Solar makes cents

A steady decline in the cost of solar power, combined with generous federal and state incentives, is making solar energy a more viable alternative than ever for powering warehouses and distribution centers, Thomas R. Hunton told attendees at the WERC conference.

Hunton is the president and CEO of American Capital Energy, an integrator of electric- and solar-power systems. He said that the cost of developing and building solar systems has been falling, on average, 5 percent a year. Solar investment is also aided by federal tax credits equal to 30 percent of the project's costs as well as subsidies in many states equivalent to one-fourth to one-half of the investment.

Companies that pay for the system out of pocket can expect to get a full return on their investment in four to six years after federal and state government subsidies are factored in, said Hunton. Companies that finance the transaction can expect an eight- to 12-year payback window.

Because solar systems generally have a 30- to 50-year design life, the energy savings over the decades can be significant. Hunton used as an example a company buying a $7.9 million solar system to power a facility. By the fifth year, the company's energy savings had allowed it to recoup all of its initial investment. Net energy savings in the subsequent 20 years—savings minus ongoing cost—would approach $10 million, Hunton said.