Cost of solar going down, industry says

Mar 22, 2010 - The Bakersfield Californian

David Stillwell is trying to wind down his monthly expenses so he'll have fewer bills when he retires. Toward that end, last year he bought a solar energy system for his Rosedale area home.

Since then, Stillwell's monthly electric bill has fallen from $450 during hot summer months to an average of about $12 a month.

"I'm tickled pea green," said Stillwell, a 49-year-old correctional officer. "Now when I go out to the mailbox and grab the PG&E bill out of there, I giggle. Before, I used to go weak at the knees."

There are a lot of reasons to consider solar if you've never thought about it before, or previously dismissed it as too expensive.

"Prices definitely have come down," said Julie Blunden, vice president of public policy for San Jose-based solar provider SunPower Corp., which serves Bakersfield. "Innovation has made solar more efficient and faster and easier to install. And if you can't afford a big upfront payment, you can finance the purchase price or a lot of companies will let you lease instead of buy."

A typical residential system that cost $8 to $9 a watt a year and a half ago would cost about $5 to $6 a watt today, and that's before incentives, said Ron Kenedi, vice president of Japanese company Sharp's Solar Energy Solutions Group, which serves Bakersfield.

The clock is ticking

There is a limited amount of time to take advantage of a federal tax credit and rebates from utility companies.

The federal tax credit for residential is 30 percent of a system's net cost, but expires in six years.

The state's Go Solar California initiative, launched in 2007, included two new incentive programs: The California Energy Commission's New Solar Homes Partnership program for newly constructed homes, and the California Public Utility Commission's California Solar Initiative for retrofitting existing homes.

In the case of new construction, the rebate goes to the builder, who gets $2.60 per watt if a solar array is offered as standard as opposed to an upgrade, said Energy Commission spokeswoman Amy Morgan.

Rebates for retrofitting existing homes go to consumers. They're harder to quantify because the amount of the incentive varies based on how much energy the particular solar array will produce, the size of the home and other factors, said Public Public Utilities Commission spokesman Christopher Chow.

Homeowners who get systems under 50 kilowatts in capacity get a one-time, upfront payment. Systems that generate more power than that get a performance-based rebate paid out over five years.

Ten kilowatt hours are enough energy to run a 100-watt light bulb for 100 hours.

10 steps

The incentive program is being implemented in 10 phases, and the size of the rebate homeowners can claim from their electricity provider decreases as those phases progress. That's to encourage people to install systems early. The sooner you do it, the bigger your rebate.

The next phase goes into effect in just a couple of months, according to solar providers.

PG&E spokesman Denny Boyles couldn't immediately say exactly what day the new rebate amount takes effect for his company's customers. The person in charge of that program was unavailable, he said.

There are 461 commercial, residential and industrial solar systems in PG&E's Kern County territory that have been eligible for a total of $12.6 million in incentives, Boyles said.

Of those, 436 were residential, accounting for $4.1 million of the incentives. All but 32 of the county's residential systems were in the city of Bakersfield.

Bakersfield is an ideal place for solar because there is abundant sunlight here for much of the year, said Jose Tengco, spokesman for Los Gatos-based Akeena Solar, which serves Bakersfield.

But there are a lot of options available, so you'll need to research manufacturers, installers and types of panels.

"The first thing you should do is understand what your goals are," Tengco said. "Do you want to get off the grid entirely, or just get out of the top rate tiers?"

Energy prices are based on usage tiers. Customers who use the most power during peak hours pay more than customers who conserve energy.

"The great thing about solar is it generates the most power when the sun is brightest, which is exactly the most expensive time of day to use electricity," Tengco said.

How much will you pay?

The cost of a system will vary based on how many panels you get, the direction your house faces and whether the system is mounted on a roof or erected on poles, among other factors.

The price is usually tied to how many watts of power the system will generate. The more panels you get, the more watts the system can produce.

Factoring in the incentives, a purchased system often pays for itself within five to eight years.

Leasing a system generally costs 10 percent to 15 percent of the cost of your power, said Lyndon Rive, chief executive of Foster City-based SolarCity, which serves Bakersfield.

"When you lease, you see payback from day one," she said. "And when you're leasing, you're not responsible for maintenance or repairs. if anything goes wrong, we take care of it."

The lease is transferable to a new owner if you sell your home, and if you decide you don't want solar anymore when the lease is up, most providers will remove it at no cost to the homeowner.

Lease or buy?

School administrator Lloyd Fries, 54, decided to lease a solar array for his northwest Bakersfield home to avoid having to come up with thousands of dollars upfront.

Fries put $1,000 down for 36 rooftop panels. Even with a monthly lease payment of $183 on top of his actual power bill, his total monthly payment is averaging $250 a month, half as much as before.

"It hasn't even been a year yet and I've already got my down payment back, easily," Fries said. "The only real negative was we had to wait months to get it installed because of the backlog, but once they finally got here, it only took a couple of days to put it in."

Warren Stan Moore, an 83-year-old semi-retired construction project manager, said he paid just shy of $12,000 after incentives for the 26 panels he put on the roof of his southwest side home last year. It was a good investment, he said. He figures he'll recoup the purchase price in about five years because solar has cut his power bill by more than half to about $72 a month.

"We aren't chiseling away on the power, either," Moore added. "We run the air conditioning. I have power tools. My wife is always on the computer."

Stillwell, the correctional officer, paid about $23,400 after incentives for a 28-panel system.

If he'd invested the same money in the stock market, he said, he wouldn't have had anywhere near the same profit in dividends as he'll be making after his system's energy savings surpass the purchase price in about seven years.

"I tried everything before. Cutting down on the AC, turning the lights off, all of that, and my bill just kept going up and up and up," he said. "I told all my neighbors, 'You'd better get on board with this,' but they all said I was crazy.

"Who's crazy now?"