Central Keystone Living - Fall 2017 - 18

What You Don't Understand About
Solar Economics is Costing You Money
By Jim Kurtz, President, RER Energy Group

e talk to businesspeople in Pennsylvania every day about the
benefits of solar energy. While most Americans would like
the U.S. to use more solar energy (as many as 89%, according
to Pew Research), Pennsylvanians tend to have three unfounded
biases about solar energy that lead many to believe solar might
not be for them.

3. Solar arrays create electricity at an effective
cost of approximately 0.03 to 0.04 cents per kWh for
the next 20 to 30 or more years. Most businesses are paying $0.06
to $0.10 per kWh today depending on their location and that will
increase over time. Empower Your World.

Myth#1: PA solar grants have gone away, so solar no

4. When structured correctly, solar projects are
cash flow-positive in the first year.
Most businesses invest 20% of the cost of the project and borrow
the rest of the required funds. They receive the 30% ITC as well
as 60% of the depreciation value in the first year and are therefore
cash flow positive within a few months, and throughout the project.

longer "works" in the state.

FACT: Prices have come down so much that solar works
without PA incentives.
Solar prices have dropped so dramatically in the past five years that
"all-in" costs, net of incentives, are now significantly less than they
were just a few years ago. System prices have dropped 70% since
the PA Sunshine Program was available for businesses, meaning
your savings potential are higher today than they were then.

Myth#2: Solar is good for the environment but not for
my bottom line.
FACT: Solar economics are great for business.
1. Incentives still cover the majority of the costs
today. These include the Federal Investment Tax Credit (ITC),
which covers 30% of the project cost, and the Modified Accelerated
Cost Recovery System (MACRS), which allows for depreciation
over five years (for an asset that should last more than 30 years)
and leads to another 30-40% of the project cost coming back in
the form of reduced tax payments;
2. The value of the electricity generated from the
free fuel from the sun is 6 to 10 times the value
of the net investment and operating cost of the array. This takes
into account maintenance costs which are extremely low for solar
clients since solar involves no moving mechanical parts;

Central Keystone Living // FALL 2017

Myth#3: With recent increases in the supplies of

natural gas, there is less need to worry about the
possibility of future energy price increases.

FACT: The U.S. has become a net exporter of natural
gas, and this is driving up domestic prices as they move
towards higher international price levels.
While the recent fracking boom has led to an increase in natural gas
availability - and a resulting downward pressure in energy prices
over the past 10 years - prices started to move up in 2016 and
most experts are predicting continued increases in domestic prices.
New export facilities of liquefied natural gas in the U.S. have led
to the country becoming a net exporter of natural gas for the first
time in 60 years. Overseas demand for natural gas - where prices
can be 400-800% higher - will drive our domestic energy prices
higher for years to come:
As longer-term expectations are that electricity prices will significantly rise - because natural gas is the leading source of electricity
generation in the U.S., using solar energy to lock in effective rates
of $0.03 to $0.04 per kWh for the next 30+ years provides a great
opportunity to reduce and create predictability in a key operating
cost for many businesses.

Table of Contents for the Digital Edition of Central Keystone Living - Fall 2017