Don’t get me wrong. I’m as upset as the next person that our tax dollars will go to bail out unscrupulous banks — but there is a silver lining to all those interested in renewable energy, which should be everyone worried about climate change, peak oil or energy independence. The recent rescue package extends tax credits on wind, geothermal and biomass energy for one more year. This is good news, but not earth-shattering. The really good news is that the bill extends tax credits for solar energy of all types for the next eight years, and removes the current $2,000 cap for homeowners. This means that renewable energy is now more competitive with utility rates, the investment pays for itself in a shorter time frame, and homeowners can more easily guarantee their electricity costs for the next 20-30 years.
With large rate hikes in recent years and more planned in coming years, electricity consumers are not only feeling pain at the gas pump, but also at the light switch. If you live in Southern California Edison territory, you may be paying as much as 30 percent more for your electricity in 2009, depending on how much electricity you use. And those with Pacific Gas & Electric are not going to fare much better with a requested rate hike of more than 20 percent in 2009. Edison’s chairman recently told investors that rates would be doubled over the next five years, and next year’s rate hike is the continuation of a trend we’ve seen since the power crisis of 2000-2001.
Solar, on the other hand, provides clean, renewable energy at fixed costs — and those costs are coming down! For example, just last year a homeowner installed a 2.5-kilowatt system — enough for half a typical home’s electricity needs — that cost approximately $17,500 with state and federal rebates. Under the new tax credits, that same system will cost about $14,000. This system will pay for itself in less than 11 years and save the homeowner $21,000 in avoided electricity costs over 20 years, the typical life of a solar system.
While the lifetime savings are substantial, this type of system still involves a large capital outlay at the time of purchase. But for those who can’t afford to purchase a system outright, there are now more financing options than ever. California solar companies are beginning to offer attractive financial models that will help homeowners cope with the relatively high up-front cost of solar by partnering with financing companies to offer solar leasing. While lease options will vary depending on size, performance and other factors, in general they offer lower up-front costs, long-term price stability, and include standard maintenance — great features for someone who wants the benefits of solar without high up-front costs and maintenance.
Locally, two California-based solar companies, REC Solar and Akeena Solar, have paired with Sun Run, a company that will finance, monitor and maintain the solar system, and then sell the electricity to the homeowner. These financing models emulate power purchase agreements that have been successfully employed for larger commercial systems for years. In many cases, the monthly costs will be less than the prices homeowners are paying for higher-tier electricity from the utility.
SolarCity has a similar leasing program that is offered in Santa Barbara County. Recently, a Santa Barbara resident put no money down on a 4-kilowatt system from SolarCity and was able to save approximately $9,000 when compared to the cost of electricity from the utility over a 15-year contract (assuming a conservative 5.5 percent utility rate increase per year). This system covers more than half of the electrical demand on the home, and since homeowners are leasing the system and are not responsible for maintenance, they can basically enjoy worry-free, fixed-rate, cheap electricity for the next 15 years.
In addition to effectively reducing electricity costs, the renewable energy tax credits will be a boon to the green-collar job market. With federal money going into the renewables sector, we are sure to see increased demand for labor. And as we have seen with Clipper Windpower, the Solar Energy Co., REC Solar and many others, local renewable energy companies have huge potential to create hundreds of jobs in a short period of time. UC Berkeley recently released a study that found that over the last 30 years, California’s energy-efficiency policies have created nearly 1.5 million jobs and saved $56 billion in electricity costs. A separate U.N. report predicted as many as 20 million new jobs in the renewable energy sector by 2030. With unemployment at its lowest point since 2003, this boost to the job market could not have come at a better time.
So what does this mean to the everyday person? If you own property and are unhappy with your electricity bill, or want to lock in a set electricity price for the next 20-30 years, or simply feel the time is right to enjoy personal energy independence and carbon-free electricity, you should call a local solar installer to get a personalized quote. And if you are looking for a job or wanting to start a new career, you should examine the green-collar job market.
— Megan Birney is the Community Environmental Council’s renewable energy project specialist. Click here for more information on CEC’s energy plans for our region.