Solar-Powered Dairy Offers Case Study for Incentives

In the winter months, just before kidding season, the Tates get a break from milking and making cheese. But Steve Tate, already thinking about next season's operations, is about to install a solar thermal system that will provide much of the hot water needed to clean the milking parlor, milk bulk tank, and all the cheese room equipment.

"We are committed to nurturing the land and operating our business based on principles of sustainable agriculture," said Tate, "so looking to the sun as a source of energy seemed natural. But in this case, we will also have significant savings from greatly reducing our use of propane to heat our water."

The solar hot water system at the Goat Lady Dairy will consist of five 4 ft by 10 ft panels mounted on the south-facing roof of the barn. With the help of a small pump, the system circulates water through the solar panels where it absorbs the heat from the sun. The solar-heated water is stored in a 300-gallon drain-back storage tank. The incoming cold water then flows through a heat exchanger in the storage tank where it is preheated with the free solar energy before it flows into the propane-fired hot water tank to be used as needed. Steve Tate expects that the hot water temperature for their operations will easily exceed 150 degrees F and that the propane-fired hot water heater will mainly function as a backup on cloudy days. Evergreen Energy Company will install the solar thermal system at the Dairy.

According to Gabriela Martin, Clean Energy Consultant for the Environmental Law and Policy Center in Chicago, "the reduction in energy costs is attractive in itself, especially with the recent increases in the cost of propane and natural gas. However, the current combination of Federal and State support for renewable energy has greatly improved the economics for solar thermal systems and is making them attractive investments."

The project also serves as good example of how someone considering a project can leverage a few different incentives at the same time to drastically lower the cost of a project. Three items come into play here: a USDA grant, the new Federal solar tax credit, and local state-based tax credits.

The Goat Lady Dairy solar thermal system will cost $10,000, fully installed. The Tates applied for, and received, a Federal Farm Bill grant for $2,500. The 2006 deadlines for grant applications is May 12, 2006.

Beginning January 1, 2006 (and effective through December 31, 2007), a 30% Federal tax credit is in effect for solar systems. In addition, businesses that install solar systems for their operations can take advantage of the Five-Year Accelerated Depreciation provisions that exist for solar thermal and other renewable energy systems.

Furthermore, North Carolina provides a 35% corporate tax credit on the cost of the installation that can be taken in equal amounts over five years. All totaled, the $10,000 solar thermal system is costing Steve Tate less than $1,500.

"The cost of propane has gone up 25% since last year," Tate says. "At this level of fuel prices this system will pay for itself in less than two years!"

For more information on the various funding sources for this project, see the following links.

Information courtesy of Gabriela Martin, a Clean Energy Consultant for the Environmental Law & Policy Center (ELPC) in Chicago. ELPC is a Midwest-based environmental and economic development advocacy organization.