fitness center is benefiting from ….Free Hot Water
Solar Hot Water Cost and Savings Example for a California Fitness Center
Utility
PG&E
Minimum Daily Demand @ 80% BTU
340,031
Est. Water Storage Requirements
330 Gallons
# of Free Hot Water 7000 collectors:
12 panels
Roof area required:
91 sq. ft
Est. gas bill for hot water before solar:
$2,200
Est. Cost before rebate, incl. engineering
$40,000
Estimated California Rebate:
$ -16,000
Estimated 30% Federal Tax Credit:
$ -12,000*
Estimated Net System Cost:
$12,000
Estimated Payback time:
5.45 yrs!
CO2 Saved from the environment over 25 years:
200 Metric Tons
* Modified Accelerated Cost Recovery System (MACRS) in 5 yrs may be available and is not included in the ROI calculations. Please consult with your tax attorney as for your eligibility.
This is just one example of a fitness center chain that has 4 locations. But just think:
There are over 400 24-Hour Fitness Center facilities nationwide. If each installed a similar system to the one above, the chain would at least remove 3,200 metric tons per year of CO2, or 80,000 metric tons of Co2 over 25 years!
There are over 600 Gold’s Gym locations. If each of them went solar hot water, they would pull about 4,800 tons of CO2 per year, or 120,000 tons over 25 years.
If Bally’s Total Fitness Centers made all of their 400 locations solar hot water, they would also save 3,200/year or 80,000 metric tons over 25 years.
And we didn’t even mention the utility cost savings–which will vary in every state and location.
Every fitness center has different needs, which means that the above example is only accurate for this particular installation. There are many reasons why systems must be custom designed:
Some fitness centers have pools, and even then, different size pools that are kept at different temperatures.
Every fitness center has a different number of showers
Every fitness center has unique number of members who typically take showers.
Some fitness centers use a laundry services instead of washing their own towels.
Laundry machines are also different. Some use more or less hot water.
We haven’t even talked about solar specifics, such as the type of roof , shading, and sun hours in a particular area.
The good news is that while the above case study may not apply to you, solar hot water installers always offer a free estimate for solar hot water system that is tailored to your needs.
Questions? Please contact us. Our consultants will help determine if solar hot water is right for you.
Owners of California apartment buildings are one of the businesses that will benefit most from going with a solar hot water system.
Traditionally in California (and many states), apartment building landlords include hot water with every rental lease. Rather than individual hot water heaters, a central water heater (typically powered by gas) provides hot water to all residential units and onsite laundry facilities.
Consequently, with every bath, shower, dish washing, or load of laundry, the landlord is spending money to heat the hot water for the building’s residents. Installing a solar hot water system is a way to save 80% of that solar hot water cost.
Let’s take an example of an apartment or condo complex with about 120 units and 160 residents. While this is a real life example, please remember that every apartment building is unique with different requirements and water usage. For each unit the calculation is as follows: 20 gallons per person per-day for the first person, 15 gallons per-day for the second, and 10 gallons per-day for each person thereafter. Also included in the calculation are the 12 front-load energy saving washers to a total hot water consumption of 3,000 gal/day
So, even if you own another 160 resident building in California, your costs may be more or less than the following example.
Solar Hot Water Cost and Savings Example for a California Apartment Building with 160 Residents
Utility
PG&E
Min.Daily Demand @ 80% BTU
1,875,150
Est. Water Storage Requirements
3,000 Gallons
# of Free Hot Water 7000 collectors:
66 panels
Roof area required:
3,500 sq. ft
Est. gas bill for hot water before solar:
$16,000/year
Est. Cost before rebate, incl. engineering
$180,000
Estimated California Rebate:
$ -86,000
Estimated 30% Federal Tax Credit:
$ -54,000*
Estimated Net System Cost:
$40,000
Estimated Payback time:
About 3 yrs!
CO2 Saved from the environment over 25 years:
3 Metric Tons
* Marcs 5 yr accelerated depreciation may be available and is not included in the ROI calculations. Please consult with your tax attorney as for your eligibility.
Once again, it should be noted that every apartment building is different. The number of units, number of residents, type of washers, type of dish washers, hot water tanks, engineering, roof space and many other factors will affect individual costs.
Also, these figures are rounded and based on the expected PG&E rebate. However, as of August 2010, the rebate regulations are still being finalized by The California Public Utility Commissions (CPUC) may alter these numbers.
According to sources, the CPUC should finalize the regulations by some time in September. Consequently, now is the time to get your solar quote and start the design and engineering to get reserved on the first tier of California rebates. Rebate amounts will decrease as the number of installations rise, so early adopters will get the most generous part of the subsidies.
In addition to California, there are other states that have very generous rebates right now. Contact us at info@freehotwater.com to get the latest information of your state.
Finally, remember that there’s no cost to getting a customized quote for your apartment building or other business. Worse come to worse, you’ll spend a little time getting educated about solar hot water. Best case, you’ll save a lot of money going solar.
When designing a large scale system, we have to consider for microclimate and local radiation as well as water demand, pick hours and water consumption patterns.
Below is a standard report that Free Hot Water generates for each project, verifying the parameters and assumptions taken in the design process.
It snows in Maryland and the entire Washington D.C. area, but that hasn’t stopped Maryland from supporting solar hot water for residences and businesses.
For those concerned about winters, know that solar engineers account for the cold months when designing your system. Certainly, your solar hot water system is not going to be as productive as the milder months, but the sun does shine in the winter and that thermal heat does provide a significant amount of hot water.
Also, keep in mind that whether you live in Maryland or Arizona, your hot water needs are almost always backed up by conventional water heating sources. So whether it’s winter or summer, your home or business will always have enough hot water for showers, washing clothes, etc. It’s only the proportion of solar heated water and gas or electric heated water that will change with the seasons.
