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Solar Energy, Electrons Sold Separately?
Dec21

Solar Energy, Electrons Sold Separately?

Introduction to Renewable Energy Certificates (RECs) Renewable Energy Certificates (RECs), commonly referred to as “Green Tags,” help states meet their Renewable Portfolio Standards (RPS) and other renewable energy mandates.  As state RPS requirements call for utilities to procure specific percentages of the energy they provide from renewable sources, RECs are gaining traction as a convenient opportunity.  This post will provide a brief introduction to RECs are and how they can be used.   Renewable Energy Certificates (RECs) A Renewable Energy Certificate, also known as an REC, is the legal ownership of the “clean” qualities of 1 MWh of electricity that’s generated from renewable energy sources.   When electricity is generated by a qualified renewable source like solar, something really cool happens.  Two commodities are generated:  the electricity itself and the clean qualities of that electricity.   Electrons are the same whether they’re produced by photovoltaics or fossil fuels, so the electrons from the renewable source can be sold just like any other electricity.  The rights to the properties associated with this generation, however, can sometimes be traded independently.  This is where Renewable Energy Certificates come into play. One REC is equal to 1 MWh, or 1000kWh of the clean characteristics of electricity that’s produced by the renewable source.   In the case of Solar Renewable Energy Certificates, or SRECs, this would be the “solar” attribute of the electricity generated by the solar panels.    A clean energy provider receives one REC for each MWh that their facility produces, which they can then sell.   After purchasing an REC, these clean characteristics can be legally claimed by the purchasing party.  RECs basically allow the customer to acquire the environmental benefits of renewable energy in measurable quantities.    Though the ownership of these certificates is tracked by renewable energy tracking systems such as M-RETS (Midwest Renewable Energy Tracking System) and/or WREGIS (Western Renewable Energy Generation Information System), the qualities associated with RECs are intangible so they don’t have to be restricted by geographical location in the same way as the actual electricity.  The clean qualities of the REC will sometimes have to be bundled with the actual electricity, but in theory they don’t necessarily need to be.  The extent to which RECs transcend these physical limits does depend on legislation, but we’ll see how REC markets play out with legislation in the coming years. In renewable energy certificate markets, facilities are used to keep track of the certificates. Every MWh that is generated is given an identification number so it cannot be used twice or by more than one party.  After a certificate is claimed by its rightful owner, is considered to be “retired” and cannot...

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Solar Brings Down Electricity Costs
Dec14

Solar Brings Down Electricity Costs

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Federal Tax Credit for Residential PV
Oct18

Federal Tax Credit for Residential PV

At GoGreenSolar.com, we are often asked about the federal tax credits that apply to customers who use solar electric systems to power their homes.  Though we’re not tax experts, we’ve spent some time gathering information about these federal tax incentives for residential PV installations.  Here’s what we’ve learned:  The federal government offers tax credits to encourage the adoption of renewable energy.  These tax credits are 30% of the net cost of your solar electric system.  What is a tax credit? Unlike a tax deduction that takes money off your taxable income, tax credits will reduce your taxes by a specific dollar amount, directly offsetting your bill.  Of course, you do have to be paying taxes to benefit from tax credits. Who qualifies for the 30% federal tax credit? If you have recently put a solar electric system in service on your property, you qualify for a 30% federal tax credit.  To receive the tax credits for a residential solar system, the home with the system doesn’t have to be your primary living place.   So if you put solar on a second home, you’ll still qualify for the 30% tax credit.   If you are renting your home, however, you would not qualify. Is that 30% of the total cost or do they calculate it differently? Total (Gross) Cost – Utility/State Rebates = Tax Basis for 30% Tax Credit   First, determine the gross cost of your solar electric system, including all equipment, labor, and qualified expenditures.  Next, subtract any rebates you received from your utility company and/or state.   The tax basis by which your tax credit will be determined is calculated after any state or utility rebates have been subtracted.  Unless they qualify as income on your taxes, these rebates need to be subtracted before calculating your 30% federal tax credit.  This will give you the net cost of your project, which will be used to calculate your tax credit.  Net Cost x 0.3 = 30% Federal Tax Credit Does this apply to DIY solar electric systems? Yes. Just like any other solar electric system, a DIY solar system qualifies for the 30% federal tax credit.    If you hire help for your DIY project, have them write you an invoice for their labor and bill you.  Just remember, as in any case, to save ALL your receipts for tax purposes! What form do I use? Use the IRS Form 5695 to claim your tax credit, and submit this document with your taxes.   Be sure to keep all receipts and Manufacturer’s Certification Statements for your records. For more information about incentives in your area, visit dsireusa.org.  ...

