Solar Electricity

The sun provides a clean, unlimited source of radiant light that can be converted directly into electricity with a solar electric, also known as a “photovoltaic” or (PV) system. Calculators were among the first mass-produced users of PV.

Businesses are constantly seeking ways to decrease operating costs, increase sales revenue or gain a competitive advantage - installing a PV system may provide the driving force to achieve those goals.

Clean electricity, produced by your PV system, will enable you to reduce your electric bills, generate income and deliver a message of environmental responsibility. Together with state and federal incentives, your PV system is estimated to break even in as few as 4 years.

Solar is not an expense … it’s an investment.

BENEFITS

  • Payback Period / Positive Cash-flow

    In New Jersey, commercial systems typically break even in 4 years depending upon system size, incentives, SREC transaction price and individual tax effect.

  • SREC Income (SREC)

    One (1) Solar Renewable Energy Credit is earned for every 1000 kilowatt hours of electricity the system produces. Each SREC can be sold on the open market for the first 15-years of the system’s life. The New Jersey Clean Energy Program tracks and publishes weighted average SREC values on a monthly basis.

  • Environmental Effect and Marketing Opportunity

    PV systems produce clean energy, directly offset the use of fossil fuels, and deliver a message of social responsibility to your customers, employees and the community.

  • Energy Expense and Consumption

    System output will reduce electricity expense and dependence on the power grid for 25+ years. The electricity produced by your system actually increases in value with each utility rate increase.

  • Depreciation – Commercial Systems

    Accelerated 6-yr depreciation through the Modified Accelerated Cost Recovery System (MACRS) may offset up to 35% of your solar investment.

  • Federal Investment Tax Credit (FITC) or Grant – Commercial Systems

    Receive a tax credit or, for 2011, a federal grant equal to 30% of the total system cost.

  • Long-term Reliability and Low Maintenance Cost

    Photovoltaic cells, originally developed to power satellites, operate from 25-40-years with limited maintenance. You can budget about $.02 / watt for annual operation and maintenance costs.

  • Property Value

    The capital improvement and reduced energy consumption will improve the building’s efficiency to enhance occupancy and attract future owners.

  • Local Power/National Security

    The sun provides an abundant, global source of energy that, when harnessed with a PV system, reduces the nation’s dependence on local and foreign fossil fuel. PV systems decentralize the production of electricity, reducing the need for large traditional power plants.


How does a solar electric system work?

Several PV panels wired together form an "array". When sunlight shines on a PV array, DC (direct current) electricity is produced. The DC electricity flows to an Inverter for conversion into AC (alternating current) to power businesses or homes.

The first user of the generated electricity is the facility to which the system is connected. At any given moment, when a PV system generates more electricity than the facility demands, the excess power flows out of the facility for use by other users connected to the local power grid. In this case, the utility meter at the facility essentially spins backwards…yielding a credit to the system owner, known as "net-metering". View an illustrative diagram of how a solar system works.

How long does the installation take?

There are many logistical issues before and after installation that must be considered to arrive at a realistic understanding of the time requirements from start-to-finish. For instance, a 50,000 watt PV system requires about 6 months to complete from the date that a contract is signed to the date that the system begins to generate power. In this example, physical construction requires about 3 to 4 weeks, while paperwork, such as permits, pre-construction approvals and post construction inspections require the remainder.

How much does a solar electric system cost?

Pre-incentive system costs of commercial systems can range from a high of $7 per watt (< 25kW @ $175,000) to a low of $4.00 per watt (> 1MW @ $4,000,000).

Remember, a solar system is an investment … not an expense.

What is a PhotoVoltaic (PV) panel?

Most PV cells are made from silicon (“Si” on the Periodic Table of Elements).  New technologies have emerged using new substances such as Copper indium gallium (di)selenide (CIGS) or Cadmium telluride (CdTe). A photovoltaic cell produces direct current (DC) electricity when exposed to sunlight. When several PV cells are wired and secured together, the result is a PV panel.

