The St. Louis Business Journal recently reported the story of Walsh & Associates’ installation of a solar array on its 88,000 s.f. warehouse in St. Louis, Missouri, which the article reports is the largest solar array in Missouri. The cost savings have been dramatic:
"Walsh’s 416-panel solar installation, projected to reduce the company’s annual energy bill from $36,000 to $1,500, is already paying off. Previous winter bills of $1,000 have been cut in half, while the company has yet to pay a summer electric bill – which typically runs $2,000. Walsh 2011 electric bill, for example, was $224 – a significant drop from its April 2010 bill of $1,300. By comparison, Lewis’ electrical bill for his 3,200-square-foot home was $250."
Most small businesses and developers are scared by the high price tag of on-site renewable energy projects. Indeed, the article highlights the fact that Walsh paid $500,000 for installation of its solar array and estimates that for a 100 KW system a business can expect to pay the same. However, large corporations such as Google and Walmart have made significant investments in off and on-site renewable energy and energy efficiency improvements for the purpose of realizing cost savings. The St. Louis Business Journal highlights that Walsh saved up to 40% of the installation costs through local, state, and federal assistance.
Missouri currently has a variety of programs that businesses can take advantage of in order to save costs and “go green” at the same time. The following is brief list of some of the available public incentives that can be used for on-site renewable energy projects:
- Property Assisted Clean Energy (“PACE”) financing - PACE is program by which a local municipality can imposed a special assessment on property located within its jurisdictions to help provide low-cost financing for improvements related to on-site energy production and efficiency. Jefferson City, Missouri is currently the only Missouri city with a PACE program in place but Kansas City, St. Louis, and other cities are seriously considering such programs for commercial properties.
- Utility Rebate Programs- Walsh took advantage of photovoltaic rebate program that provided $2.00 per DC watt generated up to a maximum of $50,000 offered by AmerenUE. Several other state utilities such as Columbia Water & Light, and Kansas City Power & Light also offered this program. However, many of these programs have been suspended as a result of a Cole County Circuit Court ruling against solar rebates as defined in the 2008 Proposition C adopted by Missouri voters.
- Federal Business Energy Investment Tax Credit - 26 U.S.C. 48 provides a tax credit equal to 30% of qualified expenditures related to the acquisition of equipment that uses solar energy to generate electricity, to heat or cool or provide hot water for use in a structure, or to provide solar process heat. The tax credit can be transferred to investors for equity in the project, thus reducing the total first cost of the project. The American Recovery and Reinvestment Act of 2009 (H.R. 1) also provides that this tax credit can be turned into a grant provided that 5% of the total cost of the property, excluding land and certain planning activities, is expended prior to December 31, 2011.
- Chapter 100 bonds: low-interest financing, sales tax exemption and personal property tax abatement - Chapter 100 bonds can be issued by a Missouri municipality to finance industrial development projects for private corporations, partnerships or individuals. The bonds can be tax-exempt and can thus provide low-interest financing for a project and even if the bonds are not tax-exempt, both sales taxes and personal property taxes can be abated for qualifiying facilities. For eligible developments, this method of financing can be used to acquire and install on-site solar energy system.
- Enhanced Enterprise Zones - As previously reported, effective August 28, 2011, Missouri cities and counties may now designate “renewable energy generation zones” within their boundaries for the purpose of effectuating tax abatement for projects located within areas that have been underutilized for renewable energy production. This statute can potentially be used for industrial and commercial projects.