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

Is Solar Finally Affordable in 2010? In Many States, Yes.

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, 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.

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San Francisco Picks up the Solar PACE



Photo:Flickr/David Paul Ohmer

Once again, the City of San Francisco is rocking for solar and energy efficiency. This time it’s all about a new solar and energy efficiency financing program they’re calling GreenFinanceSF, but what many know as municipal financing or “PACE.”

So what’s it all about?

PACE stands for Property Assessed Clean Energy. Essentially, it’s a new way of financing solar and other energy efficiency projects with no upfront costs to the home owner.

Instead of a second mortgage, the city finances your solar project with a relatively low interest bond. To pay that money back, your property gets a special property tax assessment with payments spread out over 20 years.


  • No upfront costs for your solar system and energy efficiency upgrades.
  • Because it’s a special tax assessment specifically on your home, there’s no “loan” to pay back if you move in a few years. Instead, the new home owner takes over the tax payment—and also gets all of the benefits of your upgrades.
  • Just like a conventional mortgage loan, you still get to write off the tax assessment’s interest from your Federal Taxes.
  • It’s a 20 year payback period, so that can make payments lower than your current pre-PACE electric bill.
  • You still qualify for San Francisco’s Solar Energy Incentive Program, which gives you $1000-$7,000 depending on your income and if you use a local solar installer.
  • You still qualify for the California rebate, which can get you an extra $4,400 for a typical 4kW system.
  • You still qualify for the Federal 30% Investment Tax Credit.
  • You still qualify for California’s new Net Metering program.
  • Your neighbors cannot shake a finger at you for raising their electric rates to subsidize your solar system. That’s because PACE/ GreenFinanceSF is funded by a bond tied to your property taxes alone. They’ve got nothing to do with it…unless they sign up for their own program.

So what’s the downside?

Wait a minute….I’m thinking. ….Still thinking. Bullet point is forming now…….Okay, it’s a stretch, but here it is.

Disadvantages (Sort of)

  • The other qualification for GreenFinanceSF is that you have to get an energy efficiency audit and do the recommended upgrades.
  • That’s actually not a bad thing, because in the short run, it’s going to save you money through lower electric bills, and a smaller solar system.
  • You still have to have decent credit; somewhere in the mid 600′s for a credit score should do fine.

Getting Started

That’s the news, San Francisco. So where do you start? Well, you have to do the energy efficiency audit first to qualify. Check out our partners at One Block off the Grid, aka “1bog.org.”

1bog.org pre-negotiates a discount with bulk pricing for people who sign up for energy efficiency and/or solar. It’s sort of like Costco for solar and energy efficiency upgrades, except there’s no dues or fees ever for consumers, and there’s no annoying club cards.

1bog also has a free, no obligation solar estimate calculator. Try it and see if solar makes sense for you.  It’s free, so couldn’t hurt, except a little time. Worst case, you’ll get a quick answer about how much solar could costs for you.

Thanks for considering solar, San Francisco! You rock for the environment, but  you knew that.

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Battle of the Bay – The Clean Tech Initiatives of San Francisco Vs. San Jose

San Francisco Solar initiatives vs. San Jose

San Francisco and San Jose are setting examples for other cities in our nation by being renewable energy hotbeds. However, the cities are taking very different approaches. San Francisco is more focused on putting cash incentives and city-based financing into the hands of the consumer to make renewable energy installations more feasible. On the other hand, San Jose is skipping consumer subsidies and focusing on developing the local renewable energy industry, reducing the product innovation cycle and time-to-market.

San Jose

I spoke with Collin O’Mara, San Jose’s Clean Tech Strategist (How many cities have this dedicated job position do you think?).  There are many clean tech initiatives going on in San Jose, so much so that it sounded like his head was spinning. He spewed forth about 20 different plans in about 30 minutes. I won’t outline all their goals here (go here to see them), but I will tell you they are ambitious, to say the least. They want to be the clean tech center of the world, and I hope they pull that off. I read their “green vision” and I like where they’re focusing.
An important question that Collin wants San Jose to answer is: “How do we get your new products to market as quick as possible?”  A big solution to the problem was building a San Jose UL testing lab. If you want your products on the market, they need to be UL tested. Before that facility opened, the nearest solar testing labs were in Arizona (saddled with up to year-long backlogs). Now San Jose has the largest working photovoltaic testing facility in the world.