A typical silicon based 240 watt commercial PV panel is approximately 65” x 40” and weighs roughly 43 lbs.   There are larger panels on the market as well as smaller.

Are there any government incentives available to help reduce my out-of-pocket costs?

At the federal level, there are two:

1) 30% Investment Tax Credit (FITC) or a 30% cash grant
2) Accelerated depreciation - 100% first-year bonus depreciation

In New Jersey, there are no incentives to reduce pre-construction “out-of-pocket” costs.  However, NJ’s highly successful Solar Renewable Energy Certificates (SREC) program is considered an ongoing “production” incentive. Here’s what the NJ Clean Energy Program website states:

Each time a system generates 1,000 kWh of electricity; an SREC is earned and placed in the customer's electronic account. SRECs can be sold on the SREC tracking system, generating revenue for the first 15 years of the system's life.

Electricity suppliers, the primary purchasers of SRECs, are required to pay a Solar Alternative Compliance Payment (SACP) if they do not meet the requirements of New Jersey’s solar Renewable Portfolio Standard (RPS). One way they can meet their RPS is by purchasing SRECs. As SRECs are traded in a competitive market, the price may vary significantly. The actual price of an SREC during a trading period can and will fluctuate depending on supply and demand.

New Jersey’s SREC program has been so successful in providing post-installation income to system owners, resulting from system kWh production, that similar programs are being implemented in several surrounding states.  View recent and historical SREC Trading and Pricing statistics.

For other states, please refer to our Helpful Links page.

Note: Please consult your tax professional to understand the benefits owning a solar system can provide.

How long will it take for me to break even on my solar investment?

Commercial systems in NJ are estimated to break even in about 4 years. LES provides an estimated break even analysis with every proposal.

What kind of maintenance will my solar system need?

To ensure that your system runs at its peak efficiency, you’ll need to monitor production.

The panels must be inspected and cleaned twice a year. Electrical connections between panels, into combiners and inverters require annual inspection. All items in need of repair (under warranty or not) will be handled within a timely manner to minimize your downtime.

LES can provide an annual maintenance service contract to manage those services for an additional fee, about $.02/watt annually.

How do I determine the size of a system for my property?

There are several factors that must be considered:

First, the maximum amount of annual electricity a commercial system in NJ can produce must be less than or equal to the amount of electricity (measured in kilowatt hours) the building/property historically consumes annually. New or renovated buildings without a track record will require a signed electrical drawing stating the projected consumption from a Professional Engineer (PE).

Second, the location and space availability may restrict system size.

Third, your financial threshold and related tax considerations may come into play.

What are the attributes of a good commercial PV site?

  • A flat roof facing south     
  • A roof membrane with at least 10 years of life expectancy    
  • Structurally sound building/roof that can support the system weight of 3 to 8 lbs per square foot     
  • Little or no shade from trees or roof obstacles  (i.e. mechanical or HVAC equipment)     
  • An electrical system that can support the added power generated by a PV system

How much power does a PV system generate?

Under perfect conditions, with a 10° pitch due south and no shade, a silicon based commercial PV system in New Jersey will generate approximately 8% more AC output than the DC system size. For example, a 100kW system is estimated to produce 108,000 kWh annually.  

How long does a typical PV system last?

PV systems will last 25-40 years. Most PV panels carry a 5 year warranty against defects.  Additionally, most panels are warranted to generate at least 80% of their nameplate value in their 25th year. Inverters typically come with 10 year warranties. Warranty extensions on inverters are recommended and available for an additional fee.

 

Can my roof support a PV system?

We will not know until a structural analysis including a drawing review, site inspection and roof core sample analysis is performed. Many flat roof commercial systems are anchored to the roof with concrete ballast blocks. Depending on various factors, ballasted systems can weigh between 4 and 9 lbs per square foot. Some commercial systems must penetrate the roofing system with connections to the building’s structural members.  Other systems may be mechanically connected to the seams of a sloped standing seam roof.

