Children play near a meter used to measure the solar power being produced by the panels on a roof in a Colorado co-housing development. The state was the first to require by popular vote that utilities generate a percentage of their power from renewables. This article is reprinted from the Center for American Progress’s “It’s Easy Being Green” series.
The check that landed in my family’s mailbox recently wasn’t much in monetary terms–just $9.73–but to us it was huge in other ways.
The payment from Xcel Energy, Colorado’s largest utility, meant that the grid-tied solar photovoltaic system we installed a year and a half ago on our home in the foothills west of Denver had produced about 200 kilowatt hours more power than we consumed in 2008. At least as far as home electricity is concerned we are slightly better than net zero, both in carbon emissions and costs.
In a broader and more important sense, our modest refund reflects the success of progressive policy choices Colorado voters and officeholders made in recent years that have made it far easier for homeowners like us to follow a greener path. Those policies have put Colorado in the vanguard of what Democratic Governor Bill Ritter likes to call the “new energy economy.” The state now ranks fourth in the nation in solar production, with three-quarters of the 32 megawatts of output coming from rooftop installations like ours.
In 2004, Colorado became the first state to enact by popular vote a renewable portfolio standard, or RPS requiring large utilities to generate a set percentage of their power–10 percent by the year 2015–from renewable sources such as wind, solar, or geothermal. Xcel quickly found it could meet that standard about eight years early, so in 2007 the state legislature doubled the RPS to 20 percent by 2020, and included a less ambitious standard for electric co-ops, or private, independent electric utilities. Today, 28 states and the District of Columbia have some form of RPS on the books.
The RPS in Colorado has been a powerful driver for renewable energy that has benefited green-minded consumers by making residential PV systems far more affordable. Because of the RPS, Xcel established a Solar Rewards program with a combined rebate and credit of $4.50 a watt to homeowners and businesses that install small solar and other renewable systems. Another bonus for these consumers is that? Colorado’s net metering law requires that utilities pay homeowners with renewable power systems for any excess power they pump into the grid.
Since 2006, more than 4,900 Colorado residents and businesses have enrolled in the Solar Rewards program, receiving almost $57 million in rebates and credits.
My family’s numbers tell the tale. Our 4.3 kilowatt, 20-panel PV system’s total cost was initially $34,000. Xcel’s rebate and credit dropped the cost to $15,000. The federal tax credit reduced it by another $2,000, as did a state sales tax exemption. Net out-of-pocket cost: about $11,000.
That’s still a substantial investment, but considerably less than it would be without the incentives. And creative financing is on the horizon in Colorado, thanks to 2008 legislation that allows cities and counties to use their bonding authority to offer low-cost loans to homeowners for the upfront cost that can be repaid over time through their property taxes.
Last year, Congress approved legislation removing the $2,000 cap on the 30 percent federal tax credit for solar, meaning a more generous federal incentive. Responding to that, Xcel reduced its own credit by $1 per watt, so the combined credit and rebate of $4.50 a watt that we received is now $3.50.
For 24 hours after Xcel announced the reduction, consumers could take advantage of both the older $4.50 per watt incentive and the new higher federal tax credit if they didn’t plan to actually install until 2009 when the new federal law takes effect. That prompted a stampede of 1,414 applications to Xcel in one day. The pace of Solar Reward applications has since slowed, though it’s hard to tell how much of that is because of the lower credit and how much is tied to the worsening economy.
But even in dark economic times, the outlook for solar remains bright in Colorado. This year the state legislature is considering a measure that gives purchasers of new homes the option to have their house pre-wired for solar or come with solar panels installed.
And at our house, where going solar has reduced our carbon footprint by about four tons of CO2 a year, we’re trying to decide how to spend that $9.73.
Tom Kenworthy is a Senior Fellow at the Center for American Progress.
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Sun must be the unique energy source for everthing.
Joe – you might want to look at the case of Spain as a reference for states blessed with a strong solar potential.
