Environmental Studies Program


Date of this Version

Spring 2015


Environmental Studies Undergraduate Student Thesis, University of Nebraska–Lincoln, 2015


Copyright © 2015 Shea Winkler


Increasingly, states are using policy and incentive to promote the development of small-scale distributed solar energy generation systems (DG). Net metering is the most common state policy approach (enacted by 46 states), but various states have also enacted other incentives and different approaches to net metering. Investments with faster payback periods are more attractive to investors. In this study we analyze five different state approaches at various projected electricity cost escalation rates with respect to the payback periods for a 5-kilowatt (kW) DG. We also weigh the potential impact that proposed United State Environmental Protection Agency (EPA) regulations to 111(d) of the Clean Air Act may have on payback periods. Using the National Renewable Energy Laboratory’s (NREL) System Advisor Model (SAM), we compared the payback periods and net present value of investments (NPV) in each of the respective states over a thirty-year period. When holding other variables constant, including the 30% renewable energy federal tax credit, we find a range of payback periods and NPVs affected significantly by state policies and incentives. To a lesser extent we find that cost escalation rates have an inverse relationship with payback periods, and the proposed EPA 111(d) regulations have little to no effect on payback periods.