Appendices - GSA

Appendix C. Results of Life-Cycle Cost Optimization
(with Financial Incentives)
Results are presented both with and without financial incentives. GSA does not
benefit directly from tax credits when paying for projects with appropriations.
However, by partnering with an entity that does have a tax liability through an
alternative financing mechanism such as an ESPC, the tax credits could improve
the cost-effectiveness of the project. Tables in the body of the report and
Appendix A and B are without incentives, and tables in Appendix C are withincentives.
There are 4 types of incentives that are considered for each technology and at
each site:
1. Federal Business Investment Tax Credit (% of cost);
2. State tax credit (% of cost);
3. Rebate ($/watt or % of cost); and
4. Production incentives ($/kWh produced).
The 30% business investment tax credit is assumed for PV in the with-incentives
case.
Renewable Energy Credits (RECs) could be sold for the power generated from
renewable sources, but these would be used to offset another organization’s
goals, and thus it would be double-counting to say that GSA is using the
renewable energy if the REC’s are sold.
Incentives offered by federal and state governments, local utilities, and private
organizations have a huge effect on solar project economics, and need to be
taken into account even at this early planning stage. For this analysis,
descriptions of incentives available at each LPOE site are taken from the
Database for State Incentives for Renewable Energy [ref. 6]. These descriptions,
however complicated, are approximated as a % reduction in initial cost, a $/watt
or $/m 2 reduction in initial cost, a $/kWh production incentive, or a combination of
the three. Incentives represented in this way modify the initial cost estimate or
the annual cost savings estimate to calculate the life-cycle cost and payback
period.
Federal incentives are applied at all sites in the with-incentives case. State
incentives considered include:
• California Solar Initiative (San Diego tier)
o 50kW: $0.32/kWh for 5 years
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