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Publication Date: Wednesday, February 01, 2006 Cover story: Blue skies ahead for solar energy
Cover story: Blue skies ahead for solar energy
(February 01, 2006) Solar power heads into the mainstream, as families find the incentives are financial as well as environmental
By Andrea Gemmet
Almanac Staff Writer
For Sherry and Charlie Schmidt, it was the rolling blackouts of 2001 that convinced them to go solar. They were planning to build a home in the Woodside Glens neighborhood, and it seemed short-sighted not to make energy-producing photovoltaic panels part of the project.
"It just seemed like the right thing to do," Mr. Schmidt says.
The Schmidt family's roof-top solar panels not only power their house, they also charge their electric car and produce excess electricity that is sold back to PG&E.
"It seems like every car in Woodside is a big SUV, and I'm driving my little electric car and I'm basically driving it for free, because I'm running it off of my solar," says Ms. Schmidt, smiling impishly. "I love it that I'm driving my car for nothing."
The Schmidts were in a hurry to get their photovoltaic (PV) system up and running by the end of the year in order to maximize their rebates and incentives. Their 7-kilowatt syste m, which is about twice the size of the typical residential PV set-up, cost about $50,000 but they got $25,000 back, thanks to incentive programs, Ms. Schmidt says. Declining incentives in effect this year would have meant a difference of several thousand dollars, she says.
Now, a new $2.9 billion solar energy initiative recently approved by the state Public Utilities Commission is bringing a measure of stability and predictability to the funding for solar energy rebates and incentives over the next 11 years.
The solar initiative is part of Gov. Arnold Schwarzenegger's goal to put solar energy systems on 1 million California rooftops by 2017, increasing the state's solar capacity to 3,000 megawatts. As of 2004, the entire state had 93 megawatts of solar power-producing capacity connected to the electrical grid.
"When I ran for office, I promised the people of California an affordable, reliable and more environmentally friendly energy supply. Today is a big step towards that goal," Gov. Schwarzenegger said on January 12, the day the Public Utilities Commission passed the initiative.
The California Solar Initiative is expected to provide a big boost to the solar power industry says Darren Bouton of the Pacific Energy Center, an educational offshoot of PG&E focusing on conservation and efficiency. It also extends current rebates of $2.80 per kilowatt for PV systems for another year. The rebates will then decrease by 10 percent a year until they end in 2017. It's funded by a surcharge on all utility customers, costing an estimated $15 a year for most households.
Fluctuations in federal tax credits, which ended in the 1980s, essentially killed off the solar hot water industry that seemed so promising in the 1970s, and it's taken 20 years for the American solar energy industry to recover, Mr. Bouton says.
"The recently adopted solar initiative is bringing solar back into the mainstream," he says.
In California, in the last five years the amount of installed capacity of photovoltaic systems has increased eightfold, he says.
In recent years, almost all of the solar energy systems found on homes are grid-tied photovoltaic systems like the Schmidt family has. Photovoltaic means that solar panels harness energy from the sun to create electricity, and grid-tied refers to the fact that it is part of the local electrical grid.
The Schmidts' system provides electricity directly to their house when the sun is shining, and draws electricity from PG&E power lines when it isn't.
When their grid-tied system produces more energy than they need, it gets fed back into the power grid, supplying power for their neighbors. A special meter allows them to keep track of how much energy they are producing, how much they are using, and whether they are "buying" power from PG&E or "selling" it back to the utility company.
At the end of the year, the utility company settles up and customers who didn't produce as much solar electricity as they used must pay the difference. Customers who produce as much as -- or more -- electricity than they used owe nothing for electricity.
Mr. Bouton, who teaches classes on PV systems for residential and commercial uses, says he finds there's a lot of confusion about this.
"The best you can do is zero-out over 12 months' time," he says.
A lot of people don't realize that the utility company is not going to cut them a check if their systems produce excess energy, and that they're still going to have to pay a monthly metering charge of about $5, as well as pay for any natural gas that they use.
"If you size your system too big and produce more (than you use), then you become a philanthropist," Mr. Bouton says. "If you produce 110 percent of what you need, you're donating to the utility."
