Solar PV Is It Worth it?

[Jane]

I always wonder whether solar PV is worth it. Any comment?

[boblee]

Solar PV is certainly a clean technology that can help ease the carbon foot print. In economic terms, however, it depends on the size of the electric bill. The payback for grid tied solar PV will be faster where the electric rates are higher. In California or other part of the country where electric rates are tiered, those homeowners who are in the higher tier rates will see substantial economic benefit as the solar PV will drop the rate to a lower tier. Those who are in lower tiers will see payback over longer period of time.

In any case, the best way to save money is to reduce electric usage. So homeowners should figure out ways to reduce electric consumption first before installing solar PV. That way, the solar PV system will be properly sized.

[Jane]

Lately, I've heard of property assess clean energy program. What exactly is it? How do you pay for it?

[boblee]

A program called PACE (Property Assessed Clean Energy) has been proposed where certain energy saving improvement, including insulation, solar PV, can be financed through a city or county and the repayment is thru property tax over 20 or more years. When the house is sold, the property tax stays with the house and the new owners will continue paying for the improvements that they enjoy. The idea is great as it removes the hurdle of having to pay the capital cost of improvement up front. A few cities, notably Berkeley, has implemented this program. The program is due to start in many parts of California and other state.

Unfortunate the program receive a huge setback last week when Fannie Mae and Freddie Mac decided they will not accept such financing arrangements, citing risks associated with such loans. See http://www.environmentalleader.com/2010 ... e-program/. Interested groups have said they will appeal. If Fannie Mae and Freddie Mac indeed eventually carry out what they say, it will make financing green remodeling harder.

[amor]

I think solar is still expensive. For a 3KW system, after rebate and tax credit it still costs $13000. And I am not about to pay 7% interest rate for the PACE program whether Fannie and Freddie will carry it out or not. I just wait. The price eventually will come down more.

[Kate]

You can get a smaller solar system and save some money by air sealing all the leaky areas around the windows and doors, and insulating your attic. See Do-It-Yourself Guide to Sealing and Insulating.
http://www.energystar.gov/index.cfm?c=diy.diy_index

[Jane]

Without the PACE program most people cannot afford the solar system. It is just too much money to pay up-front.

[Kate]

Many law makers think PACE is the best way to get homeowners to install solar systems on their roofs in order to reduce using more fossil fuel. They said it can also help the economy. Recently, they hinted that they plan to introduce the bill again later this year.

[boblee]

PACE is is limbo because, in a market where home prices are not likely to appreciate any time soon, banks do not want to finance anything to do with a home.

Without PACE, even with declining PV prices and incentives, the upfront cost of putting a PV system up is still pretty high and people are cautious about tying up the money in a PV system.

There is an alternative called leasing that is worth considering. Some solar companies will finance the upfront cost and sign a lease agreement with the home owner. The solar companies practically acts as the electricity provider - they work with the electric utility company to settle the feed-in from the PV to the utility and the power used by the home owner. The home owner, under the contract, pays the solar company a fee or a rate (depending on the contract) that is typically lower than what is being paid to the electric utility. The fee or rate increase over the years is also expected to be lower than the rate increase by the electric utility. Check the solar companies offering these lease contracts or power purchase agreements out.

[SEOaaron]

The UK has a provided by the Government, which ensures a payment for the energy generated for 25 years. This is currently 41.3p per kWh, making any standard sized domestic systems payback around 10 years (9% ROI per annum)