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 Solar Panels on Poles  

The 5.52 kW solar electric system at Northwest Drywall, Inc. includes 24 SunPower Modules mounted on three poles, it was the first grid-connected system installed in the city of Redwood Falls and provides a little more than half the electricity for the business.

State Solar Electric Rebate Program

Business taps solar, despite tough economic times

Business: Northwest Drywall, Inc.

Location: Redwood Falls, Minn.

System type: Solar electric, 5.52 kW, 24 SunPower 230-watt modules, pole mounted with tracking system

ARRA-funded State Solar Electric Rebate: $9,600

Dennis Kahnke and Northwest Drywall, Inc. in Redwood Falls, Minn., faced the same dilemma that many businesses—and residents—are facing: whether to invest in renewable energy during challenging economic times.

Kahnke’s drywall business has been suffering for the past couple years, just like so many businesses tied to the construction industry. Northwest Drywall is down to just 12 employees from the 40 it had a few years ago. But despite the hard economic times, Kahnke and his son, Jeff, proceeded with a new 5.52 kW solar electric, or photovoltaic (PV), system to help power two buildings occupying 25,000 square feet. And they’re glad they did.

“We have no regrets,” said Dennis Kahnke, president of Northwest Drywall, who started the business 45 years ago. “We just wish there were more jobs out there.”

The system, which includes 24 SunPower 230-watt modules mounted on three poles with passive tracking, was commissioned in June 2010. It cranks out about 50 kWh on a good day and averages 30 kWh per day in the summer, according to the Kahnkes, with a projected output of 7,200 kWh per year. After the first month of operation, their electric bill dropped from about $100 a month to $30 a month.

ARRA rebate trims cost

The Kahnkes’ solar electric system cost $55,590. But thanks to a $9,660 rebate from the Minnesota Solar Electric Rebate Program (funded by the American Recovery and Reinvestment Act [ARRA] of 2009) and a federal tax credit, the cost was trimmed to about $30,000.

Factoring in depreciation savings, the Kahnkes expect about a 10-year payback period to recoup their investment based on today’s electrical rates. The system should last about 50 years, so they fi gure it’s a good long-term investment. “Even with the incentives,” said Jeff Kahnke, vice president, “it’s going to be a lengthy payback period. But the power companies could raise their rates, and the sun is a good clean energy source—free for the taking and never-ending. Solar is good for us, the community, and the environment.”

The Kahnkes were the first to install a grid-connected, net-metered solar electric system in the city of Redwood Falls (net-metered means they can sell back power generated that they don’t use). They have long been interested in clean energy alternatives. Dennis Kahnke has been using a hydronic system fueled by a wood burner to heat the majority of his business for the past 30 years, and he and Jeff have explored wind turbines. But solar was the best renewable energy option for Northwest Drywall, according to Philip Lipetzky of Green Energy Products, LLC in Springfield, Minn., who installed the Kahnkes’ PV system.

“The Kahnkes have always been energy conscious,” said Lipetzky. “There were some obstacles to wind, so solar made the best sense.”

Economic feasibility of a system

Lipetzky and the Kahnkes sat down in the fall of 2008 to plan a system that would meet the business’s energy and budget needs. They looked at the annual electrical usage of the business and determined how much electricity they wanted the solar system to generate. They devised a two-phase plan aimed to provide 100 percent of the electrical power for the business on an annual basis. Phase one, described above, would provide a little more than half the electric power needed, while phase two, soon to be installed, would be a roof-mounted system with 18 modules to power the remainder. They were sold on completing phase two of the plan, but they waited a bit before committing financially to more solar.

Solar is still expensive and cost remains a barrier for most consumers. Cost-effectiveness is an issue. “We encourage clients to look at the economics of a solar system in terms of return on investment rather than the simple measure of payback,” Lipetzky said.

The good news is that the cost to install solar is getting more affordable, Lipetzky added, and solar modules and solar cells are becoming more efficient.

Incentives spur renewables

Incentives certainly help sell solar. The Minnesota State Solar Electric Rebate Program for residences and small businesses is evidence of that. The $2.5 million solar electric rebate program launched in early 2010 and its funds were fully committed by May, according to the Division of Energy Resources (DER). The state’s 2010 ARRA-funded solar rebate program includes up to $500,000 for solar hot water and solar air heat systems. The ARRA funds were the fi rst federal dollars received by DER to fund solar rebates in Minnesota. In the past, the state solar rebate program has been largely funded by the Xcel Renewable Development Fund, but at smaller amounts. About 260 solar electric rebates for 2010 have been approved so far, with a total capacity of 1.5 megawatts. The year 2010 will clearly be a record year for the number and capacity of solar PV systems installed in Minnesota.

“The ARRA rebate has defi nitely made an impact,” said Lipetzky, whose company did 35-40 installations in the past year. “It helps to get people thinking about solar, it gets the word out. For people on the fence—and there are a lot of them—receiving a rebate is often the deciding factor.”

Minnesota is solar friendly

In addition to the state solar electric rebate program, Minnesota offers a host of incentives that encourage solar. The state excludes the value of a solar electric system from real property taxation, and solar systems are exempt from state sales tax. The state offers low-interest loan programs to fund energy efficient improvements, and some utilities offer grant, rebate or loan programs to help fund solar energy installations. In many cases, a federal Renewable Energy Tax Credit of 30 percent can be applied to the cost of residential or business solar systems installed between Jan. 1, 2009 and Dec. 31, 2016.

Jeff Kanhke and his Solar Power System

Minnesota offers a solar rebate program for both solar electric and solar thermal installations. Funds are limited and program details may change. In addition, there is currently a 30% federal tax credit for qualifying solar installations. Many utility companies also offer rebates and incentives for solar installations.

For a complete listing of all available government and utility incentives, visit the Database of State Incentives for Renewables and Efficiency.

For more information, visit the Division of Energy Resources.