Ms. Schmidt admits that she doesn't much like the idea of donating power to PG&E, and jokes about putting on an end-of-year light show at her house to burn off the additional electricity credits.
Because the Schmidts' house is new, they didn't know how much electricity they could produce, but it looks as if they will end the year using far less energy than their system generated, Ms. Schmidt says. So far this winter, they are running about even, so it seems safe to assume that they will be sending a great deal of excess power into the grid during the summer months, she says.
While giving PG&E electricity to sell to other customers isn't much of a motivator for most people, there are the environmental benefits of replacing electricity from power plants with solar electricity. A study by the San Francisco-based Vote Solar Initiative says that if the California Solar Initiative succeeds in getting solar panels on one million rooftops, it could prevent tons of carbon dioxide and other pollutants from being released into the air.
The study estimates that the reduction in carbon dioxide emissions, a leading cause of global warming, would be equivalent to taking between 1.1 million to 3.7 million cars off the road.
Solar designer Steve Peabody of MC Solar Engineering in Santa Clara says that most of his customers are looking to save money on energy bills, but many of them are also motivated by doing the right thing for the planet. The 32-year-old company does a lot of PV installations on the Midpeninsula, nearly all of them grid-tied systems, Mr. Peabody says.
"The cost of energy has gotten so expensive, more and more it's a financial decision," he says.
And electricity rates are most expensive for the people who use the most of it. Mr. Bouton says wealthy Bay Area homeowners are often the ones with the financial savvy to fully understand the benefits of solar power.
"These people tend to understand the financial analysis, maybe even better than the middle-class people," he says. "And if you are a big user, you're probably paying in the higher tiers (of electricity rates), so if you've been paying more, you'll be saving more. A lot of the people that actually do this are the big (power) customers."
Typical homes use 3.5 kilowatt PV systems, although with homes getting larger, the PV systems are also increasing in size, Mr. Peabody says. A 7-kilowatt system is increasingly common, and he's even done a 10-kilowatt residential installation, he says.
California is poised to become the second largest producer of solar power in the world, behind Germany, and one reason the golden state is on the forefront of the growing use of solar is the amount of equity Californians have in their homes.
"That's really boosted the residential market, because people with equity in their houses can get access to pretty cheap capital," Mr. Bouton says.
Using home equity loans, people can buy PV systems with no cash out of pocket, use the money they would have spent on energy bills to make monthly loan payments, and still come out ahead, he says. It's possible to pay off a solar-energy system in 10 years, not 25 years as is commonly thought, especially for people who are savvy about time-of-use electricity rates, he says.
PG&E offers a rate plan that charges more for electricity during peak demand hours and less for electricity use during off hours. Happily for solar-power customers, the peak hours are between noon and 6 p.m. when solar energy production is at its height. For grid-tied PV customers on the time-of-use plan, that means they pay less for the electricity they use at night, and they get better rates for the solar electricity they "sell" back to the utility company during the day.
"I don't run my dishwasher or my vacuum cleaner between noon and 6 p.m. I wait until night," says Ms. Schmidt, who says that's also when she charges up her electric car.
People with off-the-grid systems usually choose it because they have homes in remote areas and it's simply too expensive to run power lines to their properties. Solar energy is stored in batteries, so that it can be used when the sun isn't shining.
"It's a different lifestyle," says Mr. Boutin. "If they go for long periods of time without sun, they've got to be careful about how many lights they turn on."
The drawback, Mr. Peabody says, is that batteries reduce the efficiency of the system by as much as 15 percent. Batteries also are expensive, need regular maintenance and have to be replaced every five to six years, he says. The PV solar panels, on the other hand, come with 25-years warranties and last indefinitely.
The benefits of a grid-tied system -- other than the warm feeling that comes from being a benefactor to PG&E -- is the ability to use as much power as you want, whenever you want it. The drawback is that you are just as susceptible to blackouts as your neighbors.
"Economically, you're self-sufficient, but if the grid goes down, you go down," says Mr. Bouton.
