Solar Power 2009: New Tax Breaks and More Help Boards See It in a New Light
If you've got residents who might be a reluctant to dive into a solar energy project, it may have just gotten a little easier to convince them: The federal tax credit for solar projects, set to expire by the end of 2008, now continues to 2016. Consequently, co-ops and condos can continue to deduct 30 percent of the cost of a solar electric project — and now without the $2,000 cap. And locally, if you install between now and December 31, 2010, you can get a New York City property-tax abatement of 8.75 percent of the system cost per year for four years, up to $62,500 per year or the full sum of your property taxes.
The federal extension "is a huge improvement," says Monique Hanis, spokeswoman for the trade group the Solar Energy Industries Association. "The extension for eight years gives people time to plan and save money for projects, to maximize their roof space so they can get the most out of it." Additionally, if you install a solar heating system for your hot water, you can deduct another 30 percent for that, although the $2,000 cap remains on that end.
The law also marks an important change regarding who can claim tax credit for solar power, often referred to as photovoltaic (PV) power. Previously, anyone who paid the alternative minimum tax (imposed on higher-income earners) could not claim the PV tax credit. The new law removes that ban.
New York State additionally provides a 25 percent tax credit based on the cost of the project, which trickles down by percentage or share to the individual co-op or condo owner's income taxes. In both cases, each individual cannot get more than $5,000.
Solar in the Real World: Brooklyn
Real-life doesn't get any realer than in Brooklyn, where the board of the 12-unit co-op at 176 Sterling Place in Park Slope is installing a three-kilowatt solar electric system that will power between 80 and 100 percent of the power needs for the common areas and about 70 percent of the hot water. Board president Michael Fram estimates the cost at $100,000. The board converted a line of bank credit into a loan and also raised maintenance by about 10 percent for a five-year period to help fund it, reports treasurer Robert Dascoli. One unanticipated expense was a small increase in property insurance — about $400 a year to cover risk of damage to the PV system.
Balancing all these outlays, the New York State Energy Research and Development Authority (NYSERDA) will pay the co-op about $12,000 in incentives. And each resident will see about $5,300 in state and federal tax savings. Dascoli also predicts the building's property taxes will go down by about $3,000 a year for the four years — savings that will be passed on to each shareholder in reduced maintenance. Once the project is completed and the loan paid off, in about five years, Dascoli says, residents can expect to save about 15 percent on their maintenance charges because of energy production from the solar panels. He also foresees a boost to the resale value of apartments.
The solar project will take up about one-fourth of the roof space, and residents will not lose any of the common deck area. The environmentally conscious co-opers are individually metered, and each resident has opted to pay a little extra to purchase wind power from Con Edison.
Net-Metering
Another change has resulted from the passage of a New York State law that deals with what is known as "net-metering." When a PV system generates more power than it uses, the power flows back into the grid. Essentially, the meter runs backwards and the customer gets a credit for supplying power, not using it. Previously, in Con Edison territory, net-metering was limited to 10 kilowatts of power and only residential customers could do it. In August, the law changed to permit net-metering up to 2,000 kilowatts of power and expanded it to commercial customers. (See "Green Roofs Tax Abatement and Alt-Energy Initiatives Signed Into Law.")
some solar sources
General contractor:
Quixotic Systems (212) 367-9161
Thermal hot-water installer:
New York Cooling Towers (718) 497-0545
Solar Electric Installer:
Tristate Solar (800) 716-3422
While the state of the economy might make you think twice about spending, David Buckner, president of Solar Energy Systems, does not believe people will be more skittish. He also says he doesn't see a lot of people driven in by high or low oil prices. The impact of the economy is more psychological, he says.
Will co-ops and condos be able to obtain bank financing to begin such projects? Buckner recalles the recent case of a large commercial solar project where the banker admitted that if the project had been proposed now instead of a year ago, the funding would not have been available.
Despite this, he says, the combination of federal, state and local tax relief, plus the net-metering change, makes it easier than previously for smaller buildings to take on a solar project. Agrees Bhagavathi Natarajan, mechanical engineer for Quixotic Systems, a Manhattan-based solar-power installer, ""There is a lot more reason now to look to solar."
Adapted from Habitat December 2008. For the complete article and more, join our Archive >>