Photo: Flickr/Jurveston
Is solar finally affordable in 2010? In many states, I think the answer is yes, and it’s not just for the rich eco-minded elites either. That may have been the case before 2009, but many factors have finally made solar affordable for middle class budgets across the U.S.
First, before we get into the nitty-gritty numbers, let me just make a few observations of what has changed in the last two years to make solar affordable in many states:
- The Federal 30% Tax Credit. Previous to 2009, that tax credit was capped for residents at $2000. Not any more. Now you get the full 30% off the installed cost of your solar system, calculated after any state or utility rebates.
- Solar panel prices have plummeted. There’s nothing like a recession to make demand lower and force panel companies to compete by reducing prices. In just a year, panel prices have dropped 50% and are still inching lower. Labor, however, hasn’t dropped, so there is a floor.
- The growth of innovative financing options. Let’s be clear here: Buying is always more cost effective than leasing in the long term, but buying means getting a home loan to pay for it up front. HOWEVER, residential solar leases and solar PPA’s do allow you to go solar for very little up front money, so you will save some money—just not as much money as buying through a home equity loan or PACE program (see below). So, get a quote for buying and leasing if you want and compare. Either way, you’ll see it’s affordable.
- PACE (Property Assessed Clean Energy). These programs did not exist until just recently. They’re growing in cities everywhere now. Here’s an example of the San Francisco program. Bottom line, a great way to finance your system, and if you move before 20 years, by law, the new home owner takes over the payments, so you can move free and clear of any residual loan value, and the new buyer can benefit from the solar and pay the remaining loan.
- The growth of SRECs. New Jersey is the poster child of why solar is now affordable, and a large part is due to the Solar Renewable Energy Credit market there. Read about a New Jersey example here. These markets are growing in every state.
- The expansion of net metering. Many—but not all—states now have net metering. With this system, if your solar panels produce extra solar power during the day, the utility is required to credit you back that power at night. In some areas, they’ll even pay you for the extra power if your panels produced more “net” energy at the end of the year.
Okay, so that’s the broad strokes of why solar is affordable in 2010. What about the numbers? Numbers are really difficult to apply to everyone, and I’ve written why before. Read this post, and realize that what you pay is going to be more or less than your neighbor or a person in another state. Wish there were one policy and one price for solar, but that’s just not the case.
With that mind, let’s go through some example prices and payback time for a $100 average monthly electric bill and a net price of around $12,000 or less. Keep in mind that these are pre-negotiated, no-haggle, group purchasing prices through our partners at 1bog.org.
| 2010 Solar Price for a $100 Electric Bill in Some (but not all) Solar Affordable Markets
|
| City |
Payback time assuming 6% annual electric rate hike. |
Net Cost After All Incentives |
% of Home Usage now Solar Powered |
| Los Angeles Solar |
5.6 years!!!! |
$7651.20 |
96% |
| Phoenix Solar |
7.4 years |
$9319.40 |
82% |
| Denver Solar |
10.1 years |
$12303.90 |
72% |
| New Orleans Solar |
8.9 years |
$10,597.50 |
73% |
| San Antonio Solar |
10 years |
$12,348.00 |
74% |
| New Jersey Solar |
3.4 years!!!! |
$10453.72 |
82% |
As I said, pretty much affordable when you take into consideration all of the incentives. Now, you will pay more money up front, that’s true, but it does pay off fairly quickly, and I didn’t even mention the increase in home value and other income tax benefits. Plus, solar systems last for 25 years, or longer, so free electricity after only 3.4 years in the case of Northern New Jersey.
Curious about the numbers for your home? Do what I did and use 1bog’s free estimation calculator. If the numbers don’t pencil out this year, then write down the numbers to benchmark yourself and try again next year.
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Yes mon! C’mon with the come on, get down with the get down. Another job well done Tor
Yes! Even in one of the reddest of red states, Utah provides a tax credit of 25% (up to $2,000) to homeowners who install solar panels or a host of other renewable energy sources at their home. Combine this amount with those offered by the federal government and any local utilities and the cost becomes appealing.
I don’t mean to be negative, but are rebates like socialism where the government is actually paying for your good and services?
If solar, wind or other is really affordale then no rebates would be necessary; and this is coming from a retailer of these alernaive energy services.
Tom, I don’t mean to be realistic, but oil and gas companies get tons of subsidies, not to mention subsidized by all of the health effects that they DON’T pay for, but that you and I pay for through asthma, and many other things. Here’s a link to a study that shows that from 2001 to 2008, solar got very little in subsidies compared to fossil fuel companies. .
Meanwhile, solar prices are coming down and already at grid parity in certain states. Yes, solar is subsidized and needs to be subsidized at this point until the industry matures over the next few years. Give it to 2016 when the 30% tax credit phases out. Solar should be fine without subsidies by then. Coal and gas will just keep getting more expensive to mine and find…and pollute and clean up.
But if you want to take away solar subsidies *and* oil and gas subsidies and have a level playing field, fine. Of course, the oil and gas lobby won’t allow that. This has nothing to do with socialism, but politics and where/how our elected legislators designate spending portions of tax payer money. If I could take my share of tax payer money away from oil and gas and designate it for solar and other renewables, I would, and I’m sure a lot of people would follow me. But that’s not how our system of government works, and I accept that. Our representatives can’t listen to a million voices and do a million different things. I also pay for U.S. Highway roads in Nebraska and North Dakota that I never personally use, but again, we’re the *United* States of America, and we have to step back and see the big picture.
Thanks for commenting.
Sam Harriman
S. Mark Florence
Tom Farrow
Tor a.k.a. "Solar Fred"