Solar Water Heaters: Benefits Begin to Outweigh Costs

Investments in renewable energy, such as solar water heating, should prompt home­owners to “do good while doing well,” says Freeman Ford, president of Chico, Calif.–based Fafco. “Doing good is reducing your carbon footprint by installing solar,” Ford says. “Doing well has to do with what your savings are actually going to be.”

Despite system costs sometimes upward of $12,000, Ford says that “doing well” is getting easier. Taxpayers can stack state, local, and utility-level incentives on top of the 30% federal tax credit created by the American Recovery and Reinvestment Act, offsetting initial costs (what Ford calls solar’s Achilles heel) by thousands of dollars.

Mark Bartlett, pres­ident of Attisun, in Annapolis, Md., sees tax credits getting attention. “Many of our clients come to us after searching the tax credits on the Internet.” Previous solar water heating tax credits were capped at $2,000. Bartlett says that the now-uncapped federal credit will help more.

Growth Market

Also owner of Watermark remodeling and construction company, Bartlett says that opening Attisun was a business move he made three years ago to anticipate market conditions. “I wanted to identify a business model that would be able to weather and go forward in a different economy,” Bartlett says. “We still have a remodeling company, but our main focus and most of our time is directed toward our solar business.”

Alex Shekhtman, president of Washington, D.C.–based A&A Design Build Remodeling, has been working with Bartlett as a trade partner since late 2008. “Now that we’re actually doing it, I’m very happy because people are interested,” Shekhtman says. To educate his non-Sun Belt clientele, Shekhtman markets the service at home shows and online. As business comes in, he will direct customers to Bartlett.

“The way we’ve structured Attisun is that we’re not the subcontractor — we reverse that to make it easier to deal with details like manufacturer certificates and documentation for grant programs,” Bartlett says.

He helps clients gather appropriate forms, some of which require his input. However, “the client will write a contract directly with us, which states that the client is responsible for making all applications for grants and following through because that’s an agreement between the taxpayer and federal, state, or local authorities.”

Driving Demand

Tax credit availability also benefits manufacturers who are eager to see solar thermal use increase. “As a manufacturer, we focus on states that have implemented renewable portfolio standards and have state and local, and perhaps even utility-level rebates and incentives,” says Bill Poleatewich, president of Dawn Solar, in Brentwood, N.H. “Of the 50 states, there are probably half that have more favorable financial infrastructure supporting deployment of these technologies.”

Tim Bowler, solar sales and technical services manager for Stiebel Eltron USA, in West Hatfield, Mass., says that the solar water heating industry will have to ramp up production. “The tax credits are going to reinvigorate the industry, especially because they’re available for eight years,” Bowler says. “Right now the industry is not fully geared up to meet the demand that will come. It will be several years before we’re really up to it.” Bowler says that Stiebel Eltron plans to open a solar thermal manufacturing facility in the U.S. within a year.

“Right now, China has 80% of the market, Europe has 10% and we have about 1%,” adds Ford. “Its’ going to be a large market, but it’s in its infancy now.” —Lauren Hunter, associate editor, REMODELING.

BOTTOM LINE

Individuals may claim a tax credit of up to 30% of the total cost of a solar water heating system (including labor, piping, wiring, etc.) installed from 2009 to 2016. To qualify, the system must be Solar Rating and Certification Corp. certified, and must provide at least half the energy used by the home to heat water. Systems used to heat swimming pools are not eligible.

Local Look: States Weigh In

UTAH: The state’s individual income tax credit for residential solar water heating systems is 25% of the reasonable installed system costs, up to $2,000 per residential unit. The credit is nonrefundable, but can be carried over for up to four years.

Taxpayers must first apply for the tax credit through the Utah State Energy Program before claiming it on their state tax returns. The legislation was enacted in 2007 and extends these credits through at least 2012. —Lauren Hunter