September 28th, 2009

By Bill Sullivan
Green Right Now

If you’ve ever thought about going solar to take a bite out of your utility bills, you may want to take another look: A perfect storm of events, policies and programs currently makes solar more affordable than ever.

The problem: He who hesitates may miss the best deals.

“People say, ‘It’s too good to be true,’” says John Berger, CEO of Standard Renewable Energy of Houston. “And, you’re right, it is. That’s why it’s not going to last.”

In theory, solar has always been an attractive source of alternative energy. It’s clean. It’s green. What’s not to like about harnessing power from the sun to climate-control your home, keep the lights on, and maybe even run a few appliances?

For the average person, the issue has been cost. Until recently,going solar on any kind of useful scale has been expensive, asking buyers to pony up big bucks, then wait 20 years or more to recoup their investment through monthly utility savings.

Here’s what has happened to change all that:

• Since the middle of 2008, the price of solar panels has dropped about 40 percent. Credit increased production of polysilicon and the opening of more panel-producing plants, particularly in China.
• The global economic slowdown: Installations in Europe – long a hotbed for solar power – are expected to be off 26 percent from last year, according to consulting firm Emerging Media Research. More supply + less demand = lower prices.
• More generous government subsidies: In 2008, homeowners could get a 30 percent tax credit on solar installations, but the credit was limited to $2,000. That ceiling was removed on January 1.
• And, yes, even many of your old-guard utilities are helping make solar more affordable. For the moment, at least, rebates from your regular utility can further slash your bottom line.

Put it all together, and going green by way of the sun isn’t only for those enjoying deep pockets. With so many moving parts, however, the current opportunity may be fleeting.

According to SRE’s Berger, the decline in materials cost will almost certainly lead to reduced government incentives. (If it’s already cheap – or cheaper – why subsidize?) At the same time, utilities have begun backing away from rebates. (In Northern California, Pacific Gas and Electric is cutting its rebate program by 29 percent; Phoenix’s Salt River Project trimmed 10 percent from its homeowners rebate in June.)

“Any incentives you can get from your local utility, or the state, or the federal government, you need to wrap them up now,” Berger says. “We’re already faced with incentives getting cut because of the price decline. We anticipate more by the end of the year, and we expect a whole lot more next year.”

For now, those with the resources to invest can enjoy big bargains.

About a year ago, Greg Hare of Magnolia, Texas, priced a system for his 7,000-square foot house and garage at about $100,000. He decided to wait. Over time, the drop in panel prices trimmed about $23,000 from that bill, and the beefed-up tax credit nearly doubled his savings. Ultimately, Hare took advantage of the situation and opted for a larger system, installing 64 panels rather than the originally-planned 42.

For those with more modest means, Berger estimates that a typical homeowner can cut 20 percent off his bill with a post-tax credit investment of $15,000 or less.

As prices become affordable to a wider range of potential customers, the long-term implications may be more significant than the current run of attractive short-term deals. Regarded by detractors as an environmentally friendly but largely impractical solution, solar appears to be in the process of becoming a real and viable industry.

When you think silicon, you think of computers. Yet, in 2008, more silicon went into solar panels than microchips, says Mike Splinter, CEO of Applied Materials, a Silicon Valley company that makes the machines that manufacture microchips.

“We are seeing the industrialization of the solar business,” he told The New York Times. “In the last 12 months, it has brought us a $1.3 billion business. It is hard to build a billion-dollar business.”

Where does your local utility fit in this picture? That depends largely on where you live and who controls the market.

In Austin, Texas, municipally-owned Austin Energy offers an aggressive rebate program, featured prominently on its website. Similarly, San Antonio’s CPS Energy touts the new kids on the energy block. In those cities, you can go solar and get considerable help in doing so.

In Colorado, on the other hand, the state’s largest utility (Xcel) tried passing a surcharge on homes and businesses using rooftop solar power. The initiative quickly crumbled in the face of public outcry and pressure from the governor’s office. (Environment Colorado is now lobbying the state to increase subsidies for residential solar power.)

“Typically, the municipal utilities are the ones more embracing of it,” Berger says. “The industrial utilities…hate it with a passion.”

Still, even seemingly-entrenched industrial power companies may have to reassess their position. According to data compiled by Credit Suisse Securities, wholesale power demand in the United States was down 15.3 percent in the second quarter of 2009 compared to a similar period a year ago.

Experts attribute much of that to the economic slowdown, but concede that conservation efforts and a move to alternative energy sources have played a part. If that’s the case, utilities that have dominated their markets may be forced to seek a different kind of role in a changing landscape.

Already, John Berger senses a change in the perception of the power of the sun.

“A lot of the utilities thought this was a social do-gooders business,” he says. “I’ve had some execs ask me that. ‘It’s really nice, what you’re doing for the planet, John.’ And I’ve always told them that I wanted to make one thing clear: We’re here to make money and help people basically get off the debt you keep putting on their backs.

“That wasn’t taken seriously until this year. A lot of it is being taken seriously now.”

Copyright © 2009 Green Right Now | Distributed by Noofangle Media