Frank Lovece in Green Ideas on May 7, 2018
Simple Payback. It sounds like the title of a revenge thriller. And indeed it’s a way for co-op and condo boards to get revenge on high energy prices via such “green” projects as solar panels and cogeneration. In fact, simple payback is just one of many factors that can make such capital improvements cost less out of pocket – and eventually pay for themselves.
It comes down to three things: cash incentives, tax rebates, and lowered energy bills.
First, federal, state and local agencies can put up part of the money for a project, reducing your upfront cost. Then tax rebates or abatements can lower your property taxes or, in some cases, be passed through to your residents. Finally, your building will have lower operating costs thanks to lower energy bills – leading to savings that eventually add up until you recoup the remainder of your upfront expense.
“It’s like a layer cake,” says Richard Klein, president of the solar-energy consulting and installation company Quixotic Systems. “With solar, you can get incentives from federal, state, and city sources, a tax rebate or a tax credit from New York State, and a New York City property-tax abatement of twenty percent over five years on the net of the New York State Energy Research and Development Authority (NYSERDA) rebate.” As for cogeneration – a natural-gas power plant in your building that generates both heat and electricity, also called “combined heat and power” or CHP – NYSERDA has incentive funds available through at least December 31.
The icing on the layer cake is that the overall cost of solar installations continues to come down – despite the Trump administration’s tariffs on imported solar panels, primarily from China, which has caused their cost to rise.
Robert Dascoli was board treasurer when his 12-unit co-op at 176 Sterling Place in Brooklyn installed solar panels in 2009. “With all the incentives that lowered the upfront costs, we did an analysis and found that after eight years [of lowered energy bills] the system would basically pay for itself,” Dascoli says. Incentives included a four-year property-tax abatement, a state tax credit for 25 percent of the project cost, a federal tax credit for 30 percent of the cost, and a cash rebate from NYSERDA.
But incentives change from year to year. “The way different incentives come together,” says James Hannah, an executive at the solar-energy consulting and construction firm Bright Power, “it can bring the cost down to 30 to 75 percent of the sticker price.”
Or maybe it won’t. “There are a couple of catches,” warns Kelly Dougherty, director of energy management at FS Energy Services, a subsidiary of the nationwide property-management company FirstService Residential. “Even if you’re paying [upfront] just half the cost of a project, that can still be a lot for a building.” Taking out a loan to cover those upfront costs will lengthen the project’s payback time. “As for the tax credit,” Dougherty adds, “a tax professional really should get involved since not every shareholder or unit-owner is going to get that tax benefit. It’s a process, and you need to realize that it may not work for every building.”
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