With state aid, Californians warm to rooftop solar power
At a time when many investors are sticking money in their mattresses, Californians are putting it on their roofs.
Applications for state rebates to install solar panels hit their highest level ever in December, one of the few bright spots in an otherwise gloomy economy.
Residents filed a record 1,215 applications seeking solar subsidies this month, according to the California Public Utilities Commission. That’s the best showing in the program’s 24-month history, and December isn’t even finished. More than 18,000 California homeowners and businesses have applied for rebates over the last two years. Although not everyone who files this paperwork actually ends up installing solar, the figures are viewed as a reliable barometer of future demand.
A record 133 megawatts of solar photovoltaics have been installed in California so far this year, even as the state’s economy has stumbled.
Michelle Gerdes of Long Beach just lost her job as a designer for a dinnerware manufacturer. Her husband, Steve, works for an air-conditioning company whose business is slowing. But that didn’t stop the couple from buying $32,000 worth of photovoltaic panels that went up on their roof this month. The state rebate and a federal tax credit will reduce their out-of-pocket costs to about $17,000 -- a substantial saving but still a big chunk of change. “We decided to just go for it,” said Michelle Gerdes, 44. “It’s the right thing to do for the environment . . . and it will definitely increase the value of our house.”
Coming in the midst of a deep recession, continued strong demand for solar has thrilled -- and puzzled -- officials who oversee the California Solar Initiative, which seeks to put panels on 1 million roofs in California within a decade. Consumers nationwide are in a serious spending funk. Even with California’s generous incentives, photovoltaic systems can cost tens of thousands of dollars.
So what gives?
New federal tax breaks have persuaded some homeowners to take the plunge, said Molly Sterkel, who manages rooftop solar efforts for the utilities commission.
Others are being enticed by new financing models pioneered in California that allow them to go solar for little or no money down. Add rising electricity rates in many parts of the state and turmoil in the financial markets, and some consumers are concluding that sunshine is their safest investment.
California is by far the nation’s leader in rooftop solar, with well over half the installed capacity.
“In an economic downturn, people are looking for ways to save money on things that they are going to do anyway,” said Nat Kreamer, founder of SunRun Inc., a San Francisco residential solar energy company. “Electricity is one of those fundamentals.”
Launched in January 2007, the California Solar Initiative is an attempt to push photovoltaics on a mass scale in California to help cut greenhouse gas emissions and shore up the state’s energy supply.
The goal is 3,000 megawatts installed by 2018, enough to displace five good-sized power plants.
Funded by utility ratepayers across the state, the $3-billion program offers rebates to Californians who install panels on their homes and businesses. Incentives vary. But refunds typically range from 20% to 50% of a system’s cost.
The incentives are structured to decline over time as demand grows, meaning Californians who act sooner will get the biggest refunds.
Rooftop solar will get even more attractive in January. Congress recently expanded federal investment tax credits for residential solar arrays. Starting next year, homeowners will be eligible for tax breaks of up to 30% of the entire cost of their projects. Those benefits had previously been capped at $2,000 per system.
“That has really spurred the market,” said Lyndon Rive, chief executive of SolarCity, a Foster City, Calif.-based solar installer. “Our cash sales have increased dramatically.”
For consumers who still can’t afford to purchase, SolarCity has a residential leasing option. It lets them put solar on their roofs without the hefty upfront costs. Customers cut their power bills while the rebates and tax credits flow to SolarCity, which maintains ownership of the panels.
The deal has proved so popular that it has turned SolarCity into the state’s largest installer of residential rooftop photovoltaics.
Kreamer’s SunRun offers a similar program known as a power purchase agreement. His company installs, maintains and owns the systems. Homeowners sign a long-term contract with SunRun for solar energy that’s priced below what they pay for conventional power.
Californians pay some of the highest electricity rates in the country. Rates in many parts of the state are rising.
The Gerdeses’ utility, Southern California Edison, is asking state regulators to allow it to collect more than $700 million extra from its ratepayers next year.
It won’t be coming from the Gerdeses. With solar panels now snug on their roof, the couple needn’t worry about rising electricity bills as the recession deepens.
“We can think about turning the hot tub back on now,” Michelle Gerdes said.