Hook Your Wind Machine to the Grid
(Page 2 of 3)
PURPA requires utilities to buy electricity from qualifying
independent producers at rates based on what is called
avoided cost. This figure is determined by what it would
cost the utility to produce that electricity. Because
there's a tremendous variation in the actual avoided costs
of different power companies, and because there are a
number of different ways to go about calculating them,
buy-back rates vary from about 1¢ per kilowatt-hour
(kwh) in some midwestern states to as much as 10¢ per
kwh in California and parts of the Northeast.
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However, regardless of your location, you'll never get rich
by selling power from your home-size wind machine to a
utility. Because the power company pays less than retail
for power it buys, your best bet is to use as much of your
home-generated electricity as possible. Unfortunately, some
utilities require that all generated power be sold directly
to them (at buy-back rates, of course) and that all power
consumed at the site be purchased from the utility at
retail rates. This provision—which is often called
parallel (as opposed to series) interconnection—can
make tying into the utility's grid a financial bust!
TAX INCENTIVES
Because of a variety of federal and state tax incentives,
it's possible to write of as much as 90% of the initial
cost of a wind-powered electric system. One of the
decisions you'll have to make, however, is whether you'll
consider your windplant to be a home appliance or a piece
of business equipment.
Domestic applications: The federal
residential renewable-energy tax credit allows an
individual to deduct up to 40% of the first $10,000 spent
on a wind machine. This will result in a direct reduction
in the amount of tax paid in the year that the equipment is
purchased.
In addition, 19 states offer similar direct tax credits,
and a total of 37 states have some sort of direct or
indirect incentive. The indirect incentives may be in the
form of tax deduc tions (from gross income), exemption from
sales and/or property tax, and/or a combination of rebates
or refunds to the purchaser.
Finally, an individual may deduct the interest paid on a
loan used to buy a windplant, as well as any sales tax that
may have been added to the purchase price.