Another example of SJ banking on industry instead of broad subsidies was the San Jose Solar Challange. Mayor Reed implored solar companies to develop a way for San Jose’ers to install solar energy with no up front costs by creative financing structures.  They got some good results from this that will definitely scale to other cities.  Hey, if you want something, you gotta ask for it.

The bottom line is that if you are a budding clean tech company trying to bring some products from design to market, San Jose’s gonna try to make that as easy as possible for you. They’ll help you in many ways, so it’s a good place to be.  Collin then mentioned about four zillion clean tech companies focused in San Jose that I won’t list here.

As a side note: I’ve noted before that my biggest hopes for market-changing solar tech in the very near term come from two product ideas:  the integrated PV+Hot Water panels and Micro-Inverters.  Collin agreed that these are exciting technologies.

San Francisco

While San Jose might be a great place to call home if you’re a clean tech startup, San Francisco has some VERY strong initiatives focusing on the consumer, including the San Francisco Solar Incentive Program that gives up to $6000 per residential meter and even more for businesses.  San Francisco is also working with the city of Berkeley to create a low interest loan program to make the solar out-of-pocket expense more bearable for its citizens.  Smaller power bills and increased cost of doing business in San Francisco make some of the zero-financing programs no dice here. The above measures are going to help fix that and then some.

Both SF and SJ are winners of the 2008 Solar cities grants. SF is using some of this partnership money to run train the trainers meetings. The city trains proactive citizens to explain the fundamentals of solar energy to their neighbors, tennis clubs, bridge groups, whatever. I know that when citizens organize group purchases of solar energy they are much more effective in making a difference, because everyone feels like the right questions are being asked to the installer and everyone feels more comfortable. I have high hopes for this plan.  Finally, although I am biased obviously, I hope we can get some aid from the city to get the word out about One Block Off the Grid’s second run in here in SF, and hopefully triple the success of the first round.

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Test out our new solar energy calculator!

So, I have spent 14 straight hours designing this residential solar power calculator for San Francisco homeowners. I think it’s a lot better tool than many other calculators out there right now and I hope you all get some use out of it whether you live in San Francisco or not. The plan is to create a calculator and a case study from each state in our nation so you can better understand the financials of solar in your area! Notice you need to take a look at your power bills for your average monthly kwh usage, then click to include your installed cost per watt for your system (usually between $8-$10/watt), and finally input the wattage of the panels you plan on putting up there (175-210 is pretty standard). Once you fill those yellow cells in, the output is automatic and will give you out of pocket, net costs, and payback period for a system that will eliminate your entire power bill! In addition to estimating your immediate property value increase, I also calculate the number of panels you’ll need and the square footage of roof space that’ll be required.

Basic assumptions I made were that your roof is flat or southerly facing, you don’t have any shading issues, and the price of electricity will rise at an average rate of 6% per year (which is a relatively conservative estimate). Have fun and I hope this helps! Remember, if this tool gives you some sticker shock, relax. You can finance the remaining cost of your system after tax credits and subsidies. Often the cost of your monthly payments are at parity or even lower than your existing power bill.

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A Solar Installation Quote I made Today in San Francisco

Solar Money

So what’s this stuff gonna cost me?

I’ve been getting more people asking for a brass tacks breakdown of what a residential solar power installation costs… so here you go.

I made this solar quote for a fellow in San Francisco today. He had an optimally tilted (21 degrees) and optimally faced (true south) composition roof with no shading… so his situation was pretty much perfect (for this particular location…. optimal tilt and azimuth maybe slightly different on the east coast). Here are the numbers:

Note: pricing is pretty linear, so if your power bill is bigger than his, scale the numbers up accordingly, smaller, scale down.

