Clear info on home solar power rebates, tax credits, and other benefits - state by state

Monthly Archives: April 2009

Solar Info: SolarPowerRocks.com

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I’ve already told you many solar resources for various states. The most comprehensive one is DSIRE, a government site that summarizes all of the solar and energy efficiency programs offered by each State.

I’ve recently discovered a blog by two solar enthusiasts called SolarPowerRocks.com. One blogger is a beginning solar sales associate, and the other is one of the founders of 1BOG.org (1 Block off the Grid), the organization that collectively bargains for low cost solar for a group of area residents. I mentioned them in an earlier post.

The guys at SolarPowerRocks have created several great resources.

  • One is that they have a free solar installer referral service. Just spend a few minutes inputting some info about your home electrical usage, and they’ll have an installer in your area give you a should.
  • Secondly, they have taken the time to rate and summarize the State programs and their commitment to Solar. These various State buttons on the side of the blog will tell you in plain language about your State’s solar initiatives and affordability.
  • They constantly update their State summaries as new solar initiatives are past, as well. However, some posts are out of date. For example, the Federal 30% tax credit is no longer capped at $2000, and that’s still in the calculations of some posts.

Take a look, but please come back here for information, as well! And please let me know if you have any questions about solar. It’s kind of the point of “Dear Solar Fred.”

Cheap Solar: NY Times Video

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A friend pointed out this great 5 minute video from the New York Times. It’s about a housing complex being built from the ground up with great insulation and solar panels for not electricity, but also for hot water.

The homes are so well insulated that they couldn’t buy a central heating system for each home. Even the smallest heater would have baked the home owners. Instead, they rely on small, built in natural gas wall heaters.

If you’re a housing developer in California, you can do this too if you consider solar as a standard feature. The State has generous cash rebates for builders who develop units with solar under the new solar home initiative.

If you don’t live in California, check out builder incentives in the DSIRE database of state rebates. You’ll be surprised what’s out there.

Cheap Solar Loans: The Feds

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Dear Solar Fred,

Are there any Federal government programs geared toward giving home owners low interest loans for solar?

Anna in Ohai, California

Dear Anna,

Yes, indeed,Uncle Sam has several national programs that will help you to finance your solar system (and other energy efficiency projects) for your home. Click here and download this flyer to give you a summary of the programs. (If these don’t work, be sure to check out my Cash Poor financing series of posts.)

Your best bet may be through fannie mae and freddie mac through energy efficient mortgages.
(EEMs). The advantages are spelled out on this site, and I quote:

“The government-sponsored loans have several special benefits. First, they let you add on the money for the improvements to your mortgage even if this means you exceed traditional loan limits. Second, you don’t have to qualify for the additional money. Third, and probably most important, 100% of the cost of the improvements can be financed. Since all improvements must be cost effective to qualify, this means there are no out of pocket expenses. Your mortgage payments go up a little, but your utility bills go down more. You can even realize a positive cash flow. It’s like getting paid for improving your home.” (Solar Fred’s emphasis.)

Sounds pretty good to me. Get started with a list of numbers and websites here.

Cheap Solar: No Batteries

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Dear Solar Fred,

What’s the cost difference between having a system with batteries and a system without batteries? Is being off the grid worth it?

Sincerely,

Sam in Los Angeles

Dear Sam,

Great question. Short answer is that battery tied systems are NOT worth the extra cost for many reasons. Let me count the ways.

  1. Most if not all State cash rebates require your solar panels to be connected to the utility. So you if you’ve got power going to your house already and you want free money from your State, then I would stay on the grid. (Go to the DSIRE site for summaries of state incentives.)
  2. Grid tied only systems are relatively easy to install, requiring less time and money for installation costs.
  3. Similarly, without batteries, you have to buy fewer pieces of electrical and safety components.
  4. Being tied to the grid, you can take advantage of net metering and time of use rates.
  5. Grid tied systems are very low maintenance. Battery systems, even those that are just backup systems, are less efficient, require more space and maintenance, not to mention frequent battery replacement costs.
  6. For the 25 to 30 years of your solar panel life, the grid will almost always back you up at night and on cloudy days. It is extremely rare in America when the electricity goes down. Power is generally restored within hours or within a few days at the very worst.
  7. If you consider that you’re not eligible for state rebates, you could be losing $20,000 or more between the rebate cash that a State like California would have given you, plus the extra equipment and labor costs.

