Katherine Martine | Wine Business Monthly
With key tax incentives set to expire in 2027, now may be a good time for wineries to invest in solar, microgrid tech.
As more wineries turn to the use of solar power and microgrids for self-resilient energy systems and mitigation against Public Safety Power Shutoffs (PSPS), more energy infrastructure developers are coming to Napa/Sonoma wine country. Sprocket Power, a developer of commercial on-site energy infrastructure, announced this week its expansion to the wine industry.
Another energy company, Justplug, a consultancy that designs and implements grid-independent energy systems, also recently announced its launch in the wine sector.
In a July press release, the company pointed out that the cost of an outage adds up: “PSPS outages have averaged 41 hours. For an estate winery moving 50 to 100 tons through crush, that window overlaps with $90,000 to $180,000 in raw material value (based on 2023 Santa Barbara County wine grape pricing of $1,828 per ton). Tasting rooms and events typically drive over half of a winery’s revenue, making hospitality continuity as critical as production resilience.”
And while installing or upgrading solar and or microgrid tech may seem like an intimidating up-front capital cost, especially in this market, Sprocket and other speakers at a July 20 Napa Green event emphasized that with options to earn credits and or sell back power to traditional electricity providers like PG&E, long term energy bill savings and helpful tax incentives, some of which end in 2027, there is a positive business case for these type of systems.
“We’re all reading about the grid, and the expense and challenges of the grid and data centers and all of that. It is now typical for most of these utilities in California, Northeast and the Mid-Atlantic to be looking for these resources to help them and they’ll pay you for that,” Maria Fields, the CEO of Sprocket who spoke at the Napa Green panel session said of selling power back.
Fields noted when you look at the net benefit this kind of system can yield a 72% cost reduction in your utility bill, about a four-year payback on the project investment.
“There’s a strong business case for this,” she said
Through the federal Solar Investment Tax Credit (ITC) program, Commercial entities and tax-exempt organizations qualify for a 30% credit as long as construction begins by July 4, 2026, and the project is operational by Dec. 31, 2027.
Sharing an example of the cost breakdown, Fields pointed to a chart noting an approximate capital cost of around over $1 million. Solar-related incentives could provide approximately $28,000; the federal ITC credit could help provide around upwards of $300,000. In this example, accelerated depreciation was listed as $237,633 and with these figures in mind, net capital was $400,343, amounting to an ROI of 23% and a 4.5 year payback.
In year one, the net economic benefit of the system could be nearly $70,000, but by year five that could jump to $77,000 and to $88,000+ by year 10.
Domaine Carneros has had its microgrid up and running since 2023. Gita Mallya, Domaine Carneros’ viticulturist and sustainability lead, said with their system they’ve seen $450,000 in savings since starting use of their grid that year. The initial thought was it would take about 10 years to start seeing ROI but now it’s looking like they’ll see a return in just seven.
The sparkling house’s Schneider microgrid consists of the original solar array (which has been replaced with new panels of the same generation capacity), the new car port and ground mounted panels, the battery, generator, and the energy control center. Using data points such as energy production and energy demand, the microgrid’s smart control center software uses AI to apply utility tariff models, time-of-use rates, and demand charges in real time to best manage energy utilization.
At the event, Fields described general microgrid sets up as, “you’re looking at integrating a complex set of resources and having them take in data and put you more in control of your energy use.”
In the event of an outage, the winery should be able to operate 24/7 with the microgrid during a power outage.
Harper’s Rest, a Healdsburg-based regenerative organic certified winery, recently started construction on its own microgrid project.
Winemaker and general manager Vance Rose shared during the panel that they wanted to pursue the microgrid because for them it made sense from a green sustainability and a financial and business operational sustainability standpoint. Plus, he said they’d rather generate their own green energy rather than buying it from PG&E.
They’ve also experienced eight semi-recent PSPS events, the last one coming right before they were preparing to bottle, quite the inopportune time when they already had the mobile bottling truck scheduled and ready for use.
He admitted the capital cost is significant. But the winery already has a backup diesel generator and with the incentives, savings on bills and the fact they can sell power back to PG&E, it’s working out well.
“We think it will be about 4.5 years for us to amortize that,” Rose said of the system. Once up and running, the microgrid will be able to power the property’s five buildings.