SUN POWER RISING
Solar technology hits a new plateau in the face of
rising electricity costs and greenhouse emissions
From the pages of CA-Modern magazine
By Tanja Kern
While some homeowners stuff their hard-earned dollars under mattresses in an uncertain economy, others hang them outside for all to see -- on rooftop solar panels. "Where else can you invest in something that's not going away?" asks Randy Feriante, owner of Dura-Foam Solar Center, a Menlo Park-based solar-electric dealer. "Everybody needs electricity."
California is the nation's leader in rooftop solar, with well over half the country's installed capacity. There's good reason why: California's electricity rates have historically increased by 6.7 percent per year, and prices continue to rise.
That's why the state launched the California Solar Initiative in 2007, in an effort to drive solar-electric systems (also known as photovoltaic or PV systems) on a mass scale. The goal is to improve the state's energy supply, reduce greenhouse gas emissions, and reach 3,000 megawatts installed by 2018.
Funded by utility customers across the state, the $3 billion program offers rebates to Californians who install solar panels on their homes and businesses. Refunds typically range from 20 to 50 percent of a system's cost.
Solar power can dramatically reduce a homeowner's electric bill, but the savings comes at a big upfront cost. It currently takes about nine to 10 years for the cost of a solar installation to pay for itself.
There are several upshots, however. If one uses a grid-tied system, any excess power their solar system generates during the day can be sold back to the utility company.
Of course, solar is good for the environment, too. The utility companies get most of their present power from burning fossil fuels, which pollute the air and are responsible for the bulk of greenhouse emissions. Solar energy, in comparison, is clean and non-polluting. Over the next 15 years, a solar system for a typical three-bedroom home will offset 82,000 pounds of carbon dioxide (CO2), according to SolarCity, a solar installer with dealerships throughout California.
"There's no downside to having solar," Dura-Foam's Feriante says. "You are always going to need electricity. If you put it on your roof, your property is worth more, and every month it is paying you back."
"Many of our present customers are expressing an interest in sizing their solar systems to power electric cars for the near future," adds Feriante. "The numbers indicate, and engineers are found to agree, that two kilowatts would be enough to provide the power for 40 miles a day for the electric Chevy Volt. The electrical give and take with the grid makes this possible and convenient."
While capturing sunlight and converting it into electricity, photovoltaic systems can be either on-grid or off-grid, meaning they are connected to the region's electrical power grid or are stand-alone systems that supply only the individual home. On-grid PV systems draw power from the local utility company as needed and feed excess energy that's generated but not used back to the utility company.
Federal law requires the local utility to buy PV-generated electricity from homeowners, based on net energy metering agreements. Under net metering, the electric meter runs backward as a customer's solar system generates surplus electricity. The utility company generates a bill credit for the full retail value of the electricity the PV system is producing. The methods of applying credit for exported energy vary from program to program.
"The net metering agreements work almost like rollover minutes from a mobile phone," says SolarCity CEO Lyndon Rive. "In the summer you will likely produce more power than you need, and in the winter you will use more power than you produce." Any credits garnered from the utility company can be used towards paying electric bills for the months homeowners use more electricity than they produce.
Homeowners who want to take advantage of California Solar Initiative incentives have to install an on-grid PV system and be customers of Pacific Gas and Electric (PG&E), City of Palo Alto Utilities, Southern California Edison (SCE), or the Sacramento Municipal Utility District.
The systems are made up of three main components: solar panels, an inverter, and a meter. Solar panels made from crystalline silicon currently account for more than 90 percent of today's solar market. Unfortunately, silicon panels remain expensive to manufacture, which is why the cost of solar arrays remains so high. The panels output 10 to 300 watts of electricity each. The number of panels a home needs depends on how much electricity the family inside requires and the power of each panel.
The inverter converts the direct current electricity (DC) into the alternating current (AC) electricity needed to run a household. Additional equipment is needed to ensure that the quality of electricity produced meets the load requirements and utility company standards.
Lastly, a meter helps a homeowner monitor the amount of power being consumed. If the utility company offers net metering, the meter can also be used to record excess electricity the PV system sends back into the grid. In this case, the meter spins forward when electricity is being drawn and backward when electricity is being produced.
Utilities that don't offer net metering require homeowners to install a second meter to track the electricity the PV system feeds into the grid. It takes two to three days for qualified solar contractors to install a typical residential system. With rebate paperwork, utility interconnection agreements, and permits, turnaround time is usually four to eight weeks.
What's the cost?