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Understanding Your Electricity Bill Part 1: The Basics
Aug27

Understanding Your Electricity Bill Part 1: The Basics

Hello solar drops and droplettes!  Electricity bills can seem quite cryptic to the uninitiated, so we are going to do our best to demystify the bills for our readers.  It is our hope that you will gain a better understanding of your electricity usage, utility rates and schedules, how you can reduce your personal usage and save money.  Once you understand how your electricity rates works, you’ll be able to determine whether or not replacing all or part of your electricity with solar makes sense in your specific situation. We’ll focus on the basics of the bill page-by-page, focusing mainly on the first and third page because the other pages contain no usage data.  Future articles will address other aspects of electricity bills, some of which were outlined above and others that will be generated directly from questions you may have.  Please post any questions in the comments and I would be happy to answer them in a later article.  Now, grab a copy of your bill to follow along, and without further ado, let’s dive in! *Please note that the example bill for this article is from Southern California Edison (SCE). Most bills have the similar information, but if there are some serious differences, feel free to ask about them.  I will address all questions in later articles or directly in the comments.* Page one is your account summary. Most of the important numbers on the bill are on this first page. The customer account number is in the upper right-hand corner. This number can be used to check your account history online or over the phone. The customer account refers to any properties signed up with the utility under the same name. The service account number is associated with specific addresses that are under the customer account. Underneath this number and associated address is the rotating outage number, which may be used to access information about scheduled blackouts for your outage group (this information is available online or by phone as well). Just below the top portion of the bill is the invoice summary of the previous bill amount, your payments, the current balance and any new charges that have accrued in the current billing period, which is listed in the top left-hand corner. Below the summary is the reading from your meter in kilowatt-hours (kWh). It provides a graph that shows your daily average electricity usage (kWh).  Use this tool to compare your daily usage as it varies month-to-month and season-to-season. The bill also offers data on your average daily usage by the year, so if you have been making efforts to reduce your usage, those...

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So Many Ways to Go Green: Solar System Purchase vs. Lease

Hello solar droppers! It’s time to wrap up this comparative series where we’ve been clarifying the defining features of the most prevalent ways of going solar.  We’ve talked about how Solar Power Purchase Agreements work, how SPPAs differ from system purchases, as well as how SPPAs differ from solar lease agreements.  This article will focus on purchasing your own system in comparison to leasing a system from a third party.  We’re going to keep it relatively short since both of these options have been separately described in detail in those aforementioned articles.  This article is purely for comparative purposes for those of you that are weighing your options between purchasing and leasing solar panels. Let’s start with leasing panels.  Here’s how it works: solar leases are typically contracted for 15 years or more and require little or no upfront cost associated with upgrading to solar electricity.  The price of installation is partially or entirely offset by state rebates (where available), but the leasing company that owns the panels receives the Federal Tax Incentive (which pays back 30% of the cost of the system) as well as any Renewable Energy Credits (RECs) that are associated with the system’s production.  Homeowners just make monthly payments (which can escalate annually) for the hardware, not for the electricity itself.  Solar leases aren’t standardized from company to company, so it’s important to know if the lease includes a system buy-out or prepay option, as well as maintenance, monitoring and insurance which may or may not be included in the terms of service. Before we get into the comparison between these two options, let’s review of the basics of buying your own solar system .  You’ve determined how much electricity you use annually and sized a system accordingly based off your usage and how much of your roof space is viable for photovoltaic production.  After you’ve determined all of the hardware that you need for installation, it’s time to pay for your system!  If you don’t have the capital to pay for everything up front, there are many financing options (which will be the topic of future articles) for your consideration.  After the proper permits are pulled, the system is installed.  Self-installation can save some money if you know what you’re doing, but most homeowners will have the job done by a professional installer, which will add to the upfront cost.  However, some states offer rebates that offset all or part of the cost of installation.  After installation your utility bill should be greatly reduced or eliminated (if there was enough viable roof space to replace all of your usage with solar energy), and all...

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Nitty Gritty Details

What’s the Difference Between a Solar Lease and a Solar Power Purchase Agreement? For those of you who are comparing different options for going solar, your main choices are purchasing a system as an addition to your home, buying a new or upgraded home with solar already integrated as a feature, buying your electricity utility-style through a solar power purchase agreement (SPPA), or signing up for a solar lease.  The latter two choices are very similar and require a closer look to distinguish one from the other.  (For a comparison between purchase options and SPPAs check out this article.) Sleek solar tiles from Applied Solar. To start off, it’s important to cover the basics of how both financing models work.  The SPPA option has been described in detail in this article, but for now it’s best just to cover the practical details of how these agreements function: SPPA stands for “Solar Power Purchase Agreement.” The SPPA provides the benefits of solar with little to no upfront cost (usually between 0-$2000). The agreement is usually termed for 15-20 years, and is transferable to another owner or home. A solar services provider charges a set rate per kilowatt-hour. The electrical rate can remain flat, but is more commonly contracted with a fixed annual increase of around 3%. The solar utility maintains, monitors, and insures the system over the term of the agreement. The solar utility that purchased the panels benefits from the Federal Investment Tax Credit (ITC) and any Renewable Energy Credits (RECs) that are generated. The installer (sometimes separate from the solar services provider) receives any available money from state rebates (which means the homeowner didn’t have to pay part or all of the cost of installation). Most SPPAs have options to buy the system throughout the term of the agreement or to pre-pay for all of the remaining electricity at a discounted rate while deferring the responsibilities of ownership to the solar utility. The home is always tied to the grid, so any excess electricity used beyond what the panels produce is purchased from the grid utility. Homeowners that want to pursue this option must be properly qualified with a minimum amount of monthly electricity usage, proper sun exposure and roof orientation as well as excellent credit (usually FICO 680 or better). A handy illustration of how an SPPA integrates into the grid electricity system. Next up, the solar lease has become a popular option because, like the SPPAs, homeowners don’t have to buy a system.  They just make a monthly payment and receive the benefit of clean electricity. Here’s the skinny on leases: There is commonly no upfront cost....

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