The hottest market for solar power may be right over your head.
Residential solar systems are sprouting on rooftops throughout the state, particularly in such sunny locations as the Central Valley. The pending expiration of a 30 percent federal tax credit has spurred a lot of would-be buyers with high electric bills to take a hard look at solar as a way to save money while helping the environment.
Cheaper panels, quicker installation and low-interest loans sweeten the deal for many potential buyers. So do options to lease instead of buy the solar equipment, which can cost as much as a new car.
Jonathan Bass, vice president of communications for industry giant SolarCity, sees possible customers every time he takes a flight. “Fly into Sacramento, Los Angeles, San Francisco, and what do you see?” he said. “There are a whole lot of empty rooftops. … Every rooftop is a potential power plant.”
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Using a sustainable resource, solar systems make environmental sense, say longtime proponents. Solar is clean and viable energy. For many homeowners, solar systems are now making financial sense, too.
“Our goal is to tear down the barriers from adoption of sustainable energy,” Bass said. “Affordability is the biggest one.”
More than 186,000 residential solar systems were installed nationwide in 2014, 51 percent more than 2013, according to the Solar Energy Industries Association. That brings the nationwide total to more than 600,000 solar homes.
“That’s still less than 1 percent of U.S. homes have solar on them,” said Andrew Pontti, spokesman for Sunrun Inc., another industry leader.
California leads the way in solar with almost 250,000 solar homes. That’s still far short of the state’s “Million Solar Roof” goal, part of the 2006 California Solar Initiative, which pumped more than $2 billion into incentive programs.
“Those incentives are going away,” said solar expert Barry Cinnamon, KLIV radio host of “The Energy Show” in Silicon Valley. “By 2017, the federal tax credit will be gone.”
In addition, existing utility systems have only so much capacity to add solar hookups from private homes.
“It may be only 12 months before there’s no capacity left to put more solar in,” Cinnamon said. “Everybody is rushing before the tax credit expires.”
Part of the surge in solar has come from new financing options. SolarCity, which has installed more than 217,000 systems nationwide, introduced its low-cost loan program last fall. With a major office in Roseville, SolarCity has more than 800 employees in the Sacramento area, many of them in service. Solar roof systems typically are under warranty for 20 to 25 years.
Solar leases, popularized by Sunrun and other companies, install systems under zero-down contracts. Sunrun, for example, still owns the equipment, but the homeowner buys the solar power at a set rate that’s locked in for the life of the contract – usually 20 years. Any tax credits or other incentives are typically figured into the contract to lower costs.
About 70 percent of solar installations in 2014 were leases, according to Bloomberg New Energy Finance.
There are some advantages to ownership, Cinnamon said. The equipment will pay for itself, as long as the sun shines.
“People should be looking for systems that give them good economic return,” Cinnamon said. “It’s good to lease systems; it’s still good for the environment. But for most people who own a home, buy a system. Solar loans are really, really good. It makes good economic sense.”
Not all roofs ideal
Today’s solar photovoltaic (PV) panels are lightweight and efficient. With no moving parts, they last for decades. Attached to metal grids, they soak up sun atop the roof with little maintenance. Newer streamlined grids look better than earlier models, too. Installation time has been halved, now averaging less than one day.
But first, you need sun. And not all roofs are created equal. Potential panel space must be free of shade and and have ray-catching angles. Forget about a northern exposure, and an east-facing roof may not make economic sense.
System sizes are based on potential wattage and prices can vary widely. Most homes need 3,000 to 4,000 watts.
“Look for $3.50 to $4.25 per watt AC – that’s alternating current – before any tax breaks or credits,” he said. “Quotes often are for DC – direct current – but that’s not what your house uses. And not everybody gets the tax credit.”
Total price, which can cost more than $20,000, depends on two factors: Size of your current electric bill and the size of your roof.
Although it’s tempting, don’t install a lot more panels than you need, Cinnamon said.
“You don’t want to go negative (where the meter spins backwards),” he said. “You want to get to zero. There are a lot of choices out there. Look for a local contractor with a good service record and get a good price.”
Typically, you can reduce a $200 bill down to $50 a month, he said. Those monthly savings go towards paying back the cost of the system – in most cases, five to eight years.
Under lease options, the monthly payment typically is 20 percent less than current electricity cost. The positive is that the homeowner starts saving immediately without a major investment.
Remember: You’ll still get a utility bill, Sloan said. Factor that into your lease or purchase expense.
“Every cent you make or lose is determined on the day you sign the contract,” said Brent Sloan, who teaches a solar class for SMUD consumers. “It’s all over on that very first signature. Your system will not run your entire home including the air conditioning. You will still be hooked up to the grid. You need to be a smart consumer because you’re buying 20 years of energy in advance.”
Pieter Stroeve, co-director of the California Solar Energy Collaborative, put his own research into action. He installed solar on the roof of his Davis home last year.
“We’re very conservative in our power use, so the payback time for me will be about 10 years,” said Stroeve, who bought a 3,000-watt system. “That’s too long; it’s usually four to five years (where solar savings will pay for the system’s installation).”
The solar collaborative is part of the California Renewable Energy Center, hosted by the UC Davis Energy Institute. Its researchers keep tabs on technology and the state’s potential for renewable energy use.
According to the CREC’s October report to the California Energy Commission, our state is on track to meet its mandated goal of generating at least one-third of its power needs through renewable sources by 2020. Most of that renewable energy will be solar.
Stroeve used both federal and state incentive programs for his own solar roof. Expiring on Dec. 31, 2016, the federal Residential Renewable Energy Tax Credit offers up to a 30 percent rebate of qualified expenditures in the form of a tax credit. Some state incentives also are available through such power providers as Pacific Gas & Electric (although most of those funds have been allocated).
Stroeve’s home system qualified for a $500 incentive plus the federal tax credit. “Overall, that represents about a 33 percent subsidy,” he said.
Banking credits for winter
Summer is prime time for solar generation; it’s sunny on average more than seven hours a day in Sacramento. Winter? Not so much. Sunny hours drop to about three hours daily.
“Net metering” allows consumers to benefit from the extra energy their home systems may generate during summer. Because their houses are still connected to utilities’ main power grid, they get credits for that excess. Then in winter when there’s less sun, those credits pay for electricity from the grid.
“In winter, we pay (for electricity), but we get credits in summer,” Stroeve said. “By the end of the year, it all evens out.”
Stroeve recommends one upgrade: a battery. They range greatly in power and price, up to $7,000 extra. That can be 30 to 40 percent of the total installation price.
But a battery allows for flexibility and backup. It potentially stores energy for nighttime use or cloudy days. It keeps the freezer cold when the power goes out. It also helps even out the supply.
Pacific Gas & Electric, which has helped more customers go solar than any utility in the United States, put together a useful step-by-step guide to solar conversions including a solar calculator to estimate savings and system size. Find it at pge.com.
Sacramento Municipal Utility District (SMUD) offers a free class for potential solar customers. Called “Solar for Your Home,” the course – which is offered quarterly – is taught by solar specialist Brent Sloan and covers the basics of system installation and what consumers should consider. To sign up for the next class, go to smud.org/etc.