Solar Energy Systems
Why Solar: An Overview
- Solar energy provides a healthy return both environmentally and financially. Tax credits, rebates and incentive programs are available at state and federal levels to help businesses, nonprofits, and municipalities implement solar photovoltaic (PV) projects with accelerated returns.
- Solar PV electricity generation does not emit poisonous air pollutants into our atmosphere such as CO2, SO2, NOx, VOCs and PM. These pollutants contribute to global warming as well as a wide variety of adverse health effects, particularly with children.
- PV installations are low maintenance and most generate power for many years with minimal intervention. Ongoing operating costs are extremely low compared to existing power technologies.
- Solar PV peak output matches well with peak electrical demand on the utility grid, thereby reducing the chance of brownouts and blackouts by producing the most power when it is most needed.
- Solar PV is a renewable and domestically harvested energy source, lessening our dependence on fossil fuels and foreign energy sources.
- Solar energy is a powerful vehicle for domestic job creation and economic growth. The recently enacted stimulus package contains over $60 billion of energy related expenditures. This will expand tax credits, guarantee loans for businesses investing in solar, fund R&D, finance clean energy projects, and support “green” workforce development in America.
- Groups adopting solar PV are ahead of the curve, utilizing an efficient and rapidly growing technology. It can speak volumes to customers, employees and stakeholders that one is committed to embracing and implementing “green” practices while still making economically sound decisions.
Why Solar: Basics of Solar
- PV is an acronym that stands for photovoltaic. The term photovoltaic represents the union of two words: photo meaning light and voltaic meaning electricity. Photovoltaic systems convert light energy, photons, into elecricity through the photoelectric effect.
- A complete solar electric system is made up of several building blocks. At the smallest level there are solar cells. Cells are manufactured from semiconductor materials, such as crystalline silicon, sometimes “doped” with boron and phosphorous. Cells are electrically connected and packaged to form a solar module.
- Solar modules are wired together in series and parallel to create the PV array, producing direct current (DC) electricity when exposed to sunlight. Because almost all commercial buildings utilize alternating current (AC) electricity, the PV generation must travel through an inverter, which changes the DC electricity from the array into AC electricity for the building’s consumption.
- PV systems are either roof mounted or ground mounted. The mounting systems and securing methods are determined by type of roof, available space, structural requirements, etc.
- The balance of system (BOS) components include racking, clips, switchgear, junction boxes, conduit, grounding equipment, meters, and the Data Acquisition System (DAS).
- The DAS is typically viewable online as it monitors, records and displays the PV system’s performance. Web-based monitoring is a critical component of proper operations and maintenance (O&M) procedures.
- O&M is performed by qualified solar technicians and can include visual inspections, monitoring output, cleaning, electrical testing, troubleshooting and warranty support.
Step 1: Sunlight strikes the modules.
When photons from the sun reach the solar module, a certain portion are absorbed by the cell’s semiconducting silicon, knocking its electrons loose and channeling them into a flow of DC (direct current) electricity.
Step 2: The direct current is carried to an inverter.
An inverter changes DC (direct current) into AC (alternating current)—the type of electricity we use almost exclusively to power our homes and businesses.
Step 3: The alternating current is integrated into your available power supply.
AC electricity flows from the inverter into the building’s electrical service gear, where it is drawn as needed into electrical loads throughout the facility.
Step 4: Excess generation flows back to the electrical grid for others to use.
Any excess power produced by the PV system flows back into the grid through a bidirectional “net meter” (causing the meter to spin backward). The utility will credit a customer’s account with the excess electricity produced and delivered back to the utility grid. This credit is at the retail rate rather than wholesale, thus maximizing the economics for the system owner.
What types of solar electric systems qualify for the 30% Federal Tax Credit?
- ANY complete solar power package, for home or business.
- Emergency battery backup system, as long as the purchase includes at least one solar panel.
- Product purchases that expand your existing solar power system and include at least one solar panel.
- Solar System for RV and boat that has been accepted by the IRS as a second home for tax purposes*.
- Some Facts Regarding Eligibility of the Federal Tax Credit*:
- The home served by the system does not have to be the taxpayer’s principal residence.
- If the federal tax credit exceeds your tax liability, the excess amount may be carried forward to the succeeding taxable year.
- There is no ceiling on the tax credit.
Applies to equipment AND installation costs.
- For Residential Renewable Energy Systems, use IRS Tax Form 5695 to report your expenses. (It can be used for any residence, not just your primary one.) Learn more about residential tax credits.
- Commercial systems have similar guidelines as residential systems but use IRS Tax Form 3468. Lean more about commercial tax credits.
- Systems must be placed in service on or after January 1, 2006, and on or before December 31, 2016.
Federal Tax Credits in effect through 2016
The Emergency Economic Stabilization Act of 2008, which was signed into law on October 1, 2008, was a boon to the renewable energy market. Not only was the 30% commercial solar investment tax credit extended through 2016, but the same tax credit was also extended to residential installations.
Under this legislation the previous $2,000 cap for residential solar installations was eliminated. As of January 1, 2009, the purchase of a residential solar electric system makes you eligible for a tax credit equal to 30% of the cost of your solar system, including installation. See full information on how you may use the tax credit.
Consult with your tax adviser to make sure the tax credit applies to you and your situation.