If you are on the grid and you want to be the only house on your block that doesn't lose power during a blackout, you need a photovoltaic system with a battery backup. Some people are willing to make the trade-off in productivity and costs in order to have that extra measure of energy independence. Mr. Peabody said he recently got a call from an Atherton resident who wants a grid-tied system with battery-backup in case an earthquake knocks out the power.
He says it's a common misconception among his clients that a grid-tied PV system will keep the power on during a blackout.
"What I've also noticed is that all it takes is a couple sentences (to explain) and they're ready to go on without it," Mr. Peabody says.
Most new installations are part of a remodeling or re-roofing project, and that makes it easier to determine how big a photovoltaic system will be needed, because there is data from the previous year's energy bills.
"Everyone wants to tell us their square footage, but that's not really helpful," Mr. Peabody says. "It has more to do with their habits than anything else."
For new construction, it's a trickier prospect. With new homes, there's the flexibility to site the house for maximum sun exposure -- in the Schmidts' case, the house is angled to allow for solar panels on two sides of the roof -- but there's more guesswork when it comes to estimating energy needs.
Mr. Peabody says he advises customers to go for smaller PV systems in those cases, since it's easy to leave room for additional solar panels if the system isn't producing enough energy.
Although there's been a surge in interest in "green" building materials and techniques, custom homebuilders still seem to be shying away from including solar panels, mostly for aesthetic reasons, Mr. Peabody says. You can make solar panels fairly unobtrusive, but you can't make them disappear, he says. However, he's not holding his breath for unobtrusive solar-cell roofing tiles to replace solar panels, he says.
"They create more problems than they're worth," Mr. Peabody says. "Imagine you've got a string of Christmas lights and trying to figure out which ones went out."
Mr. Schmidt says he and his wife Sherry considered all the various types of panels, and ultimately went with the most efficient ones, even if it meant sacrificing some of their home's curb appeal. Because their house is on a downhill slope, the roof and its solar panels are easily visible.
"Functionality over form won out," he says.
As for living with solar energy, he says, "It's great." He's become, he confesses, a bit of a fanatic, frequently checking the meter to see how much electricity is being produced, turning on the vacuum cleaner and checking the meter again to find out how much power he's using.
Mr. Schmidt says he ended up doing quite a bit of research about photovoltaic systems during the planning stages.
"You could really get into it," he says. "But it's like buying a flat screen TV. You could do research and learn all about it first, or you could just go out and buy one."
Solar rebates and tax breaks
There are two types of incentives for newly installed solar energy systems: rebates and tax credits.
State tax credits ended last year, but currently, there's a federal tax credit of up to $2,000 in place until the end of 2007.
Current state rebates of $2.80 per watt of system capacity are set to stay in place throughout 2006, and then decrease by 10 percent a year until ending in 2017.
According to solar designer Steve Peabody of MC Solar Engineering in Santa Clara, the average photovoltaic system costs $9 per watt of capacity, or $7.20 after rebates.
Before the $2.9 billion California Solar Initiative was approved by the state Public Utilities Commission in January, the state's previous solar power rebate program started at $4.50 per watt and dropped every six months, he said.
Under the initiative, the rebates will decrease at a slower rate, he said.
Information about solar power incentives, as well as calculators and planning tools, are available online at Consumerenergycenter.org and findsolar.com.
Solar energy resources, classes
The best Web sites for homeowners who are interested in solar energy are Consumerenergycenter.org and findsolar.com, says Darren Bouton of the Pacific Energy Center, an energy-conservation arm of PG&E.
He highly recommends solar installers who have certification from the North American Board of Certified Energy Practitioners, a nonprofit organization.
The Pacific Energy Center in San Francisco maintains a list of solar system installers. Online listings of installation companies are at the California Energy Commission site, energy.ca.gov, and at findsolar.com.
Several classes on solar energy and photovoltaic systems will be offered by the center this spring. For listings, check the classes link at pge.com/pec.
For do-it-yourselfers, the Pacific Energy Center maintains a lending library of tools and reference books, and compiles a list of vendors and manufacturers. Expert advice is also available through the center.
The Pacific Energy Center is located at 851 Howard St. in San Francisco. Call (415) 973-2277.
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