New Hampshire’s post-pandemic economic landscape continues to be full of what may seem like daunting challenges as businesses and industries look to power up and regain the pre-pandemic plateau of prosperity. One of the greatest challenges facing them is the rising cost of energy — specifically oil, natural gas and electricity — which is creating greater incentives for businesses to either increase or implement green energy solutions, such as solar energy.
Just how this energy challenge plays out in the coming decade is still unknown, but our panel of experts is ready to offer their insight to the New Hampshire business community.
Our panel:
• Mark Roberts, Managing Director, Power Operations & Business Development, Sprague Energy
• Steve Scott, SVP, Commercial Lending for New Hampshire solar projects, Bank Prov
• Eric Kilens, Senior Solar Advisor, Granite State Solar
Mark Roberts, Managing Director, Power Operations & Business Development, Sprague Energy
Q: The cost of electricity and natural gas continue to rise due to the global energy crisis. What steps can the natural gas industry and electricity providers take to help businesses mitigate the impact of these cost increases?
A: Energy providers should provide their customers with the products and services needed to help them manage their energy costs. At Sprague, we have been doing it locally for over 150 years. The current global political climate has caused energy prices to skyrocket worldwide. For nearly the past year in light of the bullish energy market, we have been working with our customers to help them assess their options. Businesses should be proactive and recognize that “doing nothing or waiting until prices fall” is actually a strategic decision.
In energy markets characterized by volatile and rising costs, we often advise our customers to lock in a price and layer a percentage of their future purchases. This will provide the customer with more price protection and less “sticker shock” when they get into next winter. If the market continues to worsen and costs continue rising, they will have procured a percentage of their energy at below market prices. Conversely, if prices were to soften, they would benefit, because part of their supply would be at market prices that would be falling. Sprague offers many different energy procurement strategies, financial products and services for our customers to put a purchasing strategy in place that meets their specific business objectives and tolerance for price volatility.
Steve Scott, SVP, Commercial Lending for New Hampshire solar projects, Bank Prov
Q: What are some of the most cost-effective ways for NH businesses to add solar energy?
A: If the business owner’s desire is to know that the energy that the business is using is from renewable sources, joining a solar garden, also known as a net metering agreement, would be an easy way to do so. The Bank’s headquarters building in Amesbury Mass., for example, receives some of the electricity it uses from a solar operator whose project is in Halifax, Mass., through such an arrangement … on top of having an array on the roof of that very same building. Aside from acquiring one’s energy from such an arrangement, solar energy isn’t really something that you can just dip a toe into, nor is it something that you have to “go big or go home.” There are “Smart Flowers” that are petal-shaped arrays that follow the sun and generate energy which would give the business a feel for how it would be accepted on their premises and understand how it would provide financial benefits. If you have the ability to install an array on your business location, either as a roof- or ground-mount, it could be done on the smaller scale and later expanded.
Q: Can you briefly describe the top state or federal programs that provide tax-friendly renewable energy incentives?
A: Federal Incentives are currently 26 percent tax credit for eligible costs related to projects installed in 2022. The tax credits will drop to 22 percent for 2023. Unfortunately, at this time, the credits expire in 2024. Separately from the U.S. Federal Investment Tax Credit, the USDA has a grant program, Rural Energy for America Program (REAP,) which provides grant money to support arrays located in areas that it has designated as rural. Grant sizes can be up to 25 percent of total eligible project costs with a maximum of $500,000. New Hampshire’s incentives are limited to 25 percent of the total project cost or $10,000, whichever is less.
Q: What are the most important questions a NH business should ask when considering the addition of solar energy?
A: The reasons for wanting to pursue the addition of solar energy to the business include business reputation, financial or other. When talking to solar installers ask them what type of project they typically do/specialize in (i.e. roof array versus field array). The installer for my roof array took pains to center the array on my roof and made the aesthetics of it just as important as the performance. When interviewing solar companies, ask whether they will look to see if your property’s location qualifies for a REAP grant and, if so, whether they would complete the application for you. (Some will, some won’t, because they aren’t adept at the applications.)
Q: Typically, how long will it take for a New Hampshire business to benefit from their investment?
A: Once the array is constructed and connected to the grid, the business will immediately see the benefits from their solar array investment. There are monitoring systems that provide information about the amount of energy that has been generated through the array. When I added my array to my house, I was constantly monitoring how it had done and, nearly 10 years later, I still maintain a chart of the monthly energy that my roof array generates.
Eric Kilens, Senior Solar Advisor, Granite State Solar
Q: What are some of the most cost-effective ways for NH businesses to add solar energy?
A: There are several financial models that work for solar, including power purchase agreements and leases, but you get the greatest return on your investment with ownership. You’re investing in an asset to offset an expense: your electric bill. Plus, by owning your energy, you’re insulating your business against future rate hikes. This energy independence is a huge payoff for solar. We hear all the time: “My rates are constantly going up. I don’t even know why!” With solar, you’re insulating yourself from this problem, because you’ve made the investment upfront to own your power. You even see this benefit if you finance, because you’re replacing an electric bill that fluctuates with the seasons with one regular payment.
Q: Does solar have a big upfront cost?
A: Solar is an investment — pay for the system now, and you won’t have electric bills down the line. This traditional model of paying for solar does have a big upfront cost.
But now, there are some great financing options that offset this upfront burden. Spreading the cost out over a period of time makes it much more affordable, and while you’re paying down the debt, your solar is handling your electric bill. Many of our business customers work with their existing lender partners and can get a loan payment similar to their electric bill once incentives are applied. For residential customers, we offer financing through VSECU.
Q: Can you briefly describe the top state or federal programs that provide tax-friendly renewable energy incentives?
A: At the federal level, there’s the investment tax credit. For projects that start construction in 2022, this is a 26 percent credit against your tax liability. (So, it’s not a rebate.) This steps down to 22 percent in 2023 and 10 percent in 2024 and beyond. This solar company can take advantage of the accelerated depreciation schedule. The acronym is MACRS, which is the modified accelerated cost recovery system. Depreciation is basically a tax write-off. While federal investment tax credit comes off of your tax liability, this write-off comes off of your income or profitability. For solar, you can depreciate 85 percent of the total cost of the system over a five-year schedule. Businesses that go solar can also make additional revenue from the sale of renewable energy credits. They’re generating this clean, renewable energy which creates these renewable energy credits, which they then get paid for. It’s additional money that the business can see out of the solar system, above and beyond.
Q: What are important questions a NH business should ask when considering the addition of solar energy?
A: Questions you want to ask installers as you get quotes include: What is the expected life of the system? How long has your business been around, and do you offer services in the future? What warranties do you offer? Why is your price lower (or higher) than what I’ve seen elsewhere? Are you insured? Can you send me references? Other factors a business may want to consider are: How does this affect my insurance? Do my property taxes increase?
Q: Typically, how long will it take for a NH business to benefit from their investment?
A: It sounds cheesy, but I would say as soon as their system is turned on, it’s an immediate benefit to the business.
As soon as they start generating their own power, they start paying off their solar investment. And then they are starting to help insulate themselves from any rate hikes that do potentially happen.
Q: What’s a realistic expectation for how much of my bill is going to be offset by solar?
A: Businesses could see, say, 75 percent of their bill offset by their solar. It’s probably not going to be 100 percent because commercial utilities have separate demand charges, measured in kilowatts. A well-sized system can cover a lot of the regular kilowatt-hour charges, we don’t want people making the assumption that their entire bill is going to be wiped out.
