Solar power: A return on investment

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Kingman Yacht Center's new solar power system will save $105,000 in electricity costs in five years

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The weather on Dec. 22, 2009, was typical for early winter on Cape Cod - cold, cloudy and windy. Five men had gathered around the power shed at Kingman Yacht Center in Cataumet, Mass. Company president Scott Zeien glanced at his watch. It was about 3 p.m.

As Zeien watched, a technician from NSTAR, the Massachusetts-based electric and gas utility that serves the area, finished his inspection of the new solar system recently installed on the roofs of three buildings in the boatyard, and made the connection to the grid. With the flip of a switch, Kingman Yacht Center went from an energy user to an entity capable of producing electricity for its own use, or for distribution on the grid to others. Any time the boatyard uses less electricity than the solar system produces, the surplus electricity is sent to the grid, and the company receives an electricity credit.

"It was a cold, miserable day, which wasn't what we had envisioned as perfect for making electricity, but we were excited about connecting to the grid for the first time. It warmed the day right up," Zeien says.

That cold December day marked the end of a complicated and sometimes challenging project, Zeien says, but one that was well worth the effort because of the projected return on the initial investment in the solar arrays and the infrastructure needed to support the system. "I made an investment that will pay for itself in five years and will result in continued savings on energy costs for upwards of 20 years or more. I did it because it was a good business decision," Zeien says, adding that the environmental benefits associated with the project are also significant.

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Kingman Yacht Center consists of a marina with 235 slips and 130 moorings, a fuel dock, full-service boatyard offering winter storage and a yacht brokerage. Established in 1932, it is the largest marina on Cape Cod and has 25 full-time year-round employees.

Thinking green is nothing new for Zeien. The company has long been sensitive to environmental issues, investing more than $1 million in green initiatives in the last decade. Zeien says Kingman Yacht Center was the first marina in the Northeast to dispense biodiesel at its fuel dock.

"We were ahead of the curve on recycling pressure-wash water, and, before it was required, we installed a storm-water pollution prevention system to stop storm water from running into the bay," he says.

Last year, Zeien was looking seriously at installing wind turbines to generate electricity at the boatyard, but because the property is on the emergency flight path for military aircraft, putting up a tall structure was out of the question. "We basically shelved the idea," he says, "but it was something we had wanted to do."

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Then in March 2009 one of those serendipitous moments that sometimes happen in business occurred when an outside salesman from Beaumont Solar Co. showed up at Zeien's office, talking about the benefits of solar energy. Zeien listened.

"We saw solar as a viable alternative to wind, which we couldn't do because of the height restrictions," he says. "We took a good, hard look at solar and decided to do it. In retrospect, I'm glad we didn't go with wind. I think solar provides a better long-term payoff - it has lower initial startup costs, and it has lower maintenance costs over wind."

Kingman Yacht Center's annual revenues were down about 8 percent from 2008 to 2009, with revenue split 50/50 between the boatyard and marina, according to Zeien. But the company had the capital to invest in its future, and installing a solar system to save long-term on energy costs seemed like a good step. He contacted a number of solar energy companies in the area, put the job out to bid, and ultimately chose Beaumont Solar, which is based in New Bedford, Mass.

The initial phases of the project involved a thorough site analysis to determine whether solar energy would be a viable option for the property. Among the key issues were the existing electrical infrastructure, what upgrades would be needed and where the photovoltaic panels would be mounted.

As the contractor, Beaumont Solar faced many challenges, says company president and CEO Phil Cavallo. "The buildings dated back to the 1970s, and we didn't know what the structural support capabilities were," he says. "The electrical system was very old and placed in underground conduits. There was no wiring diagram. We had to play detective with the electrical system."

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The conduits had to be dug up for new wiring, and the rest of the electrical infrastructure had to be modernized. The rusted roofs on two buildings required replacement before the solar panels could be mounted. The engineering, upgrades to the electrical infrastructure, and redoing the roofs to accommodate the solar panels cost about $180,000, Zeien says.

A team of 10 workers from Beaumont Solar spent approximately 1,800 man hours on the job, which culminated with the installation of 474 SunTech STP210 PV solar panels on the south-facing sides of three roofs, covering about 8,000 square feet. The panels, three inverters and labor for installing the system cost about $650,000 before any federal or state rebates, Zeien says.

The total cost of the project amounted to $830,000. Rebates were crucial to help offset expenses. "It would only have made sense [to do this] in our current environment of incentive monies," Zeien says.

The Massachusetts Technology Collaborative Renewable Energy Trust, which is based in Boston and oversees and encourages development of alternative energy, provided a rebate based strictly on the number of kilowatts the system produces. A federal program offered investment tax credits equal to 30 percent of the entire investment in the infrastructure upgrades and system, and for a limited time it offered a grant in lieu of investment tax credits. (The cash grant ends this year.) Zeien took the cash grant. An Internal Revenue Service provision that allowed for accelerated depreciation of the system resulted in significant tax savings.

Beaumont Solar provided the support and expertise required to identify and access the rebate funds and the federal grant, Cavallo says. "It can definitely get complicated, which is why part of our job is to help sort it all out for the customer," he says.

While the initial out-of-pocket expenses were high, Zeien says that with the rebate, federal grant and tax breaks factored in, the "net number on the entire project was $85,000," which will be

realized within five years. Currently, the system produces the equivalent of about $21,000 in electricity per year, at today's prices, or about $105,000 in energy savings within five years. "We are also able to sell credits for the energy we generate," Zeien says.

The environmental benefit is clear. By producing electricity, Kingman Yacht Center is reducing its carbon footprint. It is estimated that over a 25-year period, the reduction in carbon dioxide emissions that would have resulted from buying that $21,000 worth of electricity annually will be the equivalent of planting just under 43,000 trees.

Kingman Yacht Center was the first boatyard project for Beaumont Solar. "Am I getting phone calls from boat dealers and boatyards? Not really," Cavallo says. "We're calling them and talking with them, but we're not getting lots of calls at this time. I think that will change as we move forward and the advantages of solar energy become more apparent to people in the marine business."

This article originally appeared in the May 2010 issue.

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