Do I need a new roof?

Rule of thumb: if the roof has less than 10 years of life … replace it before installing a system. When installing a new roof, inform the roof manufacturer that you’re considering a PV system. LES is an experienced general contractor and can manage the installation for you. 

If I install a PV system, will my roof warranty remain intact?

Most major roof manufacturers understand that PV systems may be installed on their roofs. Typically, pre-installation roof inspections are required to determine if material upgrades or repairs are necessary.

During the solar installation, the warranty may not be in effect.

As long as the corrective action (if needed) is completed and the post-installation inspection meets the manufacturer’s requirements, the original roof warranty will be re-instated. There may be fees for both inspections. At a later date, if a leak develops and is covered under the warranty, the roof manufacturer will NOT absorb the costs of removing and replacing the solar equipment to uncover and repair the damage.

What happens on cloudy/rainy days or at night?

PV systems perform at reduced levels during cloudy or rainy days.  Systems will not produce power in darkness. Conversely, on weekends when many facilities have limited use, the PV output may create a net-metering situation – in effect, causing the building’s power meter to spin backwards and reduce your electricity expense. One of the benchmarks used by PVWATTS to determine a system’s output takes into consideration the historical weather patterns in the local area.

Will I still have electricity during a blackout?

When a PV panel is exposed to sunlight, it will produce power.  During a blackout, however, PV system inverters without battery backup automatically shut down, stopping power from reaching the building’s electrical system and the power grid. Inverters automatically come back online when the power grid is restarted and stabilizes. 

Federal

Financial Incentives
http://www.dsireusa.org/incentives/index.cfm?State=US&ee=0&re=1

US Environmental Protection Agency (EPA)
http://www.epa.gov/

National Renewable Energy Lab (NREL)
http://www.nrel.gov/about/

Solar Energy Industry Association (SEIA)
http://www.seia.org/

Renewable Electricity Program (RES)
http://www.seia.org/galleries/FactSheets/Factsheet_RES.pdf

PV Watts Solar Energy Calculator
http://www.nrel.gov/rredc/pvwatts/version1.html

Modified Accelerated Cost Recovery System (MACRS)
http://www.irs.gov/publications/p946/ch04.html

IRS Investment Tax Credit (ITC)
http://www.irs.gov/irb/2009-25_IRB/ar09.html

New Jersey

Financial Incentives
http://www.dsireusa.org/incentives/index.cfm?re=1&ee=0&spv=0&st=0&srp=1&state=NJ

Solar Renewable Electricity Certificates (SREC)
http://www.njcleanenergy.com/renewable-energy/programs/solar-renewable-energy-certificates-srec/new-jersey-solar-renewable-energy

SREC Pricing
http://www.njcleanenergy.com/renewable-energy/project-activity-reports/srec-pricing/srec-pricing

Renewable Energy Incentive Program (REIP)
http://www.njcleanenergy.com/renewable-energy/programs/renewable-energy-incentive-program

Mid-Atlantic Solar Energy Industries Association
http://mseia.net/

New York

Financial Incentives
http://www.dsireusa.org/incentives/index.cfm?re=1&ee=0&spv=0&st=0&srp=1&state=NY

NYS Energy Research & Development Authority (NYSERDA)
http://www.powernaturally.com/

NYS Department of Environmental Conservation
http://www.dec.ny.gov/

Pennsylvania

Financial Incentives
http://www.dsireusa.org/incentives/index.cfm?re=1&ee=0&spv=0&st=0&srp=1&state=PA

Alternative Energy Portfolio Standard Program
http://paaeps.com/credit/

PA Department of Environmental Protection
http://www.depweb.state.pa.us/portal/server.pt/community/dep_home/5968

GLOSSARY OF TERMS

U.S. Department of Energy - Energy Basics
http://www.eere.energy.gov/basics/glossary.html

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