Gross Cost of the Turnkey System $35,00.00
- California Solar Initiative Rebate - $7,750.00
- San Francisco Local Installer Credit - $2,000.00
- Federal Tax Credit (30% of cost after all Rebates) - $7,575.00

NET SYSTEM COST $17,325.00
His Pre-Solar Yearly Power Costs $2,663.00
Post Solar Yearly Power Costs after moving to a Time of Use (TOU) rate schedule $313.00
Yearly Power Cost Savings $2,327.00
Payback time (assuming 1.5% yearly PG&E rate increase) 7.9 years
Property Value Increase (according to this source) $35,175.00
note the property value number increases as power rates rise

I used this site to calculate his California Solar Initiative Credit and all other incentives by putting in the average installed price these days in the area, around $7000/kwh. If you were to repeat this, DON’T USE THE DEFAULT cost, but input “7000/kW.” Also input 5000 kW system.  This will take care of 78% of this customer’s electric costs.

Also: According to the CSI calculator, you could owe an additional $1,388 Federal taxes because the rebates are considered income. We’re not tax attorney’s, so check with yours to be sure how this will effect you. If that’s the case, then your net system cost goes up to $18,369. All the other numbers are basically the same, however.

If you are interested in getting a home in San Francisco evaluated for Solar Power (yes, it’s free), please check out my new company One Block Off the Grid, which lowers the price of going solar on your home by using collective bargaining.

Note: This post was updated on 8/15/09, so prices may be lower when you’re reading this…or not.  To find out for your house in your area, just fill our our handy-dandy form, and we’ll get someone over to you to give you a free quote.

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Why no one has Solar Power

Solar Conformity

I live in San Francisco… Probably the MOST progressive city in the US for solar power.

California has a very juicy state solar rebate, and on top of that, is proposing the biggest and also one of the first municipal credits for solar power in the US. As an experiment, I sent out 1000 mailers to owner-occupied homes in San Francisco, and this article is about the response to those mailers.

First, let’s review what one would need to make solar work financially:

  • You own the property. (If the tenant pays power, they have little incentive to improve property they don’t own). 100% of the mailers I sent were all owner occupied.
  • You have a good chunk of change or enough equity in the home to finance the project. Although this is unique to San Francisco, this also effectively applies to 100% of the homeowners (if you own a $2mil home, you almost certainly have the equity or cash to pull the trigger)… We’ll call it 98%.
  • Your roof cannot be drastically shaded, especially in the summer, or have an impossible orientation. We’ll call it 70%. There are some shading problems, although almost all the roofs are flat, so not many orientation problems.
  • You have a decent sized power bill above the baseline. (note, this isn’t needed to make it work, but with a tiny bill it make take 20 years to recoup your investment). We’ll call this 80%.
  • You don’t already have it. We’ll call this 99.997%.

This leaves us with about 550 homes who received the mailers where solar is a wise financial investment.

Who called or emailed? 1 person. One nice gentleman named Loren, possibly the nicest guy I’ve met in San Francisco. Turns out his (gorgeous) home sits in between two buildings both twice as high, so it would never work (although we did look at one of the investment properties where he pays the power, and that place is perfect, and IS going to happen. So at least something good came out of this), but that’s not the point. Furthermore, I understand that a 1% response from direct mail is decent. I know that not a lot of people call, so that’s not the point either. Also I probably suck at making direct mailings…. THAT’S NOT THE POINT EITHER! The point is that no one ever believes solar makes sense unless they can see it. Loren happened to have an installation visible across the street from him. This one, actually:

San Francsico solar installation on Washington

I run across this over and over again. If I ever get a call out of the blue, it’s because someone’s neighbor has it. Always. So that’s my beef! Why do “The Joneses” have to have it first in order for it to be possibly financially viable?! Let’s look at some numbers:

Here’s a residential quote I gave out the other day that assumes that PG&E (our local utility here) rates go up about 10%, which is a fair assessment given that they’ve increased over 40% in the last two years for some rate plans (although for the last 40 years they have about a historic rate increase of 7%):

This gentleman used about 1780 kWh/month and was paying about $6100 a year in power. He had a nice large southern facing roof sloped at 19%. I designed a system of 36 panels of Sun Power’s SPR-225 panels and two 4000W SMA inverters, which would have brought his power costs down to about $1320 a year. That’s $4780.00 in power savings the first year, and that number grows as power costs increase (the sun is the most laid back landlord ever, he never decides to raise your rent). So how do the numbers work?

