By Jason Grottini, Director of Operations at Envinity

UPDATE (3.3.15) – Envinity will be leading a discussion entitled “Introduction to Solar Power for Your Home”, at the 2015 Central PA Home & Garden Show.  Meet Jason and the rest of the Envinity solar team on Friday, March 13th at 5:30 pm for this informative presentation.

Jason Grottini

Jason has been raising heck at Envinity since 2008. He currently oversees company operations and is our renewable energy designer.

It is no secret that the rate of solar installations in Pennsylvania has decreased over the past couple of years.  Long gone are the days where the common misconception was that “solar just doesn’t work in Pennsylvania because its too cloudy/rainy/mountainy”.  Trust us, we’ve heard them all, and have spent the better part of 10 years providing education and outreach to dispel those myths.  The current issue is related more toward economics of solar than anything else.  Despite the fact that the cost to install solar has decreased by 40% over the past few years, we have also lost the PA Sunshine state grant program, allowed our SREC market to nearly bottom out, and have maintained cheap electric rates throughout much of the State.  With so many homeowners wanting to do the right thing and generate clean, local energy, how do we solve this issue of creating a compelling economic justification for investing in solar?

Let’s start with a classic solar project as a basis.  An average installation is 5.4 kW, made up of 20 – 270 watt solar modules and a central grid tied inverter, costing $24,500.  Until the end of 2016, there is a 30% federal tax credit, making the net cost of the system $17,150.  In central Pennsylvania, on a home with a relatively good solar resource, this system will generate 6,500 kWh per year.  The current simple payback for this system is 14.5 years, with a rate of return right around 7%, assuming an electric rate of $0.11/kWh.  For a system that carries a 25-year warranty, these economics are pretty good compared to your average investment.   However, many of our inquiries making decisions based off of cost and payback alone often want to see under a 10 year payback.  How do we get there as a State?

Solar for the Sustainable Farm

Envinity has over 700 kW of solar installed around the state. We’re pretty close to knowing what we are doing.

The answer should be simple.  We believe there are two actions that can be taken by our State government that would revitalize the industry.  First, we need to increase our state Alternative Energy Portfolio Standard.  Without getting too much into the weeds here, by requiring utilities to generate more energy from renewable sources such as solar AND requiring that this energy be purchased from generators in Pennsylvania, the value of our Solar Renewable Energy Credits (SRECs) will increase.  Current SREC values have been hovering around $45 per MWh generated.  For the average homeowner with a 5.4 kW solar array generating 6.5 MWh per year, this equates to a $290 payment.   If we can stabilize our SREC market around $80 per MWh, the same 5 kW system would receive $520 per year.  That difference alone takes a 14.5 year payback down to 12.5 years, an 8% rate of return.

The second item that we need to consider is not a State grant program, but a State tax credit.  We’ll touch on why a State grant, such as the former PA Sunshine Program, is not a great solution in a second.  If Pennsylvania were to create a tax credit similar to that of New York – 25% of your total installation cost capped at $5, 000 – now we are looking at payback periods of 8.5 years!  Even if the State tax credit were only 10% of the system cost capped at $2,500, simple payback hovers around 11 years.

Done. A few swipes of the pen by our state government and viola, the solar market is back on the rebound.  This is of course a simplified version boiled down for digestible consumption, but are these not two very achievable items?  At the very least,  these are topics which we can contact our local representatives about and show that there is a demand for more solar power and less fossil fuels.

Why not a State rebate program as we had with PA Sunshine a few years back?  While free money may be good for homeowners, it is not good for the industry as a whole.  Think back to the height of the PA Sunshine program compared to where we are now.  Free money led to an industry boom.  That boom resulted in every fly-by-night contractor, out of state journeyman, electrician turned solar installer, etc to offer solar installations.  The influx of installers not qualified to install a very technically detailed system has led to many failed or under-performing systems across the state, giving the industry a major black-eye as word spreads.  During the height of PA Sunshine, there were a dozen or more contractor options for residents of Centre County.  Once the free money dried up, only two were left standing (and yes, Envinity is one of them and we were installing solar well before the lure of free money).  Free money is also not always free.  It takes added time for installers to apply for grants, we are required to pay employees a higher prevailing wage, and there is gobs of annual reporting that must be done for both installer and the customer.  All of these things are ultimately factored into the cost you pay for solar, and if your installer did not account for them, chances are they won’t be around to service your system for too much longer.

Solarpowerrocks.com ranks PA #34 in the nation when it comes to taking solar power seriously.

Solarpowerrocks.com ranks PA #34 in the nation when it comes to taking solar power seriously.

To put a bow on things, our State government is failing us when it comes to promoting solar power.  While we rank 12th in the country with 240 MW of total installed solar, installations have tailed off significantly since 2013 and we have allowed all financial incentives to fall to the wayside.  Our State legislature has been playing good cop with utility companies and bad cop to homeowners.  We deserve better, and with a couple simple legislative actions, solar power economics will become something we can all feel safe about investing in.

Questions or comments?  Send ’em to jason@envinity.com!