Tag: solar

Many business owners looking to reduce energy costs view solar projects as worthy of conversation but ultimately too costly.

There are other, cheaper steps they can take first, said Jesse Pellman of Longview Structures, a custom builder and remodeler in Lancaster that focuses on environmentally friendly design and sustainable materials.

“The low-hanging fruit is often lighting controls and a conversion to LED lighting,” Pellman said. “It’s simple, straightforward, and has some decent return to it.”

For small companies in older buildings, going “green” to conserve energy might also mean replacing windows, adding insulation or upgrading mechanical equipment.

“It’s not as glamorous as solar, but it’s more accessible,” Pellman said. “The first push always is conservation before active measures.”

But if businesses want to make a push into solar, 2019 may be optimal, according to commercial solar developers and local government officials.

Absent any legislative action, this year is the last year that the federal government is expected to offer a 30 percent tax credit to homeowners and businesses for installing a solar system. In 2020, the tax credit will step down to 26 percent. The credit will then fall to 22 percent in 2021 and drop permanently to 10 percent, and be restricted to businesses, in 2022.

Solar-system costs also have dropped dramatically over the last decade. And, after Pennsylvania closed its borders last year and barred power companies from buying renewable energy credits from out-of-state solar projects, credit prices have been rising.

The credits, known as solar renewable energy credits, or SRECs, can be earned that individuals and businesses that generate solar power. Electric utilities buy the credits to meet the state’s mandates for using renewable energy.

Higher SREC prices can reduce the payback period on the investment in a system.

“The planets have all lined up with the sun,” said Doug Neidich, CEO of Harrisburg-based GreenWorks Development, a commercial real estate developer.

Neidich is plugging in to take advantage of the solar conditions by expanding the solar array on his Campus Square office building in Midtown this year.

“I don’t think businesses and not-for-profits in the commonwealth understand how attractive solar is as a financial proposition at this point,” Neidich said.

When he put a 42-kilowatt solar system on Campus Square in 2008, Neidich said he paid nearly $7 per watt to install the system, or about $300,000. More than a decade later, he expects to spend about $1.50 per watt, or $60,000, to add another 40 kilowatts on the roof.

“The cost of conventional solar has come down practically about as much as it can come down, while the 30 percent federal tax credit is still in place this year and while the renewable energy certificate market in Pennsylvania has gone up 10 times in the last 12 months,” he said.

SRECs were trading for about $300 per credit at the beginning of this decade and eventually fell below $5 before Pennsylvania closed its borders. Neidich said he believes SRECs could get back above $100 over the coming year.

Credit prices were around $35 per credit in mid-April, according to San Francisco-based SRECTrade Inc.

Neidich also partners with commercial solar developer Solar Renewable Energy LLC, based in Lower Allen Township, to help finance and develop other solar projects in the Harrisburg area. One of the partnership’s recent projects was a solar array on the roof of Commonwealth Charter Academy in Harrisburg, which took over the former PSECU headquarters off Cameron Street.

GreenWorks and Solar Renewable Energy are currently working with other businesses and nonprofits, including local governments like Susquehanna Township. Many of those clients are tax-exempt, he said, but they can still take advantage of the federal tax incentive through third-party ownership.

Under that arrangement, a solar developer or investment partnership would purchase, install, own and maintain a solar array on behalf of the nonprofit.

That partnership can use the tax credit to install the system because they are paying federal taxes, but they can pass on energy savings to the organization through discounted electricity rates under a power purchase agreement.

After at least five years, the partnership can sell the solar system at a depreciated value to the tax-exempt entity, allowing the organization to save more money.

Susquehanna Township Manager Dave Kratzer said the township is currently working on such a plan with Neidich and Solar Renewable Energy. But before the size of a solar project can be finalized, he said the township is considering about $500,000 in renovations, including roof and LED lighting upgrades, to make its facilities more energy efficient.

Kratzer said the township hopes to finalize its plan over the next few months.

“One of the things we’re trying to do is demonstrate feasibility of implementation of these improvements and do it in a way that has advantages from an economic perspective,” Kratzer said. “It’s an opportunity to lead by example.”