The Business Case for Solar Energy In Indiana

Motoring north along I-465 on the west side of Indianapolis, you may notice a large solar photovoltaic installation on the south side of an office and warehouse at 5925 Stockberger Place. The new corporation behind this installation is Energy Solutions by JMS, which is a partnership of a mechanical contractor, Johnson Melloh Solutions, and architecture and engineering firm, Schmidt Associates.

A freestanding aluminum frame angled toward the sun supports the array of Onyx solar panels, which will soon be manufactured in Columbus by NuSun, Inc.

Central Indiana receives an average 4.2 hours of sunlight per day, allowing this 100-kilowatt capacity solar photovoltaic array to produce 132 mega-watt-hours of electricity per year, which is more than this 12,000 square-foot building uses. Excess energy produced on sunny days can be sold back to IPL for credits that can be banked for times when the sun isn’t shining. No batteries required.

According to Mike Gardner of Energy Solutions (formerly Vice President for Operations at Butler University) the system cost approximately $500,000 installed. After the owners take a 30% Federal tax credit and a special accelerated depreciation for solar renewable energy, the net cost of the system is about $220,000. These tax incentives will expire at the end of this year unless extended once again.

Indianapolis Power and Light (IPL) is offering $0.20 to $0.26 per kilowatt-hour feed-in tariff for excess electricity sold back to the grid, but Energy Solutions declined that arrangement, which would have transferred their right to sell solar renewable energy credits (SRECS) on the open market to IPL. SRECs are currently selling for about $0.30 per kilowatt-hour. While there is no guarantee that SRECs will hold that rate, Energy Solutions sees it as a good opportunity to gain experience in this market to better guide their customers and they think these rates may increase substantially. They can also sell excess power back to the grid, thanks to net metering offered by IPL, an arrangement that the Indiana Utility Regulatory Commission is considering for other public utilities in Indiana.

“The bottom line,” according to Gardner, “is that the system will pay for itself in about five and a half years.” After that, Energy Solutions pays nothing, but they may still be able to sell about $40,000 worth of SRECs per year and also enjoy 132 megawatt-hours of free electricity per year, for at least the 25-year warrantee period of the panels. As electricity prices continue to climb, this idea will only shine brighter.