An unlikely location in the Midwest is setting up to be a locus of solar activity: Detroit, Michigan, former world auto industry capital as famed for its Model-Ts as it was for its smoke-belching factories, is also at the center of a pilot solar incentive program offered by utility company DTE Energy Co. through its subsidiary Detroit Edison. With Michigan shooting for a Renewable Portfolio Standard (RPS) of 10 percent by 2015, however, the pressure is on for utilities to deliver—and DTE has stepped up to the plate. SolarCurrents, as the $25 million Detroit Edison program is called, provides rebates of $2.40/watt—or, $2,400 per kilowatt—of installed solar capacity, a lucrative rebate that could set off the price of a 5 kW system by a hefty $12,000. It applies to solar photovoltaic systems between 1 kW and 20 kW in installed capacity, and the program will accommodate only up to 5 MW of installations, so get your foot in the door while you can.
Below, we’ve provided a breakdown of how you might get from the pre-incentive solar quote you would receive to the post-incentive price you would ultimately pay for a solar system.
To be on the conservative side, let’s say we have a 5 kW system that costs $40,000, pre-incentives. (Unless you’re in an especially aggressive, competitive region for solar, most installers will quote you $7.50 to $8 per watt for a non-utility-scale solar photovoltaic system, before incentives. If you’ve experienced differently, please let us know!) Here’s how we would calculate the potential rebates:
- Starting price: 5,000 x $8 = $40,000
- Renewable Energy Credit (REC) Repayment: $2.40/watt x 50,000 watts = $12,000
- Federal renewable energy tax credit, usually calculated as 30 percent of gross: $40,000 x 0.30 = $12,000
- You pay: $40,000 – (2 x $12,000) = $16,000
This figure is of course hypothetical, and your actual net cost would be even lower than this, thanks to Detroit Edison’s ongoing $0.11/kWh repayment for the actual power your system generates, which will appear as a credit on your monthly electric bill for the next 20 years. Still, the above figures are just to give you an idea of what to expect—for a more detailed quote, be sure to find a qualified solar professional. Transparency is key–especially when regarding an investment as important as solar.
I thought the last paragraph could have explained the back end incentive better than it did. The back end payments, according to my calculations, will be another 30% if not more of the total cost of installation. Therefore the system will only cost $4000 in the end. Of course, they also didn’t mentioned the fact of how much you’ll save in electric costs especially if prices continue to rise, and we know they will.
Nice article!