Short of winning the lottery, many homeowners today see solar as an unattainable investment. The cost of a PV system depends on the size of the system, the quality of components, installation costs, and the local market. In simplest terms, prices are discussed in terms of dollars per watt. California solar providers report a price range of $7 to $9 per watt. A four-kilowatt (kW) system, which is the average size for residences, commonly bears a dealer price tag of between $28,000 and $36,000 installed. When state rebates and federal tax credits are factored in, that original price would be cut nearly in half. Most homes need more than four kilowatts to cover all of their electrical needs.
Although the high upfront costs of solar may intimidate many homeowners, state rebates and federal tax credits can help reduce out-of-pocket expenses. Last October, the Federal government extended the 30-percent tax credit eight years for both residential and commercial installations.
The bill eliminated a $2,000 monetary cap for residential solar projects, and it allows Alternative Minimum Tax (AMT) filers to take the credit. These solar tax credits were originally enacted in the 2005 and have created extraordinary solar electric growth in the U.S. The amount of solar electric capacity installed in 2007 was double that installed in 2006.
California Solar Initiative rebates vary according to system size, customer class, and performance and installation factors. Owners of solar systems less than 50 kilowatts may apply for an upfront cash rebate known as the Expected Performance Based Buydown (EPBB). The rebate is calculated using the expected performance of the owner's system based on equipment ratings and installation factors, such as geographic location, tilt, orientation, and shading. Customers receive their incentive payment in a lump sum after their system in fully installed and interconnected.
"Based on the current government incentives, solar is more affordable than the current cost of power," Rive says. "We hope to educate homeowners that solar is real and it's time to move in that direction. We hope that by offering economies of scale, we can bring solar to the masses."
It takes an experienced installer about 20 minutes to complete rebate paperwork for a solar installation. Typically the state cuts a check directly to the solar contractor, and the contractor cuts the rebate amount off the price of the project. On average, a 5.8-kilowatt, $46,000 solar project will generate a rebate of approximately $9,000 and a tax credit of $13,800, reducing the original sticker price to approximately $23,000.
To be eligible, owners of residences must have a Permit of Occupancy from their local Building Department prior to submitting a Reservation Request Application for California Solar Initiative incentives.
Not every house can practically utilize solar. Even though a residential roof gets sun for most of the day, it may or may not be enough sun to make a solar electric installation cost-effective. A solar contractor should carefully evaluate each potential installation site. If there is not full access to the sun, year-round, it may take longer for the system to pay for itself, which in turn would increase the operation time needed for return on investment. Removing or trimming back trees on a property oftentimes can help improve access to the sun.
Michael Hemming and Susanne Richter, owners of an Eichler in Granada Hills, installed a PV system with the help of Kristina Hahn, a Los Angeles-based architect, and a handful of other key players. The couple installed their PV system on the northeast corner of the roof, which avoided shadows created by tall trees in the yard.
Homeowner perspectives
Architects Alexander Victa and Cristina Bontia, Eichler owners in the Rancho San Miguel development of Walnut Creek, decided to go solar in an effort to make their home, which they bought as a fixer-upper in 2006, more energy efficient and ecologically conscious.
"When we were looking to buy this house, it seemed to have the best orientation for solar panels on the roof," Bonita says. "It's on a corner lot without a lot of trees around it, and the angled part of the roof was oriented to the southwest."
The couple has Leadership in Energy and Environmental Design (LEED) accreditations, so energy efficiency was especially important to them. "We thought that experimenting on our own house would not only educate us on residential 'green' design, but also give us a first-hand experience of living in an eco-Eichler," Victa says.
For Victa and Bontia, installing PV panels proved to be the best way to offset the energy costs of a new high-velocity/low-profile HVAC system, and the challenge was to coordinate the solar installation with a new foam roof. They chose flat-pack solar panels for their easy shipping and low-profile appearance and had them installed on the pitched area of the center of the house instead of the flat areas of the roof. The panels had to be mounted on structural footings, as required by the city inspector, which rested on the main beams of the house.
Unfortunately, the couple's original solar contractor went out of business halfway through their project, so Victa, his father Arnaldo (an electrical engineer), and his uncle Danilo (a mechanical contractor) came together to complete the install.
With these setbacks, the entire projects took about six months to complete and, according to Alexander Victa, cost approximately $16,000. The lag time and final cost, he says, were well worth it, however. After one year of having the PV cells on their house, combined with improved insulation value of our walls, the couple's total heating bill for the year was reported at -$150. The utility company charged $9 per month for metering costs.
Kevin and Jennifer Gray, owners of an Eichler in Thousand Oaks, added 30 150-watt BP Solar modules to his roof (rated at 4.5 kilowatts of power) in 2004. The system provides a large surplus of power, and the Grays report that they have had no electric bills since installation.
"The thing I like about solar is that it completely isolates us from any rate increases, and we make so much more than we use," Kevin Gray says. "We are part of the solution instead of the problem. Our system is pumping power into the system during peak times, and we end up with a $200 to $300 [annual] credit."
