Net zero - zero non-renewable, utility-sourced energy usage - has become a reality for several area businesses and nonprofits this year, largely due to government incentive and rebate programs.
West Hill Shop in Putney now meets all its business energy needs from photovoltaic panels located in its field to the west of the shop.
“We've become our own power station,” owner Jim Sweitzer said. “We get paid for generating excess energy.”
Paul Harlow, co-owner with his brother Dan of Harlow Farm in Westminster, said the business was at net-zero all winter, but “now we are into the summer season, and our demand has gone up. I'm sure we are using more energy than we are generating.”
But Harlow is too busy with the farm right now to be certain. He said he will know more at the end of the growing season after everything has been harvested.
The Putney School's field house project began in earnest in 2009 and opened in October of last year.
“It's always been a part of our mission to create and maintain sustainable energy,” said Chief Financial Officer Randy Smith, who has seen the project through from its inception.
Smith added that the 36.8-kilowatt system is the result of a capital funding campaign that raised half the money for the $500,000 solar panels. The other half of the cost was covered through incentives from the state that are geared to encourage organizations, such as schools, libraries, municipalities, and not-for-profit businesses, to use renewable energy sources.
The 18,000-square-foot field house was also built to maximize energy savings, with a state-of-the-art energy-saving design. Its construction includes a building “envelope” that addresses heat retention, storage, and heat loss.
“This envelope is the most fundamental key to saving energy in any building,” said Paul Thurrell, a systems integration engineer for Southern Vermont Renewable Energy (SOVEREN). The company installed the solar array at the West Hill Shop.
“Before you address anything else,” he said, “a building needs to be well insulated, and leaks need to be sealed.”
A monitoring system is available online so that Smith and students at the Putney School can see how much electricity is being exported on the net-metering grid to Green Mountain Power (GMP) customers, how much is being imported, and how much power the heat, ventilation, and lights are using.
The monitoring system also shows how much solar energy is being generated, and what portion of it is being used by each source in the building.
Net metering is the key component to all of these systems, and is the credit the system owner receives in return for the unused energy passed to the grid by the system. In theory at least, this arrangement helps to stabilize energy costs to GMP customers whose energy comes solely from a utility.
Businesses converting to renewable energy share several reasons for doing so, including their desire to lower energy costs, reduce carbon emissions, and cut down on their reliance on foreign oil or on nuclear-generated power.
But they also take a long-term view as part of their decision to make an investment in a solar energy system.
Thurrell said the big “wow” factor in going solar for businesses is that it pays - and, in some cases, pays big.
According to his calculations, state and federal incentives have made it possible for businesses to begin having a positive cash flow within one year of investing in solar energy and taking advantage of government programs.
“Once [a business] sees how it plays [or pays] out, it's like, 'Wow, how can I do this - now?'” he said.
In the last few years, Vermont has passed legislation to remove any blocks preventing individuals and business owners from investing in renewable energy.
And a recent law, H.56, requires utilities to purchase renewably generated power for 20 cents per kilowatt hour.
Other legislation allows for group net metering that permits the credit for a renewable energy system to be distributed proportionally to more than one electric meter or customer.
With net metering, all customers benefit from renewable energy sources that lower costs for everyone gaining access to the energy from those sources.
Right now, Thurrell said, businesses investing in solar power benefit the most from incentives. Although homeowners can offset their electric bills with a solar-electric system as well, fewer incentives are available.
Homeowners get a 75-cent credit per kilowatt generated, against a year's usage. The size of the system that will suit their needs is based on an average year's electric bill. Most homes can function easily on a 10-kilowatt system.
The tax credit is worked out on paper, during the permitting portion of the process, with state agencies and the authorized solar-system installer.
The permitting process protects the homeowner with state oversight for the system, and ensures that the homeowner receives either a rebate check or credit against the cost of the system.
A Vermont business tax credit, or rebate, piggybacks the federal tax credit of 30 percent of the cost of installation of solar energy systems. It allows a business owner to have a 100-percent write-off of the “Vermont-property portion” of the federal business energy tax credit through the end of 2011.
But the federal tax credit expires this year, leaving a 7.2-percent Vermont investment tax credit that stays in effect until 2016. Businesses have only a few more months to take advantage of the much larger incentive.
According to the Vermont Department of Public Service, it is important for business owners to know that these tax credits apply only to “project costs not covered by any grants or similar funding from any public or private program that assists in providing capital investment for a renewable energy project.”
Thurrell interpreted this caveat as meaning that costs covered by business owners who did not go through the permitting incentive process will not be covered in the final analysis by the state.
Pre-approval for these tax credits must be gained from the Clean Energy Development (CED) board. As of August, only solar energy facilities generating 150 kilowatts or fewer will be eligible, and construction must begin by September.
As of May of this year, businesses have been able to elect to take advantage of a one-time grant in lieu of a tax credit with no maximum limit, amounting to 50 percent of the tax allocation, or 15 percent of the actual costs of the facility. The CED will contact the owners to see what they elect to do. That grant is not taxable under Vermont's income laws and will not be available in 2012.
Thurrell explained how it works.
If a hypothetical business invests in a 50-kilowatt system on 1.03 acres for $300,000, it would end up paying only $81,900 after $218,100 in incentives.
Such a business would be eligible for a federal grant of $90,000. Vermont incentives return $31,500, along with the state tax credit of $21,600 for a renewable energy source.
According to a formula that measures estimated yearly output of electricity from the photovoltaic source, and accounts for all the factors - from a loan for $81,900, to the electricity inflation rate, to the general inflation rate, to the utility company bonus - the return on the investment in one year would be 15.42 percent.
The “wow” factor comes when the business generates a cash flow within one year by being paid $4,288 for selling unused energy to the assigned utility.
And the revenue would go up each year, according to Thurrell's exacting calculations.
Thurrell is interested in bringing rates down, or at least maintaining them at a steady rate, and at present, is looking at investors in various community solar projects who can take advantage of net metering.
Business owners investing in such a project reap the benefits of significant federal and state incentives, while net metering lowers electricity costs for everyone.
At the West Hill Shop, the meter runs backward as it creates electricity by means of the solar panels.
The shop, which sells bicycles and cross-country ski gear, is using no electricity from GMP at this point. It generates enough with its 28-kilowatt net-metered system to run everything in the shop, according to Sweitzer.
He said that the business sized the project intentionally bigger than the store needed with net metering premiums in mind.
From the beginning, Sweitzer said, “we wanted to make the business energy efficient,” as well as produce excess energy to put back on the grid for net metering savings for utility customers.
Sweitzer did not consider the tax incentives huge, but he is not complaining.
More importantly, in his view?
“We're not generating any CO2 making this electricity.”