  • The system costs $72,644. That’s turnkey, everything, no other costs ever required. System is covered for a decade and the panels for 25 years.
  • BUT WAIT! California wil pay $15,252 of that, bringing the cost to $57,392.
  • BUT WAIT! Uncle Sam will give you a $2000 tax credit, good as cash at the end of the year… So now we’re talking about $55,392.00
  • NO, NO, WAIT! In San Francisco they’ll be giving us $4000 to install a system using a local installer, so $51,392.00
  • Now let’s assume he finances that $51,392.00 with home equity at a rate of 7.25% for 25 years, which was actually what he could get from his own loan guy.

$371.46 would be his monthly payments. What’s his monthly power bill? $508. SO THE DUDE SHOW’S AN INSTANTANEOUS $130/mo SAVINGS BY INSTALLING SOLAR.

Now, the situation is not always that perfect. Sometimes the roof tilt and orientation aren’t perfect, the power bill smaller, so here are some more numbers for you:

In addition to the dude’s instant savings., this Appraiser Journal article explains how every dollar saved in energy costs per year adds $15-$20 to the value of your home. So if our guy is saving $4780.00 per year then that’s (and we’ll make it conservative) $15*4780.00 = $71,700.00. So in addition to the fact that he’s instantly saving money, his home just shot up 70K in value. Sound ridiculous and impossible? Of course it does…. and….one second…

Solar Hulk


It’s freakin NOT! It’s REAL. And one day, after enough roofs have it, and people finally think “hey, maybe it’s a good deal,” and they call me… by that time, the Californial Solar Initiative credits are gone. The federal tax credit is gone (yah, that’s right, it got voted out of the energy bill), and the municipal credit is gone (I think it only has 3Mil in funding, at least for now)… and you’ll be left out in the cold.

Let’s do a commercial one, shall we? The numbers are commercial are even more of an obvious score than residential.

Here’s a guy who owns a Laundromat and has a “Small Commercial” PG&E rate schedule. (if you’re wondering about whether or not you get the residential or commercial benefits, the rule of thumb is that it typically follows the meter/rate schedule). He was paying about $185 per month in power to run his Laundromat.

I proposed a system of 28 SPR-225 panels and a 7000 Watt SMA inverter. This would have saved him $1870 in energy costs the first year.

  • Gross System Cost: $60,835
  • California Solar Initiative Rebate: -$10,560
  • Tax on rebate $2,957.00 (in a commercial situation, you have the rebate assigned to the customer and not the installer, in order to create a higher basis cost for the system, in order to attain high tax savings. The customer must pay tax on the rebate but it’s usually worth it.)
  • 30% Federal Tax Credit -$18,251.00 (no cap here folks, not with commercial)
  • Advanced (5 year) Depreciation Schedule -$17,770.00
  • San Francisco Municipal Credit -$8,550.00 ($1500 per kW up to $10K)

This brings the net system cost to $8662.00 That’s recouped in 4 years. And let’s not forget about the property value increase of 15-20 times his yearly energy savings, or $1,870.00*15 = $28,050.00 (a number that rises with the tide of power costs).

Now it costs a good chunk of change to pull the trigger, but he’s more than got it. After that you’ve paid it off in 4 years, and you’re getting an $2000+ a year in dividends, not to mention the extra 10′s of 1000′s of dollars you get when you sell the building.

So these both sound pretty lucrative, right? Guess which of the two bought the system… or any system from any installer? …neither of them. I mean, this is definitely MY FAULT as I never pressure anyone to buy anything and I want them to come to their own conclusions and be happy with what they will own, but maybe I need to stop doing that and start using some dirty sales tactics like “alternative choice questions” or “the yes ladder,” because logic and numbers don’t work for beans.

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