IRS releases solar Investment Tax Credit qualification guidance

investment tax credit

The Internal Revenue Service (IRS) released guidance establishing when construction starts for solar projects under tax law, allowing developers to invest with confidence in new solar projects.

“The IRS has taken an important step forward with this guidance and provided certainty that will help solar project sponsors finance and build more solar,” Abigail Ross Hopper, president and CEO of the Solar Energy Industries Association (SEIA). “Our members have been working hard to secure financing for projects and keep them on track to meet critical development and construction milestones. This guidance provides them with a strong timeline for keeping up momentum for new projects.”

Details

The guidance, Notice 2018-59, provides two methods to establish when construction of a solar facility starts to qualify for the solar investment tax credit (ITC):

(1) starting physical work of a significant nature or

(2) meeting the ‘five percent safe harbor test’ (i.e., paying or incurring five percent or more of the total cost of the facility in the year that construction begins).

“In the absence of this commence construction guidance, tax equity partners were growing cautious about project risk,” Hopper continued. “Solar projects are helping modernize and secure our energy infrastructure, creating jobs and bringing clean energy to communities around the United States. We look forward to working with the IRS to ensure the guidance is implemented in a way that keeps this solar economic engine moving forward.”

— Solar Builder magazine

New York solar installer expands into California after 2020 mandate news

YSG Solar

YSG Solar, a New York-based solar system design and installation company is expanding into the California market this June with a new office in San Francisco.

“We’re thrilled to have the opportunity to expand our company from the East to West Coast,” said David Magid, founder of YSG Solar. “This gives us the chance to serve the people of California by providing them with an affordable alternative energy option with short payback periods and exciting new technology.”

California has become the first state to mandate solar energy installations in new homes. The mandate will take effect in 2020 creating a large market expansion for solar. Since the start of the company in 2010, YSG Solar has been rated top installer by SolarReviews and has received an A+ rating with the Better Business Bureau (BBB).

The company has grown to include clients in New York, Massachusetts, Illinois, and New Jersey. With nearly 2,000 installations and over 25 years of experience among employees, YSG Solar has provided clients with service they can rely on.

“We’ve been working with YSG Solar since we entered the residential solar market, their attention to detail and customer service aligns with our goals,” Said Mukesh Sethi, General Manager of Solar and Energy Storage division at Panasonic. “We’re happy to provide them with the highest quality solar panels and to grow with them as they extend to the West Coast.”

“We’re eager to support YSG Solar in its expansion endeavors,” said Jonathan Mizrachi, Director of Sales at Allied Building Products. “We’ve been supplying their projects for nearly a decade along the East Coast and are looking forward to supporting them with our California warehouses as well.”

— Solar Builder magazine

Midwest Values: How to identify market opportunities outside of solar hotbeds

A good starting point for identifying an advantageous solar market is to look at the average retail cost of electricity. For behind-the-meter (BTM) solar projects, high retail electricity prices enable solar project economics to look more attractive. The opposite is also true. Low prices make it hard for projects to pencil out. This is a primary reason why the Midwest rooftop solar market has lagged behind other regions of the country that have experienced more rapid growth.

The U.S. Energy Information Administration (EIA) is a great resource for sourcing impartial information on energy costs throughout the country. EIA publishes a monthly report which shows the average price of electricity for each state by sector of use. Below is a summary of EIA energy cost data for the five biggest Midwestern states, in comparison to California, the leading BTM solar state in the country.

energy toolbase

Looking at the average retail electricity price by state provides a high-level filter for identifying viable BTM solar market opportunities. But the statewide average blended rate does not tell the full story. In order to really pinpoint tangible customer opportunities, we need to look at both the utility level and rate tariff level. It is not uncommon for there to be a wide amount of variance between different rate schedules within a given state. For example, the average residential cost of electricity could be 13 cents per kilowatt-hour, but specific rate schedules could range from under $0.10/kWh to over $0.20/kWh.

retail electricity prices

It’s also important to point out that the average cost of electricity is not the same as the average blended savings of a solar project. When it comes to quantifying how much solar is worth, average blended savings, which is sometimes referred to as the value of solar, is the truest representation of value. The calculation for average blended savings is very simple: first year dollar savings divided by total first year solar production. This expresses the value of solar on a $/kWh basis. We published a video tutorial entitled “How to Accurately Calculate the Avoided Cost of a Solar Project,” which explores this concept in depth.

