Solar workshop addresses concerns and advantages to installing solar panels on the farm.
WOOSTER, Ohio — “Wayne County is one the largest agricultural counties (in Ohio), yet we do not have quite as much (solar technology) as we should,” said Fred Michel, professor in Ohio State University’s Department of Food, Agricultural and Biological Engineering, in Wooster.
Michel, along with Eric Romich, OSU Extension field specialist in energy development; Christie Hooks, U.S. Department of Agriculture; and two solar consultants, addressed a group of local farmers to educate them on solar power systems.
The workshop, held Oct. 1, addressed energy efficiency, financial concerns, installation and case studies from farms that have implemented solar technologies.
“I am not saying solar is the answer, but I support this type of development. My role is to provide you with the right information to make a decision,” Romich said.
So why solar?
Some of the main reasons for converting to solar energy are environmental impacts and cost savings. Switching to a solar panel system means relying less on coal-burning energies and reduced carbon emissions.
Romich shared, according to the U.S. Energy Information Administration, the 2013 Annual Energy Outlook Report predicted an increase in electricity costs from $0.064 per kilowatt-hour in 2013 to $0.128 per kilowatt-hour in 2040. Investing in a solar system could potentially cut the farm electric bill in half.
Financial concerns
The high price of installing a solar system can be overwhelming to farmers at first glance. But, there are tax credit and energy programs that can be taken advantage of to help defray those costs.
A Federal Investment Tax Credit is available for solar systems constructed and operated on both residential and commercial properties. The tax credit is equal to 30 percent of the total cost of the system.
Romich explained, the investor obtains a dollar-for-dollar reduction in federal tax liability, which can be carried back one year or carried forward 20 years.
Solar Renewable Energy Credits are generated when one megawatt hour (or 1,000 kwhs) of electricity is produced. These credits can be sold to energy suppliers and have a lifetime of five years following their acquisition.
Qualifying solar energy equipment is eligible for a cost recovery period of five years using the Modified Accelerated Cost Recovery System. If an Investment Tax Credit is claimed on the equipment, the project’s depreciable basis is reduced by half the value of the credit.
USDA funds
The Rural Energy for America Program (REAP) offers agricultural producers and rural small business loan financing and grant funding to purchase or install renewable energy systems or make energy efficiency improvements, explained Hooks, business program specialist, rural development for USDA.
A REAP grant can help fund 25 percent of eligible costs for a renewable energy system or energy efficiency improvement. Agriculture producers can qualify if their gross income is derived from 50 percent or more of their agricultural operation.
Some eligible projects include bioenergy, anaerobic digesters, solar, wind and hydroelectric energy installations. Funds can also be used in energy efficiency improvements such as lighting, heating and cooling, ventilation, doors and windows and insulation.
There is a $2,500 minimum and $500,000 maximum availability in renewable energy grants and a $1,500 minimum and $250,000 maximum available in energy efficiency grants. If applying for a grant, the applicant must be able to provide at least 75 percent of the project’s costs.
Hooks explained applications for REAP grants are ranked on a point system and not all grants are guaranteed to be funded. Grant applications can be picked up at a local USDA office and more information about the grants can be found at www.rd.usda.gov.
Every detail
“The small details count,” said Romich. Factor in costs of insurance, the impact of financing on cash flow, and any taxable income. Potential rate increases should also be considered and have a plan if REAP grants are not funded.
Romich highly suggests getting multiple quotes to compare. Don’t be afraid to ask other producers in the area to find out what their experience was like.
“It’s not fair to get scared away by a seven- or eight-year payback,” said Romich. “There are a lot of moving parts.”
Local testimony
Don Kettering, of Katotawa Valley Farms in Ashland, had a rooftop system installed in May 2014. Kettering farms 400 acres of corn, soybeans and a small amount of wheat and hay.
“It absolutely takes up no room,” he said, pointing to the roof where the panels were positioned. Three inverter boxes take up a portion of the west wall leaving the rest his space open.
Kettering said he looked into four companies before he made his decision. The total cost for his unit was around $58,000.
“We had good grain prices, and good grain prices permits you to do a lot of things,” he said. “You couldn’t jump into a decision like that today.”
Kettering was able to receive a 30 percent tax credit as well as a 25 percent USDA REAP grant. “I was told the payoff would be about 4.4 years but I am predicting it will be closer to 6,” he said.
Seeing results. The most rewarding experience for Kettering has been watching the panels work.
“Back when I had a meter with a wheel that spun, I would wake up in the morning and see the meter slowly spinning one way and as the sun came up it started spinning the other way,” he said. “It was fun watching that wheel go backward.”
When the panels were installed, Kettering was told he would see an 85 percent savings in his electric bill, but Kettering feels confident it will be a little higher. He expects to see an annual bill of around $200 — a bill that was closer to $2,500, and even more than $5,000, during some harvest seasons.
“After the panels were installed, I decided to replace our old grain dryer system with a more modern system,” he said. Updating the dryer system created more efficiency in his electrical use.
With a dryer crop coming in from the harvest this year, there has not been a need for Kettering to run the dryers, which will help keep his electric expenses even lower.