For all new residential housing project and refurbishments, Spain mandates the use of at least some form of solare energy (photovoltaic and/or hot water). ->This corresponds more to the WW2 kind of efforts which are required.
I am by the way amazed at the number of projects (new or refurbishment) on the housing, services or industrial sector which go through without any assessment work to capture at least cost-effective measures. Emitting greenhouse gases or creating a demand for GHG emissions is NOT A RIGHT. It is tolerated. As such GHG mitigations should at least be part of the permitting process.
By the way, how many residential projects in colder and sunny places are still being done without orienting buildings toward the south?
$9.73? That is $9.73 PLUS the savings on 12 electric bills, but obviously after starting $11,000 in the hole. I’d be interested to know what you anticipate your 12 electric bills would have been and at that rate how many years will it take to get your $11,000 back?
The Smart Grid is also up and running in Colorado, thanks to Xcel and the City of Boulder. See this item (http://climatechange.foreignpolicyblogs.com/2008/12/14/the-smart-grid-is-coming-to-town/) at my blog on climate change for the Foreign Policy Association and the article I wrote for the American Planning Association on the Smart Grid – “Current Concerns.”
As Hunter Johnson points out, the missing number is the total value of the power you generated. Which you should then compare to the return you could have gotten on $34k, if your neighbors had given you that $23k with no strings attached.
Pretty long payback. Yes, the kwh figures and so forth, price the power company pats per kwh. That would be interesting.
At 2 or 3 dollars per watt and with the incentives mentioned this would have a quicker payback period. How far away is that price point for roof mounted panels?
Still, even with a 12 year payback, considering a rise in electric rates and maybe adding hot air cogeneration, this homeowner could be heat and electric bill positive in a little over a decade. That could pay their property taxes someday? And even charge their plugin hybrid from their own panels.
This and other testimonials need to investigated further in energy usage reduction by the homeowner. Colorado residents seldom have central or window AC units for example. Many such solar panel and hardware installers also do home energy audits before installing the appropriate system. That’s how they can more accurately declare annual cost saving to the potential buyers. Such an audit also suggest further ways to cut energy usage. There are solar panel and hardware packages that simply aid, but, the homeowner still has to buy power from the grid. The more one uses, the more solar panels and corresponding hardware in order to meet the goal of zero grid usage. 35K-40K after tax credit system is not unusual to meet that goal for a reasonably tight/energy efficient 1250 sq. ft.home based on 1300 KW/h per year.
Going off the grid is much more expensive in many ways. Many more batteries and a more capable inverter are minimum requirements. An outbuilding or lean-to for battery housing. A substantial cut in normal energy usage may needed as well for a self-sufficient, “inexpensive” 55K dollar after tax credit system for example. That may mean buying new, energy efficient appliances, running the AC only during the day while at home, buying a higher SEER number rated AC compressor for example. More hidden outlay for anyone anticipating such a system. Also not as green as you may think as it takes electrical power to produce appliances and AC compressors.
For a better perspective for projected savings, one has to make some assumptions. Some examples are that electric energy will continue to climb in price if purchased from the grid. Solar energy systems will continue to climb in demand, thus price, and take longer to have installed after contracted. Inflation in a few years is still being hinted at by economists, further escalating prices for electricity and buying a solar energy systems. A little known fact is that a new current solar cell has been invented and demonstrated. Will be cheaper, lighter, stronger, and better energy conversion than current panels. Projected 2 years before available en masse by solar panels. May save a few bucks in a couple of years, notwthstanding inflation if that happens.
Myself? I’ve researched solar PV systems and passive water heating systems available by local installation here in central Texas. My home faces the south, my only shortcoming is the hip roof minimizes square footage on the south facing roof available to multiple solar panel installation. The west end will get the passive water heater plumbing grid. My gamble is my contention of continuing electrical energy prices, and escalation of prices for solar PV systems in the future. None of which do I consider high-risk gambles. Don’t be afraid to think this out by doing all the research, you may pay a lot more in the future for your ambivalence now