With Tax Breaks, Going Green Saves Green

(CBS)  The massive economic stimulus bill signed in February makes a big push for alternative energy. It includes $20 billion in federal tax credits - and big chunk of those are devoted to subsidizing green projects, as CBS News correspondent Michelle Miller reports.

When oil prices spiked last year, Tom and Jane Varian started thinking about making their home in Black Creek, N.Y. more energy efficient. But it took the government's new stimulus plan - including a 30 percent tax credit - to get them to take the plunge.

"That's when it became both financially realistic and environmentally realistic," Jane Varian said.

They're having their roof surveyed for solar-electric panels, and are about to dig two 500-foot wells for a geothermal heating and cooling system.

"We expect to see a 75 percent reduction in our power bill as well as our yearly oil bill," Tom Varian said.

The upfront costs aren't cheap. The Varians will pay roughly $98,000 for their green technology, but a New York state rebate and tax credit will slash their bill by $23,000. Subtract another $24,000 in new federal tax credits and their total cost comes to just $51,000 - about half the market price.

So how long will it take to get their money back out.

"Between six to eight years," Jane Varian said. "But as long as we see a return by year ten i think we'll be satisfied."

There are plenty of reasons for getting off the grid - economic, environmental, and the kick of never having to pay a utility bill again. Being self-sustaining.

Jim Irish is converting the Varians' home. Drawing on 15 years with General Electric as an engineer, after 9/11 he poured his expertise into helping the U.S. become less dependent on foreign oil.

"I watched all that happen and I thought that the world was going to change when it came to energy," said Irish, who called his company Hudson Valley Clean Energy.

The federal government has also changed.

Under the Bush administration, homeowners could get a tax credit of 10 percent up to $2,000 for installing renewable energy systems and $500 for making energy efficient upgrades, like new windows. Under the new rules, renewable energy improvements are subsidized up to 30 percent - with no cap - and homeowners get another $1,500 for energy-saving upgrades.

The Varians expect to save at least $6,000 on utilities the first year.

"There's very little risk.to the cash flow stream from a solar system," Irish said. "Basically it will only go down if energy prices go down, or if the sun stops shining."

And if that happens, we've got bigger things to worry about.

But with no guarantee how long the government will be able to subsidize these deals, this golden - or green - opportunity may not last forever.

[mzilikazi-2009]

There is no doubt in my mind that solar electricity is a valuable alternative to electricity derived from fossil fuels even if not exceptionally cost effective at this point in time. However, I would like to know more about the average built in obsolecence or repair / replacement qualities of various rooftop solar panel systems. I have heard that the panels themselves are made of petroleum products and also that in some cases the waste generated may be toxic to the environment. If, as I suspect, a razorblade business model is incorporated into rooftop panels then they must be replaced after some time. Has anybody had a home system for long enough to know what maintanece and upkeep costs and frequency is like? Comments appreciated. Thanks.

[rhs648]

correction

Damn, these opportunistic homeowners ! They saw a way to lower their tax bill (and their energy bill), and they went for it! Fools. Sarcasm, so noted.
Posted by TJCB

You are correct. It is also can be used as a divisive tool to pit one group of people against another. Those who can afford $80,000 for solar heat and electricity versus those who help subsidize this expense but can't or choose not to have solar systems in their own homes. Instead of smokers subsidizing health care for children, why don't the rest of us subsidize smokers? By doing so, we would save on future social security payments, pensions, and medicare benefits.
Posted by rhs648

[rhs648]

Damn, these opportunistic homeowners ! They saw a way to lower their tax bill (and their energy bill), and they went for it! Fools. Sarcasm, so noted.
Posted by TJCB

You are correct. It is also can be used as a divisive tool to pit one group of people against another. Those who can afford $80,000 for solar heat and electricity versus those who help subsidize this expense but can't or choose not to have solar systems in their own homes. Instead of smokers subsizizing health care for children, why don't the rest of us subsidize smokers? By doing so, we would save on future social security payments, pensions, and medicare benefits.

[TJCB]

Damn, these opportunistic homeowners ! They saw a way to lower their tax bill (and their energy bill), and they went for it! Fools. Sarcasm, so noted.

[rhs648]

What a pathetic piece of news reporting. Yes, rebates help make solar power somewhat affordable, but if everyone gets a rebate then how will it be paid for? Besides, why should I as a taxpayer subsidize another taxpayer?

Posted by davelv1

All Taxpayers subsidies other taxpayers when you think about it. After all ,tax dollars go to things like federal interstate construction and maintenance, even those not in your state, and on which you may never drive. It pays for medical care for veterans, if you;re not one, then you;re subsidizing that too. It goes for building or repairing levees, if you don't live in an area protected by levees, your subsidizing that!
In other words, your argument is a load of B.S. Every taxpayer subsides projects that help other taxpayers!
Posted by nolalou

In other words, this is another form of redistribution of wealth. Another method is to require local governments and state governments to pay for their own projects. But this would defeat redistributing wealth,

[nolalou]

What a pathetic piece of news reporting. Yes, rebates help make solar power somewhat affordable, but if everyone gets a rebate then how will it be paid for? Besides, why should I as a taxpayer subsidize another taxpayer?

Posted by davelv1

All Taxpayers subsidies other taxpayers when you think about it. After all ,tax dollars go to things like federal interstate construction and maintenance, even those not in your state, and on which you may never drive. It pays for medical care for veterans, if you;re not one, then you;re subsidizing that too. It goes for building or repairing levees, if you don't live in an area protected by levees, your subsidizing that!
In other words, your argument is a load of B.S. Every taxpayer subsides projects that help other taxpayers!

[vuenbelvue]

Excellent comment davelv1 I'm in the commercial construction field and have seen the "Green" buildings pushed by Architects and Engineers and local trade associations.
Like the example sited, the homeowner could afford $51,000 but not $100,000 unless subsidized by other taxpayers. Sometimes these Geothermals costs over $3 million for a medium size school and if someone did the math it might show that it would tax 30 years or more before a savings is realized. By that time it's time to tear the building down.
You can get a "Platinun level" by doing something like 12-15" thick concrete walls in the basement at about $20 a s/f instead of $10 a s/f with tradition block. Buy brick manufactured within 500 miles? Most of what I have seen is a marketing tool to convince the builder to spend more money or use a particular design service.

[davelv1]

What a pathetic piece of news reporting. Yes, rebates help make solar power somewhat affordable, but if everyone gets a rebate then how will it be paid for? Besides, why should I as a taxpayer subsidize another taxpayer? So now America is socialism if not outright communism of repossessing wealth and spreading it aroung! Further, it is not Obama who is giving a higher rebate but Congress.
Also, the question was asked what happens if the sun doesn't shine? Actually, the homeowner will expect that the local power company has sufficient reserve so he can turn on his electrically powered applicances - all the while being paid for by other non-subsidized electrical power company consumers.
Please, stop these feel good Obama/Democratic liberal unrealistic based news stories - the rest of us are not impressed by your "lite" reporting.