This is an excerpt from the September 7, 2012: I heart NY PV, installations in the black, and a man with a mission edition of the SunShot newsletter.
Solar Accounting Gets Smarter
The Solar Foundation, with support from the DOE SunShot Initiative, is helping local governments gain a better understanding of the value associated with solar energy system installations. Because many local governments are facing cuts, solar provides an option for controlling energy costs, which can represent one of the most significant budget line items.
A new report, titled Solar Accounting: Measuring the Costs and Benefits of Going Solar, aims to help local government and finance officers calculate the net value associated with solar energy system installation.
Considering the initial cost of a solar energy system and its payback time does not give a complete picture of the project’s value. Payback period calculations often result in rejecting a photovoltaic installation without considering a project’s long term profitability or the time value of money.
The Solar Foundation instead recommends calculating the net present value, which takes into account the difference between the future value of benefits and costs, to determine whether a particular solar energy system will hold a positive or negative net value for a local government.
The report outlines a range of opportunities for cost savings, including solar renewable energy credit revenues, the federal investment tax credit, and other state and local incentive programs. In addition, the Solar Foundation explains third-party ownership models, such as power purchase agreements and solar lease options, which allow local governments to reduce upfront costs and control long-term energy prices.
This primer for local governments was created as part of ongoing efforts under the SunShot Solar Outreach Partnership. As a member of the partnership, the Solar Foundation helps provide information and technical expertise to local governments interested in implementing solar programs and policies.