The system would cost approximately $3.36 million. We would receive a 30% federal ITC ($1.008 million), approximately 60% bonus depreciation on 85% of the project cost in the first year ($600,000 =$3.36 million * .85 * .60 * .35 (effective tax rate)). Thus, in year 1, our net cost would be about $1.75 million. Once the project is completed we would begin to earn our fees ($300k/year). We would also get the tax benefit of depreciating the remaining 25% of the project cost over time.
Having said all that, the pay back period is still quite long (about 6 years, which includes interest expense on financing the project).
We completed an energy efficient lighting project on our entire facility last year which had a pay back period of about 10 months. That project was a no-brainer. This project, not so much.
I don't see how you could go wrong, if your company isn't overextending. Sounds like a very good capital investment plan considering the likely hood of increasing energy costs and the possibility of future power interruptions due to our aging national electric grid. Plus the system stands last at least four times the payoff period.
You have done the math, how does a 6 year payback compare to other uses for the companies capital budget? you menitioned lighting upgrades, its there other low hanging fruit available? Also, are you selling all the power back or just you excess? When you purchase price of electricity rises above 22c can you simply consume and not sell to the grid?
If you can use the power directly, does the design allow the system to function during a blackout? Sounds silly, but I haven’t scene a residential system that does.
Finaly, have you calculated the increased cost of roof maintenance. how long will the roof under the system last? if you have to reroof every ten years, you will have the added cost of removing and reinstalling the sytem every ten years.
You have done the math, how does a 6 year payback compare to other uses for the companies capital budget? you menitioned lighting upgrades, its there other low hanging fruit available? Also, are you selling all the power back or just you excess? When you purchase price of electricity rises above 22c can you simply consume and not sell to the grid?
If you can use the power directly, does the design allow the system to function during a blackout? Sounds silly, but I haven’t scene a residential system that does.
Finaly, have you calculated the increased cost of roof maintenance. how long will the roof under the system last? if you have to reroof every ten years, you will have the added cost of removing and reinstalling the sytem every ten years.
You have done the math, how does a 6 year payback compare to other uses for the companies capital budget? you menitioned lighting upgrades, its there other low hanging fruit available? Also, are you selling all the power back or just you excess? When you purchase price of electricity rises above 22c can you simply consume and not sell to the grid?
If you can use the power directly, does the design allow the system to function during a blackout? Sounds silly, but I haven’t scene a residential system that does.
Finaly, have you calculated the increased cost of roof maintenance. how long will the roof under the system last? if you have to reroof every ten years, you will have the added cost of removing and reinstalling the sytem every ten years.
You have done the math, how does a 6 year payback compare to other uses for the companies capital budget? you menitioned lighting upgrades, its there other low hanging fruit available? Also, are you selling all the power back or just you excess? When you purchase price of electricity rises above 22c can you simply consume and not sell to the grid?
If you can use the power directly, does the design allow the system to function during a blackout? Sounds silly, but I haven’t scene a residential system that does.
Finaly, have you calculated the increased cost of roof maintenance. how long will the roof under the system last? if you have to reroof every ten years, you will have the added cost of removing and reinstalling the sytem every ten years.