Environmental Engineering Reference
In-Depth Information
Investments in the stock market or savings accounts are taxable income, but investments in
photovoltaics provide savings on electric bills, which are not taxable. Depending on state rebates
and local electric rates, the twenty-five-year electric bill savings from an investment in solar pho-
tovoltaics typically provides a 10 to 20 percent average annual return on the initial investment.
By financing a photovoltaics system in a thirty-year home mortgage or other secured loan, the
net loan cost after tax benefits is often equal to or less than the first year's monthly electric bill
savings—and the loan is a fixed payment, while electric rates are always increasing (SunEdison
2011b) at the rate of inflation or more.
Solar photovoltaics are cost-competitive with central-station generation of electricity today
and are being installed at an increasing rate in the commercial, industrial, and residential sectors.
Innovations in the private sector and incentives in government policies are accelerating the adop-
tion of solar technologies. In May 2010, solar project developer SunEdison secured a financing
package projected to reach $1.5 billion to install solar power at businesses and utilities. SunEdi-
son and First Reserve, a private equity firm that invests in energy, announced a joint venture to
finance, build, and operate solar photovoltaic projects. The deal paves the way for installation
of hundreds of megawatts worth of large solar photovoltaic projects in the United States, Italy,
Spain, and Canada (LaMonica 2010).
Rather than pay the cost of installation up front, many commercial customers of the joint venture
are expected to sign an innovative long-term power purchase agreement (PPA). The solar PPA
structure allows SunEdison to maximize use of the federal investment tax credit and other local
incentives and participate in the solar renewable energy credit market. Using the PPA as collateral
to secure capital on the open market, SunEdison builds, operates, and repairs the systems, and
customers just contract to pay their utility bills. Under this arrangement, the customers buy elec-
tricity that the solar array produces, but the actual equipment is owned by SunEdison (LaMonica
2010). The customers run no risk for generation or transmission price increases during the entire
period of operation, at the end of which electricity prices will certainly be more expensive than
they were at the beginning. The customers incur no up-front capital costs and are not responsible
for maintenance or operation of the equipment, but reap the benefit of fixed energy costs for a long
period, ten to twenty-five years, allowing them to garner favorable media attention for minimizing
their carbon footprint.
SunEdison has considerable experience financing and installing solar photovoltaic systems in
this manner. North America's largest solar energy services provider, SunEdison provides solar-
generated energy at or below current retail utility rates to a diverse client base of commercial,
municipal, and utility customers. Founded in 2003 and headquartered in Beltsville, MD, SunEdison
has completed solar photovoltaic projects in the United States, Spain, and Italy and has projects
under development in Canada, France, and Germany (SunEdison 2008). In North America, SunE-
dison has installed more than 260 MWe of solar photovoltaic capacity at 450 operational sites since
2003. Familiar organizations that have contracted with SunEdison for services and solar power
systems, include Anheuser-Busch, Staples, Kohl's, the City of San Diego, Duke Energy, Progress
Energy, Xcel Energy, the U.S. Department of Energy National Renewable Energy Laboratory in
Golden, Colorado, the U.S. General Services Administration, the State of California Department
of General Services, and Montgomery County Public Schools. SunEdison recently completed a
70 MWe photovoltaic power plant in Rovigo, Italy (SunEdison 2011a, 2011c).
The attractiveness of this business model was evident in November 2009 when SunEdison was
acquired by the Monsanto Energy Materials Company (MEMC) for $200 million (MEMC 2011).
MEMC has been a pioneer in the design and development of silicon wafer technologies for over
fifty years and is a global leader in semiconductor and solar technology, with research, develop-
 
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