Accurately calculating the value of solar for a specific customer requires good software. This is especially true in instances where the utility rate tariff is complex, like a rate schedule that has time-of-use (TOU) rates, demand charges or an inclining or declining block structure. Energy Toolbase specializes in objectively quantifying the avoided cost on complicated rate structures. Our software platform is used by solar companies of all shapes and sizes in markets throughout the United States to accurately and transparently determine savings for a given customer. Let’s look at two rate schedules in the state of Illinois.

illinois rate schedules

The Ameren Illinois Co. rate schedule features a declining block structure, meaning the energy used above the 800 kWh threshold is priced at a lower rate. Assuming a high usage customer of 1,250 kWh month of usage, Energy Toolbase calculated the customer’s average blended cost of energy at $0.114/kWh. Assuming an 11.2 kW DC solar system, which offsets 90 percent of annual kWh usage, the value of solar is calculated at $0.102/kWh. Note: In a deregulated state like Illinois, be mindful of which entity is billing the generation supply charge, which will affect the customers’ $/kWh volumetric energy rate.

The ComEd, BES-Medium schedule is a typical C&I rate in that it has $/kWh energy, $/kW demand, and $ fixed charges. Assuming a customer uses 10,000 kWh month and a peak demand of 50 kW, Energy Toolbase calculated the customers average blended cost at $0.108/kWh. Assuming an 80 kW DC rated solar system, offsetting 80 percent of annual kWh usage, the value of solar would come in at $0.079/kWh.

These are two generalized examples. Other customers on these same rates could have very different average blended cost and value of solar calculations, especially if the $/kWh generation supply charge was meaningfully different. Therefore, when searching for favorable market opportunities we recommend running several sample projects to establish the range for both cost and savings.

Adam Gerza is the COO of Energy Toolbase, a software platform for modeling and proposing the economics of solar and energy storage projects. To learn more about Energy Toolbase and sign up for a free trial, visit www.energytoolbase.com.

— Solar Builder magazine

California to launch three programs to improve low-income community access to solar

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Right on cue after our Install Inequality feature this week, the California Public Utilities Commission (CPUC) adopted three new programs to promote the installation of solar energy to serve customers in disadvantaged communities.

“Transitioning to a clean economy must include all Californians. Targeting solar investments in low income and disadvantaged communities will help ensure that all Californians have access to all the benefits of solar, whether on their roofs or nearby in their neighborhoods,” said Commissioner Martha Guzman Aceves.

The programs approved include

1) The Disadvantaged Communities – Single-family Solar Homes (DAC-SASH) program, modeled after the existing Single-family Affordable Solar Homes (SASH) Program, will provide up-front financial incentives toward the installation of solar systems for low income homeowners. The program will be available to low income customers who are resident-owners of single-family homes in disadvantaged communities. The incentives will assist low income customers in overcoming barriers to the installation of solar energy, such as a lack of up-front capital or credit needed to finance solar installation.

2) The Disadvantaged Communities – Green Tariff (DAC-Green Tariff) program will provide a 20 percent bill discount to customers in disadvantaged communities. This will allow customers to choose clean energy options without the need to own their home and without the cost of installing their own solar systems. The program is modeled after the existing Green Tariff portion of the Green Tariff/Shared Renewables Programs. It will be available to customers who meet the income eligibility requirements for the California Alternate Rates for Energy (CARE) and Family Electric Rate Assistance programs.

3) The Community Solar Green Tariff program is similar to the DAC Green Tariff program, and will also provide a 20 percent bill discount. This program will allow primarily low income customers in disadvantaged communities to benefit from the development of solar generation projects located in or near their communities. The communities will work with a local non-profit or local government “sponsor” to organize community interest and present siting locations to the utility; the sponsor can also receive an incentive for its efforts.

Both the DAC-SASH and DAC-Green Tariff programs will be funded first through greenhouse gas allowance proceeds. If such funds are exhausted, the programs would be funded through public purpose program funds.

— Solar Builder magazine

REC Group shows off new N-Peak solar panel at Intersolar Europe

REC N-Peak Lauch Event at Intersolar Europe 2018

REC Group, the leading European brand for solar photovoltaic (PV) panels, launched its brand-new N-Peak high-performance solar panel at Intersolar Europe in Munich. The new panel breaks fresh ground for REC and the industry: this is the first solar panel to combine n-type mono half-cut cells with a twin-panel design, and promises excellent power output of up to 330 watt peak allied to lasting performance.

The production of n-type mono cells kicks off at the end of June in REC’s brand-new industry 4.0 manufacturing building at the company’s Singapore plant. The first N-Peak modules are scheduled to roll off the line in August.

The REC N-Peak Series builds on the success of REC’s multiple award-winning TwinPeak technology. Already recognized by an Intersolar award in 2015, REC is well-known for being a pioneer for half-cut cells and its twin panel design.

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Key highlights of the new N-Peak

· REC’s most powerful 60-cell module ever
· The world’s first solar module to combine n-type mono half-cut cells with a twin-panel design
· Mono n-type is the most efficient crystalline silicon technology
· Up to 330 watt peak
· Super-strong frame design: for loads of up to 7000 Pa
· Zero light-induced degradation
· 12-year product warranty and 0.5% annual degradation over 25-year power warranty, resulting in 86% of nameplate power after 25 years
· Improved performance in shaded conditions
· Flexible installation options

— Solar Builder magazine