On sunny days, Jim Edwards’ rooftop solar panels in Colorado generate more electricity than his Lafayette home uses. Instead of paying for power, he’ll soon be getting credits on his bill from Xcel Energy.
Edwards is among the first Coloradans to benefit from new rebates and tax incentives that are bringing the cost of sun power down to earth. But it almost wasn’t so.
Last month, 32 workers, including eight researchers, were laid off at the Energy Department’s National Renewable Energy Laboratory in Golden,Colorado. The lab helps develop the very renewable energy technologies President was promoting in his State of the Union address.
Just before Bush’s planned visit to the lab,the government restored the jobs. At the direction of Energy Secretary Samuel Bodman, $5 million was transferred to the Midwest Research Institute, the operating contractor for the lab, to get the workers back on the job. Philip Clapp, president of the National Environmental Trust, said the decision restores only $5 million of the $28 million budget shortfall at the lab that forced the layoffs.
Photovoltaic technology, or PV, has been around for decades. It uses silicon wafers or other materials that directly convert sunlight to electricity. But PV’s high cost has largely limited its use to space satellites, green activists and off-the-grid dwellers.
Now solar electric is poised to boom, thanks to financial incentives stemming from Colorado voters’ passage of Amendment 37 in 2004. The law requires the state’s largest utilities to obtain 10 percent of their power from renewable sources by 2015. While much of the power will come from wind farms, the law requires a portion to come from solar energy.
Typical rooftop system: $16,000
Xcel Energy rebate: $9,000
Federal tax credit: $2,000
Final cost: $5,000
Payback period: 16 years for a typical household system based on current electricity prices.
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‘Our phone has been ringing off the hook with people asking about this,’ said Blake Jones, president of Namaste Solar Electric in Boulder. ‘There’s just a huge amount of interest.’
Xcel Energy’s recently announced rebates cover half the cost or more of a photovoltaic system up to $20,000. In addition, the new federal energy bill provides a tax credit of $2,000.
The net result: A typical household PV system costing at least $16,000 can be had, after rebates and credits, for about $5,000, according to renewable energy consultant Morey Wolfson.
That still puts the cost out of reach for many homeowners. But for thousands of others, it makes solar electricity worth the investment. Payback on the investment can be measured two ways: in psychic satisfaction or by financial return.
Environmental advocates say that many of the Colorado homeowners expected to install solar systems will do so because they believe in renewable energy and in reducing greenhouse gas emissions.
For a financial return, depending on a home’s electrical use, the payback period for a typical household system could be about 16 years based on current prices for electricity. If power prices rise in coming years – which most energy experts predict – the payback period could be reduced by several years.
The size and cost of a solar system depends on two main factors: a home’s amount of rooftop sun exposure and whether the homeowner is interested in offsetting just a portion, or all of the household electrical consumption. Interest shown so far in PV systems incorporates financial and environmental ideals, Wolfson said.
‘This is for people who get that certain delight in seeing their meters turn backwards and knowing that they’re sending energy back into the grid,’ he said. Wolfson identified other factors and personal interests that would lend themselves to PV installations:
Households with enough disposable income to pay the upfront costs of a system.
People with high levels of energy and environmental awareness.
Gadget freaks who like to be the first to adopt new technologies.
People who pay close attention to their utility bills and monitor their use of electricity.
‘There are a number of very good reasons to consider it, but it’s definitely not something that’s ready for everyone,’ Wolfson said.
Xcel Energy plans to aggressively market the program to bring in new customers who want to be involved in developing a clean, renewable-energy technology,’ said Fred Stoffel, Xcel’s vice president for policy development. Already the growing popularity of solar electric systems is raising concerns about a pending shortage of PV panels.
Denver-based solar installer Low Energy Systems Inc. said it recently ordered a shipment of panels from Germany, and pre-sold the entire order. It immediately ordered a new shipment, but the order will take two months to arrive via overseas shipping.
Wonderland Hill Development Co. said last week that it will develop Boulder’s first solar row-house community. The 13-unit ‘Solar Row’ project is designed to generate as much power as its homes use.
For Lafayette resident Edwards and his wife, Ligia Bernardet, installing a solar electric system was a good complement to the existing energy efficiency of their 10-year-old home. The 2-kilowatt system was designed to handle most of the home’s electric needs. The power the home draws at night, when the PV panels aren’t generating electricity, will be offset by excess daytime power production that will be sent back to the grid.
The system’s original cost was $15,000. After the Xcel rebate of $4.50 per watt and the federal tax credit of $2,000, Edwards paid about $5,000 including installation and incidental costs. He estimates that if electricity prices increase 5 percent a year, the system will recoup its costs in 10 to 12 years.
‘The payback period was definitely a factor,’ Edwards said. ‘But in the end it just seemed like the right thing to do. We need to conserve energy and reduce carbon emissions.’