October 6, 2008

State Lacks Incentives for H0ousehold Solar, Wind Power

By Williams, Walt

Matt Sherald, the co-owner of Power In My Back Yard in Thomas, has been in the business of installing solar panels and wind turbines in homes and businesses long enough that he can say he has two types of customers.

The first are customers who want to save money by cutting back on their monthly electricity bills. The problem is, the expense of installing alternative energy systems is so high and current power prices are so low that those customers would not save money after they do the math.

"Those folks are not customers in the long run," he said.

The other customers are those who want to install alternative power systems because they believe it is the right thing to do. They want to cut back on their greenhouse gas emissions, or they want to live "off the grid" entirely by getting all their power from renewable energy. It is this type of customer who doesn't mind paying the extra expense for solar panels or a wind turbine.

The problem for the industry is it can't live on good intentions alone. PIMBY and other alternative energy businesses need to appeal to both those customers who want do the environmentally conscious thing and those who want to save money.

Realizing this, most states throughout the nation offer tax breaks and other incentives to homes and businesses that install alternative energy systems, but not West Virginia, where potential customers are pretty much on their own when finding the financing to do so.

"You kill the incentives, you kill the industry," Sherald said.

West Virginia is one of only two states that don't offer property owners tax incentives for the installation of solar panels. The state has net metering, which allows customers to reduce their energy bills by generating their own power, but it is not structured in a way that advocates say is needed to make alternative energy systems a cost-effective purchase. One national group advocating alternative energy gave West Virginia a "D" for its net metering efforts.

Sherald and others note that at the same time, state leaders are giving tax breaks to traditional, non-renewable sources of energy, such as coal. For example, state officials recently pledged up to $200 million in tax breaks and other incentives for a proposed coal- to-liquid plant in Marshall County.

West Virginia does offer tax incentives for large projects such as wind farms, which offer renewable energy to thousands of customers. But no such incentives exist for individual home and business systems, which can cost thousands of dollars to install.

The cost of installing solar panels on a home can run from $14,000 to $15,000, or even rise above $60,000 depending on how elaborate the setup, according to Sherald.

Installation costs must be weighed against the fact that West Virginians pay less for energy than most people throughout the nation. The average cost of energy for the state's residential customers was 6.7 cents per kilowatt-hour compared to a national average of 10.44 cents per kWh, according to the U.S. Energy Information Administration.

Kourosh Sedghisigarchi, an assistant professor of engineering at the West Virginia University Institute of Technology, studied the cost-effectiveness of installing home solar systems in light of the state's net metering law and its lack of incentives. He concluded such systems would not pay for themselves over their lifespans.

A typical West Virginia home will consume 12,900 kWh of energy a year, according to Sedghisigarchi's research. A 3-kilowatt solar array practical for most homes will generate about 1,900 kilowatts a year in the state, leading to a savings of $3,680 in energy costs over 30 years, given current energy prices.

However, the solar array likely cost somewhere in the neighborhood $18,000 to install. Even factoring in further savings from net metering, the homeowner would still be $9,500 poorer after 30 years.

"It looks like at this moment, even if you planned for 30 years, it is not something you want to consider," Sedghisigarchi said.

More recent research by Sedghisigarchi suggests that may change in the future. Home solar systems may become cost effective by 2020, thanks to increasing energy prices, he said. However, that is assuming that West Virginia doesn't change its net metering law or start offering tax incentives for solar arrays, which could make them cost effective at an earlier date.

As for wind systems, most of West Virginia doesn't generate strong enough gusts to consistently power individual wind turbines, according to Sedghisigarchi and others. Solar energy will be the form of alternative energy that will prove practical to most homeowners.

According to the Database of State Incentives for Renewables and Efficiency, on the Web at www.dsireusa. org, only West Virginia and Wyoming lack state incentives for the installation of renewable energy systems.

Virginia, for example, allows local governments to exempt solar energy and recycling equipment from local property taxes. Vermont exempts certain renewable energy systems from state sales taxes. New Jersey does the same. And states such as South Carolina, Montana and New York offer personal tax credits that can amount to thousands of dollars.

The state's net metering requirements also leave renewable energy advocates less than thrilled. The nonprofit Network for New Energy Choices gave the state a D for its law. The group faulted the state for essentially forcing customers to donate the excess energy they produce to utilities at the end of each year and limiting the size of systems eligible for the program. It also criticized the state for limiting the customers eligible for net metering.

Jeff Herholdt, director of the West Virginia Division of Energy, said Gov. Joe Manchin has asked his agency to look at ways the state could encourage the use of renewable energy as well as energy conservation. Those ideas may take the form of policy to be presented to the state Legislature in 2009.

As for what it is doing right now, Herholdt noted the state is holding a series of tax holidays for Energy Star household appliances. He also pointed out the division and Shepherd University are hosting a free, two-day conference about solar energy and alternative vehicle technologies on Sept. 19 and 20 at the university's campus in Shepherdstown.

"It isn't that we are ignoring solar," he said. "We do have an hand in that."

Copyright State Journal Corporation Sep 5, 2008

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