Trend: Tax incentives affect the adoption solar energy equipment — if the December 31, 2008, deadline is not extended, a dropoff in solar equipment purchases and installations should be expected.
Stephanie Rosenbloom at NYTimes.com describes the effects of tax credits on solar energy implementation at large retail stores. Excerpts below.
In recent months, chains including Wal-Mart Stores, Kohl’s, Safeway and Whole Foods Market have installed solar panels on roofs of their stores to generate electricity on a large scale. One reason they are racing is to beat a Dec. 31 deadline to gain tax advantages for these projects.
So far, most chains have outfitted fewer than 10 percent of their stores. Over the long run, assuming Congress renews a favorable tax provision and more states offer incentives, the chains promise a solar construction program that would ultimately put panels atop almost every big store in the country.
The trend, while not entirely new, is accelerating as the chains seize a chance to bolster their environmental credentials by cutting back on their use of electricity from coal.
Most of the efforts so far are in California, New Jersey and Connecticut, states that offer generous incentives. Executives say they would like to convert many more. How quickly they can do so depends on government policy because retailers rely on tax incentives to offset the cost.
Corporate officials describe a federal tax credit for renewable energy, one that Congress has let expire and then renewed several times, as particularly important. A Congressional deadlock over offshore oil drilling has held up legislation that would renew the credit for next year.
Retailers are fast becoming energy experts. They are experimenting with traditional solar panels, a new type of thin solar panel and ground-mounted tracking systems that move with the sun.
They are also combining those systems with other rooftop technologies like skylights and solar water heaters.
Analysts are not sure how much power the rooftop projects could ultimately produce, but they say it could be enough to help shave total electricity demand. In many communities, stores are among the biggest energy users. Depending on location and weather, the solar panels generate 10 to 40 percent of the power a store needs.
If Wal-Mart eventually covered the roofs of all its Sam’s Club and Wal-Mart locations with solar panels, figures from the company show that the resulting solar acreage would roughly equal the size of Manhattan, an island of 23 square miles.
Booming demand in recent years has driven up the price of solar panels, and analysts say it costs far more to generate electricity from solar energy than from coal.
Coal generation costs about 6 cents for a kilowatt hour, which is enough electricity to run a hair dryer for an hour. Natural gas generation costs about 9 cents a kilowatt hour, said Reese Tisdale, a senior analyst with the consulting firm Emerging Energy Research. In comparison, “best case” for power from solar panels is about 25 to 30 cents a kilowatt hour, he said.
But retailers believe that they can achieve economies of scale. With coal and electricity prices rising, they are also betting that solar power will become more competitive, especially if new policies addressing global warming limit the emissions from coal plants.
Retailers, hoping to create a bigger market and positioning themselves at the forefront of a national shift toward renewable energy, are encouraging one another to join the bandwagon.