Q. The more energy costs go up, the more determined I get to someday be energy-independent. Are the costs of solar electricity ever going to be cost-effective for the average homeowner?
A. During the past 21 years I've been writing this column, I've gotten hundreds of questions asking this very same thing, and I've always answered them the same way: Someday down the road, photovoltaics (solar electric systems, also called PV systems) will be economical enough to consider their widespread use.
Now, for the first time, I'm giving a different answer. For many homeowners in the United States, solar electricity is cost-effective today, even if they live in areas served by their utility company.
PV has always been a great economic alternative for people who lived far from the power grid on a large ranch or had lots of land in a remote area. Utility companies usually charge thousands of dollars for every mile they have to run the power lines to bring electricity to remote areas. "Stand-alone" PV systems are often cheaper to buy and install for use in remote locations than to get grid-connected power brought in. That's why there are thousands of homeowners in remote areas, in vacation cabins by a lake or forest, and other out-of-the-way places who have found it cheaper to buy solar panels than to pay for extending the power grid.
Thanks, though, to the federal tax credits currently in place and to a variety of financial incentives offered in many of the states, solar systems can be installed cost-effectively today in many parts of the country to provide some or even all of the power needed for homes.
Consider these economics: solar- generated electricity today costs about 32 cents per kilowatt- hour (kWh), far too expensive on its own to be cost-competitive with what most people pay for utility-generated power.
But there are currently federal tax credits in place through the end of 2008 that will pay 30 percent of the cost of solar systems up to a maximum of $2,000. While that's not enough to buy PV for your entire home (it costs somewhere between $7,000 and $10,000/kW, and you'd need three or four kW to power the typical home), at least it will let you get started buying PV.
Also, there are more than 20 states that offer Public Benefit Funds--state-level programs usually supported by charges paid by a state's utility customers on their bills that are used to help buy-down the cost of renewable energy systems and energy- efficiency programs (you can find out if your state has such a fund by checking the list at
detail/2604). Applying these federal and state incentives drops the PV cost in half. In addition, you can also trade your renewable energy credits on the green tag market (producers of renewable energy can sell or trade Renewable Energy Certificates, which result in a subsidy for generating electricity from renewable resources), and you'll end up with a bottomline cost of only 12 cents per kWh. That's about the same or even less than most people are paying these days for the electricity that comes out of the walls in their homes. Suddenly PV is cost-competitive.
But the news gets even better. In addition to these incentives, more than a third of the states offer state tax credits (some as high as 35 percent) that can be applied toward the cost of a solar system. In addition, there are many types of state rebates and grants, as well as a variety of utility programs around the country, that all help lower the cost of solar systems. You can get full information on programs in your state at