Commercial incentives [RE-wrenches]

[Randy Sadewic]

Hi Travis,
I seriously doubt that it is 5 or even 8 years to get your money back
with no local incentives and 6 cents for net metering. If he is a
convenience store magnate with a high tax rate then it helps.

On $9 per watt you get a 30% tax credit so subtract $2.70. The
depreciation benefit you can only estimate. The depreciable basis of the
asset is reduced by 1/2 of the credit which gives you a basis of $7.65
(9-(2.7/2)) times the the individual or business federal tax rate.
Assume the tax rate is 25% so the tax benefit is $1.91 (7.65 times 25%).
That leaves $4.39 ($9-$2.7-$1.91) or 50% of the cost to recover through
net metering at 6 cents.

As for how accelerated depreciation works, I do not know the exact
number to use each year but it isnt critical to figuring a return unless
the payback is less than 5 years.  I usually assume an even amount of
tax benefit each year. According to the new federal law, you can deduct
50% in the first year and the remainder over 4 years. There is also
Section 179 of the IRS Code, which may be available for businesses if
the total investment is about $100,000 or less. In this case, you are
allowed to write-off 100% in the first year. I haven't seen any position
on Section 179 but I did my own research and concluded it was eligible.

Hope that helps.
Randy

Randy Sadewic
randy at positiveenergysolar.com
NABCEP Certified PV Installer
Positive Energy, Inc.
Phone 505 424-1112
Fax     505 424-1113
 
Enjoy the Sun!
 

-----Original Message-----
From: Travis Creswell [mailto:tcreswell at ozarkenergyservices.com] 
Sent: Friday, March 21, 2008 6:20 AM
To: RE-wrenches at topica.com
Subject: RE: Commercial incentives [RE-wrenches]


On the commercial tax credit thread can someone give or direct me to an
example of how it applies along with the 5yr accelerated depreciation.

I recently had a chance conversation with a convenience store where they
told me they were going to do a solar PV system because they had figured
on
a 5 year payback.  I was pretty shocked by that statement because here
in
Missouri we have no incentives other then the federal and our commercial
electricity prices are normally under .06/kWh.  I explained to him that
in
MO each $8k-$10k of a PV system of would produce about $10/month worth
of
electricity.  (And that's assuming .10/kWH residential electricity).  He
replied that "maybe it was 8yrs".

I assumed they were grossly misinterpreting the application of the 5 yr
accelerated depreciation but if they aren't then I'd like to know.

The reply might need to be moved to the marketing list.

Thanks,
Travis Creswell
Ozark Energy Services

-----Original Message-----
From: Daryl DeJoy [mailto:penobscotsolar at midmaine.com] 
Sent: Friday, March 21, 2008 8:01 AM
To: RE-wrenches at topica.com
Subject: Commercial incentives [RE-wrenches]


Hi all,
   I am confused. Is the 30% tax credit for commercial installations
still
available to customers? If so, until when?
Thanks in advance,
Daryl


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