Maryland provides many incentives for installing solar hot water for both residential and commercial applications:
Property Tax Credit. Most Maryland counties offer some kind property tax incentives. The amount and formula varies by county, so be sure to check this state incentive page under Maryland for details.
Solar Water Heating Grant. Maryland also provides a grant of 30% of the installed cost, up to a maximum of $2000. The grant is applicable to both residential and commercial solar hot water systems.
State Income Tax Incentives. The amount that you receive from the above grant is not considered income. Therefore, the above maximum $2000 grant is tax-free.
State Sales Tax Exemption. Unlike installing a conventional gas or electric water heating system, the solar installer will not charge you any additional sales tax, saving you even more money upfront.
Property Tax Improvement Exemption. Your Maryland property taxes will not go up from installing a solar hot water system as an improvement. In addition, if you install a solar thermal system for space heating or cooling, the assessed improvement value will be the same as a conventional system.
In addition to all of the above, don’t forget that the Federal government provides a 30% Federal tax credit. Also, these state incentives are just the beginning of your lifetime savings. As utility rates rise over time, you’ll save money with all of the free hot water you’re receiving. (Naturally, you’ll also be helping the environment. )
For more information to estimate your solar savings, costs, and return on investment, try our solar estimation tool or contact us for a customized free quote.
Wisc. police dog sniffs out solar savings (Photo: Flickr/Beige Alert)
Well, it’s been quite a week for solar thermal and solar hot water/solar thermal news.
Of course, we first have to mention that our very own Free Hot Water 7000 Series panel has been approved by the SRCC for 0G-1oo applications. We’re very proud of our 7000 Series and it’s potential to make save apartment buildings and hotels a lot of money on their hot water costs. Please see the details and specifications here in our press release.
In other news, Rhone Resch, the President of the Solar Energy Industries Association (SEIA), delivered the “U.S. Solar Industry Year in Review 2009″ report. Check out the full report here. In terms of solar hot water and solar thermal, 2009 was a rough year for the solar hot water pool installations due to the economy. However, it’s expected that things will improve in 2010 with the economic recovery. The report also mentions California’s goal of installing 200,000 solar water heating systems with its new incentive. If you’d like to take advantage of that incentive, by all means, please contact us for a quote or use our solar thermal cost estimator.
Police in Wisconsin catch solar hot water…for their prison. It’s criminal that more government buildings aren’t taking advantage of solar hot water savings and stimulus funds. But not for La Crosse County law enforcement. They applied for stimulus funds and were granted enough to install 32 solar hot water collectors on their Law Enforcement Center, which includes the County’s prison. The prison cafeteria, laundry, kitchen, and showers will all be able to take advantage of the solar hot water system, saving County tax payers many thousands of dollars over the next two decades. The payback will be within 10 years, says a county official. Read more.
That’s the most important solar hot water news of the week. If you want to make solar hot water news for your business or local government, please contact us for a free estimate. Thanks.
Photo: Flickr:/SteveCadman Solar Hot Water Apartment Building
Solar thermal systems have been around for over 100 years and remained a cost effective alternative to gas and electric bills around the world…. except the U.S. The bust and boom of solar incentives in the 1980′s decimated the U.S. solar hot water industry, but after 30 years, solar incentives are back…. at least for now.
Recently, a number of states have implemented solar hot water incentives for businesses, such as hotels, apartment buildings, restaurants, laundry mats, car washes, etc. Each state has its own policy and every business has different needs, so the net costs will vary. Use our solar thermal cost estimator to find out your costs, or check out a sample of commercial solar thermal rebates in these states, below.
Arizona: Commercial buildings are eligible for a 10% tax credit of up to $25,000 for one building, or an aggregate of $50,000 per customer in one year. The Phoenix based APS provides a performance based rebate, which can range between $0.051/kWh-equivalent and $0.07/kWh-equivalent, up to 50% of total system cost. Other utilities in Arizona have their solar water heating incentives, as well.
California: Natural gas heated commercial or multifamily buildings up to $500,000 towards the cost of a solar thermal system.
Hawaii: State rebates for commercial installations add up to $125 per deferred kW, plus $0.05/kWh for retrofits. In addition, businesses can receive a state tax credit of 35% of the actual cost or $250,000, whichever is less. Hawaii businesses also get a 100% real estate tax assessment exemption for the new solar hot water system. Your business may also qualify for specific utility rebates as well, such as Kaua’i Island Utility Cooperative (KIUC) which pays for 50% to 80% of equipment costs.
Florida: In Florida, commercial buildings and apartment buildings receive 15 per 1,000 BTU/day for solar hot water installations, up to $5,000. In addition, Florida has long exempt any sales tax for solar thermal systems.
Texas: Businesses get a 10% corporate tax deduction based on amortized cost. All Texan companies are also free of any property tax assessment from the new solar hot water equipment. In addition, each utility has their own rebate program.
Pennsylvania: Pennsylvania’s new Sunshine solar program provides businesses a rebate up to 25% of installed system cos, to a maximum rebate of $20,000.
Maryland: The Maryland Energy Administration (MEA) is giving mid-size commercial and industrial companies a solar hot water grant of 15% of installed cost up to $25,000. The solar thermal system must be at least 100 square feet in size. Businesses may also qualify for an additional state rebate of $2,000.
The Federal Government. Finally, in addition to all of the above, the U.S. government provides all businesses a 30% Federal Investment Tax Credit that is calculated before any state or local incentives, but subject to being taxed as income.
America is finally becoming serious about incentives for solar thermal systems for businesses. However, please keep in mind that these incentives are always subject to available funding. Sometimes utilities or states run out of rebate money due to high demand. Check with a local free hot water installer to find out what programs are currently available in your area.
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