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Solar Panels Will Help Us Say Goodbye to Coal

The Mt. Tom coal-fired power station in Holyoke was built in 1960. When operating at its rated 146 Megawatt capacity, it burns 1200 tons of coal daily. It started as a coal burner, briefly flirted with oil, and since 1980 has burned coal.[1]   Mt. Tom is soon to be one of 2 coal-fired plants remaining in Massachusetts, with 1261 Megawatt rated capacity.[2]  Some of their adverse environmental impacts are documented, see the footnote below.[3]

A relatively efficient single family home uses about 10,000 kilowatt hours (kWh) of electricity annually (homes with electric heat use more).  Depending on roof orientation, that may require about an 8 kilowatt (kW) solar installation. Of 2,808,254 Massachusetts housing units, 1,637,212 are single-family homes per the United States Census Bureau.[4] 

If 1% of those single-family homes, about 16,000 of them, install an 8 kW solar system, Mt. Tom, which has been operating at about 10% capacity, is no longer needed. In fact, that size solar unit on 10% of the state’s single family homes is equivalent to the entire coal-fired capacity in Massachusetts. And we are not even counting the 1.2 million multi-unit housing and condo units - or commercial rooftops – in our state.

Is solar a good financial decision for today’s homeowner? Yes! Fort example, NSTAR’s current electricity rate is 16.4¢ per kWh. Your supplier’s rate may be different, see the footnote below for your rate.[5] What will the rate be 20 years from now? While rates fluctuate, projections indicate that average rates will continue to increase. [6] An investment in a solar system lease, however, can fix your energy price point for 20 years.

What are some basic economics? As one example, an 8 kW residential solar pv system with a 20 year performance warranty can be leased for a onetime payment of $8,000 (i.e., a prepaid lease) with no additional payments or maintenance costs. [7]  That works out to an estimated lifetime energy cost of 4.5¢ per kWh (or ¼ of NSTAR’s present rate). Alternatively, that same system can be leased with no money down for about $75 monthly in the first year - which is about 9.8¢ per kWh - compounded annually at about 3.5%.

Currently available incentives through tax credits, utility rebates and what are called SRECs  (solar renewable energy credits) for installing a solar system significantly reduce the cost to the homeowner.[8] That gets us to whether you should rent or lease the system. Although owning may be more expensive upfront and leasing may be better long term, some analyses show a good return on either investment – in the range of 25%. See, for example, case studies at http://www.energysage.com/projects.

A system owner gets a federal tax credit equivalent to 30% of the net system cost and a 15% Massachusetts tax credit for eligible equipment up to $1,000.[9] Moreover, significant rebates available from certain utilities can further reduce the cost. A lease requires most of these incentives to be assigned to the lessee. But, whether you agree to assign SRECs to the lessee or not can have an impact on your return on investment.  One SREC is earned for each 1,000 kWh of solar energy used and can be sold between a $285 price floor up to as much as $450. So selling the SREC’s using the 8 kW example above can generate cash from $2,280 to $3,600 per year.[10]

Solar for your home is worth considering and the sooner you do it, the sooner your state can become coal free. Stay tuned for more in the next Massachusetts Sierran. If you are interested in learning more about residential solar, email us at office@sierraclubmass2.org.

[6]  “The average electric rate in Massachusetts is now more than 14¢ per kWh. That ranks the seventh highest in the country and well above the national average of 10¢, according to [Massachusetts] Senate officials.” http://tinyurl.com/8ya8j5j   NSTAR’s proposed 4 year rate freeze comes at a price spike. http://tinyurl.com/6mo6dyu 
[7] This example reflects a $1,000 incentive discount currently offered by some vendors.
[8] For an explanation of types of incentives and rebates, refer to:  http://www.energysage.com/why-clean-energy/incentives-rebates.  For a comprehensive list of tax incentives and rebates, refer to: http://tinyurl.com/c6yncoo
[9] IRC Section 528(c)(1); 830 CMR 62.6.1: Residential Energy Credit



See Also

The Sierra Club - Sungevity Solar Program

Is Solar Right for you?

Solar Panels Will Help Us Say Goodbye to Coal

Things to Consider When Going Solar

Payment Options: What's Best?


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