The Grays' system is running with two metering plans in place: net metering, which tracks our basic yearly production and consumption; and TOU metering, which enables him to sell PV-produced power back to SCE for up to 50 cents per kilowatt hour during peak times during the day (depending on market conditions) and buy power back at a deeply discounted rate during the night. Overall, the system cost the Grays just over $28,000 and the couple anticipates it will be 20 years before they earn a complete return on their investment.
Kevin says he was particularly pleased with the way his system blended into the home's roofline. "I wanted to do as little violence as possible to the aesthetics of my home," he explains. "From most angles, the neighbors can't see the system, and people continue to ask us when we will be putting it in -- so that makes it an aesthetic success."
Solar providers
There is an array of solar providers in the marketplace, and it can be a challenge sorting out the best from the rest. Quality solar panels typically are installed with 25-year guarantees, and the mounting systems are usually good for 50 or more years. Prior to selecting a dealer and system, it's best to interview at least three licensed California contractors, get bids from each, and do background checks. Reputable solar providers can be located through the Go Solar California Web site (gosolarcalifornia.org), Find Solar (findsolar.com), the California Solar Energy Industries Association (calseia.org), and the Better Business Bureau (bbb.org).
SunPower, a solar system manufacturer based in San Jose, offers a patented all-black solar panel that is as aesthetically pleasing as it gets. The company's 225 and 230 models are reported to be the highest-efficiency solar panels commercially available for residential use. SunPower panels convert an average of 20 to 22 percent of sunlight into energy, compared to 16 to 18 percent of their competitors'. The high efficiency is due to the design of the panels, which feature electrical contacts at the bottom of the panels to increase surface area.
These panels offered by SunPower (with similar results reported from other manufacturers) are 50 percent more efficient than conventional panels, according to Dura-Foam Solar Center's Randy Feriante, whose company is a SunPower authorized dealer. "They look like skylights on your roof when they are installed, and most of the time they are hardly noticeable," Feriante says. "We only need 55 square feet per kilowatt, which is half the size of an average installation."
Akeena Solar, a solar provider since 2001 with offices throughout California, offers a 'plug and play' solar system that is factory-assembled, has a 25-year warranty, and features a dark appearance. The company's flat-roof system can be mounted without penetrations (if local building codes allow it), and it's aerodynamically designed to minimize wind loads. "Generally, no holes or less holes is better for the integrity of your roof," says Gary Mull, vice president of Akeena Solar.
Home Depot teamed up with the manufacturer BP Solar to provide a turnkey way to add solar to the home. Homeowners call the retailer's solar power hotline to schedule a free in-home solar consultation. Home Depot handles the forms and subtracts the rebate directly from the purchase price. The retailer says installation usually takes less than two days. After the installation, a service professional performs a quality audit and inspection followed by a six-month check up on the system. BP Solar provides a 10-year full service warranty and a 25-year limited warranty on the solar panels.
For homeowners who can't afford the upfront cost -- yet have a FICO credit score above 720 -- SolarCity offers a lease agreement (called SolarLease) that allows homeowners to pay as they go. Seventy to 80 percent of SolarCity customers, according to the company, lease solar systems, and the lease payments on average cost less than buying power from a utility company. "On average, we save customers about 10 to 15 percent off their overall electric bill," Rive says.
For a home with a monthly electricity bill of $250, SolarCity recommends installing a four-kilowatt system. When the lease ends, homeowners can upgrade to a new system, renew the lease, or opt to remove the system.
Many solar experts agree that now is a good time to invest in solar-electric systems. Technology recently reached a plateau, with inverters running at about 95 percent efficiency and prices remaining stable.
"I don't see them getting cheaper," Feriante says. "Even if raw materials prices go down, labor prices abroad for manufacturing these panels are bound to go up. For people who have available funds, or the ability to finance a system, there's really no reason to wait."
According to a recent study from the Appraisal Institute, the selling price of a home increases by $20.73 for every one dollar decrease in annual electric bills. Using this 20:1 multiplier, a typical three-kilowatt system -- costing about $12,000 after incentives and saving about $1,000 in annual energy costs -- will increase the value of a home by $20,000.
"You can put money in the bank and get a one or two percent return," says Akeena Solar's Gary Mull, "but when you invest in solar, you can get a 15 percent return on the investment--based on reduction of cost of utilities and the added value to your home."
Photos: John Eng; and courtesy Dura-Foam Solar Center, SunPower, Kevin and Stephanie Gray, Alexander Victa, Michael Hemming
RESOURCES
Akeena Solar: akeena.net
Dura-Foam Solar Center: durafoamsolarcenter.com
SolarCity: solarcity.com
SunPower: sunpowercorp.com
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