A federal incentive program could forever change the face of Virginia’s agriculture industry by encouraging more farms to install solar energy systems.
That’s the hope of Blue Crump, owner of Fan-based Cityspace Construction and Cityspace Solar. Crump recently started pitching solar installations to local farms using government grants and credits as a tasty carrot.
Cityspace’s first agricultural project is the new wine-tasting room at Cooper Vineyards in Louisa County. Fifty-five percent of the cost for the facility’s 5.8 kilowatt solar array will be covered by federal incentives.
That’s because the federal stimulus bill extended a renewable energy incentive program to businesses and provides a 30 percent grant or tax credit toward the cost of wind, solar or other systems. In addition, a grant offered by the USDA through the Rural Energy for America Program offers agriculture-based business a 25 percent credit.
“The idea of renewable energy and sustainable agriculture just go hand in hand,” Crump said, adding that the investment pays off in seven to 10 years.
Crump said Erin MacGruder, vice president of Cityspace’s solar division, came across the USDA program while working on the Cooper Vineyard project.
“From that point, it really opened the door for us to look at any agricultural or livestock producers around,” Crump said. “That extra 25 percent is key to making this a big opportunity.”
Crump, whose company has primarily served residents and small business in the city, said he believes eventually agricultural clients could take on a larger share of his sales.
The Cooper Vineyards project cost roughly $50,000, of which the grape growers, Jacque Hogg and Jeffery Cooper, are expected to get back more than $25,000 through the two federal programs. The solar panels will provide a quarter of the building’s energy needs.
In addition, Crump said that the investment qualifies for accelerated depreciation over five years and possibly additional solar tax credits from the state.
The Virginia Department of Mines Minerals and Energy is waiting for approval from the U.S. Department of Energy to use more than $15 million in stimulus money toward renewable energy grants and rebates for households and businesses. The current proposal is $2,000 per kilowatt hour for solar electric and $1,000 per kilowatt hour for solar hot water.
The tasting room’s architect, Michael Pellis of Baskervill, said solar energy had always been a part of the winery owners’ plan for the project. Pellis said the incentives were key to adding solar.
“Without those, the owners would have to look for other sources of capital from what they could qualify for in a construction loan,” Pellis said. “Incentives are a big part of making this project happen.”
Crump said he is pursing projects with other agricultural businesses, including Lowfield Farms in Palmyra, which sells free-range beef to Whole Foods.
“As you can imagine, they have many freezers where they store meat, so they are always looking to offset their electrical, not to mention it is in line with their ideas about the environment,” Crump said.
Another prospect is a retiree in a residential neighborhood who grows orchids in a backyard greenhouse and sells them at fairs. As long as the business generates more than half of its income from agriculture, it can qualify for the USDA grant.
The benefits to businesses that go solar don’t end there. Crump said Cityspace also brokers energy certificates for its clients.
Many electrical co-ops have made commitments to supplant 15 percent of their 2007 consumption with green energy by 2025, Crump said.
“They aren’t going to stop burning coal or start building wind farms or solar farms when they can buy renewable energy certificates on the open market,” said Crump.
For every megawatt hour of renewable energy, a business can issue one certificate. The typical market amount is about $320 a certificate, he said. For Cooper Vineyards, that adds up to about $2,400 in positive cash flow a year.
Pellis, the architect, said the leaseback of energy to co-ops weighed heavily on the winery’s decision to commit to solar.
Factoring in all of the incentives and the certificate revenue, Crump said the system should pay for itself in 10 years. That is based on a 12 percent annual increase of local electric rates. When the state incentives are approved, the return on investment will be even shorter — just seven years.
Crump said a lot of the opportunity for agricultural businesses isn’t just using alternative energy to offset the farm’s own consumption but in selling back energy credits to the utility.
“That’s an interesting notion, that one of the products you grow could be power,” Crump said.