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, like San Francisco. 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. 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. 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|
CityPayback time assuming 6% annual electric rate hike.Net Cost After All Incentives% of Home Usage now Solar Powered Los Angeles Solar5.6 years!!!!$7651.20 96%Phoenix Solar7.4 years$9319.40 82%Denver Solar10.1 years$12303.90 72%New Orleans Solar8.9 years$10,597.50 73%San Antonio Solar10 years$12,348.00 74%New Jersey Solar3.4 years!!!!$10453.7282%
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.