Friday, November 20, 2009

IL residents with Solar PV check this out

The City of Naperville, IL has put together a forward leaning Renewable Energy Program.

The program allows residents and business to voluntarily purchase/support green energy via a $5 charge on their monthly electric bills. You can buy extra 200kwh blocks for additional $5/mth. Over 9% of eligible residents (~50k eligible) have signed on, including a couple dozen individually listed businesses.

The result is a $270,000/annual *war chest* to support renewable energy in IL via purchase of renewable energy credits (RECs). Although only 1% of this program is being used to support solar in IL (the rest supports wind and small hydro), it still offers real benefits.

Naperville has offered to buy 35MWh of solar RECs for $65/MWh (a.k.a 6.5cents/kwh) which is being aggregated and administered by the Illinois Solar Energy Assn. and Community Energy Inc. Click on the ISEA link and scroll down a page to "read all about it".

This program is intended to support small solar (<10kw) from IL residents and businesses only. 6.5cents/kwh is significant, because it comes on top of any net metered energy savings (9-12 cents/kwh depending on utility in IL).

If a solar owner *knew* they could get this amount for solar RECs, it would increase their "solar yield" by 50% or more. Assuming a $9/watt installed price of solar (a.k.a $3.6/watt after state and federal incentives) and 12cents/kwh net metering rate, a 4.9% solar yield increases to 7.3%.

A solar yield is one divided by the simple payback (in years). The more standard way of thinking
about a REC payment of 6.5cents/kwh is that it reduces the simple payback by 6 years (from just over 20 years to just under 14) given conditions in IL.

I like the solar yield terminology because it allows a person to think about investments in solar compared to other "competing" investment options. Keep in mind that the risk of a solar investment is much lower than most other investments. I'm willing to bet that the sun will keep rising long after the US government has defaulted on its "risk-free" debt (not that I think that will happen anytime soon either).

I don't want to blow this small program out of proportion...the offer only covers ~25kw worth of IL installed solar, but then the program "cost" is less than $2,500. I assume this is really a "pilot" program/offer which could in the future be adopted statewide...IL has an RPS of 4% renewables in 2009 increasing to 5% in 2010 (mostly from wind).

And speaking of 2010...the IL senate passed a bill this year enabling what is known as PACE (property assessed clean energy ?) starting in 2010.

What is PACE you ask? PACE allows property owners to borrow money from local governments to pay for clean energy improvements, and then the property owner repays the government through an increase in the property tax assesment in future years. Basically instead of going to a bank to get a loan to install your solar panels (which isn't really practical in many cases) and then using your savings from reduced utility bills to pay off the loan--local governments in Illinois can cut out the middle man. In addition your local government can offer a lower interest rate (than the bank which doesn't exist) because they are aggregating many solar installs as well as their property taxing authority.


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