To be balanced, battery tied people have some non-financial advantages:

  • You can have it both ways. That is, you can be on the grid and have a battery backup system in case of a black out. (Consider how often this happens, however. In most of grid-tied of America, a black out may happen once a year or less. Is that worth 20 grand? If you’re in a rural community with no utility wires for miles, then it could be worth it.)
  • Grid tied systems with a battery backup are still eligible for most State cash rebates and the 30% Federal Tax Credit. (However, neither of these discounts will apply to any batteries or battery components.)
  • Grid tied systems with a battery backup need fewer batteries, less maintenance, and less space than a system that has batteries only. (But you still have higher install labor costs, extra equipment, and you’ll eventually have to replace the batteries.)
  • With a battery system that is not tied to the grid, you can proudly say that you are completely independent of coal burning utility companies, that you use 100% renewable energy from the sun, and that your lights and refrigerator will be on after an earthquake or problem with the grid. (However, as noted earlier, you are also responsible for a separate, well ventilated space to house the batteries, maintenance of the batteries, and the inevitable replacement costs every 5-10 years–depending on how well you maintain your batteries.)

So it’s up to you, but if you really want the most affordable system that is 95-99% reliable and less expensive, I would go with a solar system that is only tied to the grid without backup.

Cheap Solar: Buy Half a System

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Dear Solar Fred,

I admit that my family and I are energy hogs and spend $350 a month on our electric bill. I know if we size it right that we’ll see a payback in around 12 years, but right now, we don’t have enough home equity for the up front costs. Is there any other way to buy solar without settling for leasing?

Sincerely,

Pete in Palo Alto

Hey, Pete,

I have a good suggestion that may save you a lot of money and allow you to go solar. Instead of trying to offset ALL of your home’s electric bill, get your installer to size a system that will take care of 50% or 60% of your electric bill. There are a lot of money saving advantages to this. Obviously, you’re going to be paying less up front because you’ll be paying for less solar. That’s savings number one. But the real big savings may come in rate tier savings:

  • In many states–certainly in Palo Alto, California–there are different rate tiers charged for usage. The more power you use, the higher your rate jumps to a higher tier for that above average usage.
  • The lowest rate in your territory is about 11 cents per kilowatt hour (kWh) for the “base tier.” Everybody, including you, get this rate for a certain amount of usage.
  • When you use energy above this level, the utility charges you HIGHER rates. The next rate tier above 11cent is 25 cents/kWh–more than double. If you use even more, the rate jumps even higher to 35 cents/kWh. The utilities do this to penalize energy hogs like you and to encourage you to conserve. One way to do that: Go solar.
  • If you buy enough solar panels to offset your usage by say 50%, you’re sort of tricking the utility into thinking you use a lot less energy. In reality, your solar panels are generating enough to get you out of the higher tiers back into the lower tiers.

All this being said, it would still be a good idea to really cut your energy use through some basic energy efficiency.

What 's "Time of Use" (TOU)?

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Dear Solar Fred,

What the heck is “Time of Use?” It sounds like a warranty or something. Should I get it, whatever it is?

Sincerely,

Busy Barbara

Dear Busy Barbara,

Time of Use (TOU) has nothing to do with a warranty. It’s actually a rate plan that your utility may or may not have, though most do for solar and/or wind. Time of Use works with net metering, something we’ve discussed earlier, to make your new electric bill lower–and therefore make solar have a faster payback. Here are the simple basics:

  • During the day, especially during the longer days of summer, your solar panels produce more electricity than your house needs. So you send the extra energy back to the grid for storage, and at night, when the sun isn’t shining and your solar panels aren’t producing, your electric company sends you back the electricity that you didn’t use. This is basically net metering.
  • That power that your panels generate during the day and send back to the grid is the most expensive power of the day. Businesses and factories need that power and are willing to pay top dollar for it. –So does your utility company.
  • With Time of Use Rate, the Utility buys the energy your solar panels produce at the high day time “peak” rate. Now here’s the big savings:
  • At night, when you the sun isn’t shining and you buy some or all of that power back, you buy it back at the cheaper night time rate. So you sell the solar electricity high, let’s say 10 cents a watt, and buy back the night time “off peak” electricity at 5 cents a watt. You make a profit of 5 cents a watt on the energy your panels produce! That’s Time of Use.
  • Your utility and the its various TOU rate plans determine the “peak” time periods. Some peak times are broken up to into 4 time periods, morning, night, and afternoon, and evening and weekends, each with its own rate. Others, like Southern California Edison, have peak rates set at M-F, 10am-6pm. All the other times are off-peak.
  • Solar Fred Caution: If you’re a stay-at-home-Mom or person with a home office, you may not benefit from Time of Use because you’re using up all of your solar power, plus buying extra coal power to run your computer(s) and the diaper genie. So you may be better off with the regular flat rate if this is the case. Consult with your installer about your energy usage during the day and the TOU rate plans. You’ll still have net metering, but you won’t have that bonus profit.
  • Solar Fred Tip: Properly factoring in TOU into your initial solar panel design can decrease your system size because of the extra savings. Remember: With net metering, utilities generally DON’T pay you extra if you lower your yearly bill past zero. So you want to make sure you have just enough solar power to get your bill close to a zero, but not lower than that.