Salute to Solar

18 Mar 2014

Going solar is easier than ever due to dropping costs and different financing options, rebates and credits.

Here's a look at the current state of solar.

salutesolarThinking about going solar? Then you probably already know Colorado is an ideal location for it. Our 300-plus days of sunshine are a source of pride for natives and a big draw for transplants and tourists. But they’re also important when it comes to solar panels. Going solar in Colorado is so popular that there are now more than 300 solar companies in the state employing nearly 4,000 people, and a new solar system gets installed every four minutes.

Going solar makes perfect sense for most Boulder County homeowners, and it’s never been easier. But with such an evolving industry and changing regulations, sorting it all out can get confusing. So we asked these solar experts to help us distinguish between the “myths” and “truths” you might encounter when you’re starting your research: Roger Alexander, executive director of the Colorado Renewable Energy Society; Bill Giebler, customer-care manager at RGS Energy (formerly Real Goods Solar); Kyra Coates, marketing director at Endurance Solar; and Blake Jones, President of Namasté Solar. Here’s what they had to say:

Myth: The longer you wait, the more it’s going to cost you.
The fact is, prices keep dropping.

Twenty years ago, solar panels were for living completely off the grid, like in a remote cabin somewhere or on a boat, and there were numerous costs associated with equipment, installation and maintenance.

Ten years ago, solar finally made it to the big city. “Solar customers were tied to the grid, and utility companies played along nicely,” Giebler says. “The market really started to open up, but it was still expensive to pay all the costs up front.” Although the price of solar panels had plummeted from $75 per watt to about $10-$12 per watt, the costs were still out of reach for most folks.

Then, about five years ago, financing plans and solar-loan programs arrived on the scene, allowing more home and business owners to install solar panels without spending cash. As a result of financing, rebates and tax credits, the price of solar panels dropped significantly again, to around $3.50 per watt.

Today, with the price per watt down to about 77 cents, there are numerous options for going solar, including a solar lease. In this option, you lease the equipment and then pay a monthly fee for 20 years. When the lease expires, the lease company will remove the panels or you can buy the system at a cost that factors in depreciation. If you sell your home in the meantime, the lease can be transferred to the new owners, provided they have good credit.

Another option is a power purchase agreement. As with a lease, you pay monthly for 20 years but you’re buying the power, not paying for the equipment. “PPAs are mostly used by business owners, not homeowners,” Coates explains.

A bank loan is another financing option. “Long-term unsecured solar loans have become increasingly popular,” Jones says. “These loans often have terms as long as 12 to 20 years, with fixed-interest rates as low as 1.99 percent. They have no prepayment penalties and they require no money down, so they’re a great alternative for homeowners who would rather own their solar system than lease it.”

“If you finance through your bank,” Coates adds, “you still get the rebates and the 30-percent income tax credit. The credit applies to everything you paid, including installation and finance charges.”

New construction is another way to go solar. With most new-home loans, the cost of solar can be rolled into your mortgage.

Financing a system with cash isn’t likely for many people, but still possible, though you wouldn’t see a payback on your investment for at least 10 years, Giebler says.

Myth: Anyone in Boulder County can go solar with $0 down.

If you’re an Xcel customer with the right kind of roof (sloped and sunny) or decent yard space, and if you have good credit, it’s true that you can go solar for little or no cost. The rebates and tax credits available keep the costs low. You start saving right away, because in most cases, your monthly payment is lower than your electric bill was in the past.

However, things are a little different if you live in Longmont or Lyons. Most Longmont residents get their electricity from the city’s municipal utility, Longmont Power & Communications, not Xcel. Lyons also has its own utility, getting its power from the Municipal Energy Agency of Nebraska. Neither city offers rebates, so a homeowner wanting to install solar panels would not be eligible for financing. However, you could participate in net-metering after going solar, so you’d see a reduction in your monthly electricity bill, and you’d still be eligible for the 30-percent federal tax credit. But you’d have to purchase everything up front (at least $20,000 out of pocket), and you wouldn’t see a payback of any kind for at least 20 years.

Truth, but: Going solar is a complicated process.

“With all the groups we have to bring together, like the finance company, Xcel—as both utility and state-rebate agency—and our suppliers, plus the building permits, inspections and other hurdles to go through, yes, it can be complicated,” Giebler admits. “Luckily, though, your solar company does all the work for you. All of it. You just have to be patient, because even though installation itself takes only a few days, the process as a whole can take four to six months from start to finish.”

Myth: Once you go solar, you can kiss your electric utility goodbye.

Even when you go solar, you’re still tied to the central grid—not off the grid, storing power in batteries, like in that remote cabin 20 years ago. You generate the power you need, and any surplus you produce is transferred back onto the grid for others to use. However, when your system isn’t generating enough of its own power, like on very cloudy days or at night, you get the power you need from that same central grid, and you have to pay for it from Xcel, at regular retail rates.

Truth, but: that’s not the whole story: If your solar system generates excess power, your electric utility buys it back from you.

Under its Solar*Rewards program, Xcel pays you for any excess power you produce. If you need more power from the grid, you pay them. It often evens out, but if it doesn’t, Xcel gives you credits you can roll over from year to year and use in the future, or you can take a minimal payout. This is called net-metering, and utilities are required by law to participate.

However, during public hearings in the first week of February, Xcel Energy appeared before the Colorado Public Utilities Commission asking for permission to reduce the net-metering credit from 10.5 cents to just 4.6 cents per kilowatt-hour. At the hearings, proponents of solar outnumbered supporters of Xcel by a ratio of 16 to 1. Although the PUC was expected to hand down a decision in February, it ruled “to sever the issue of the costs and benefits of net metering into a separate proceeding,” says Terry Bote, external affairs manager for the Colorado Department of Regulatory Agencies. So far, no schedule has been set for the proceeding, and a final decision “is likely at least six months away,” Bote says.

As solar has gotten more affordable and more accessible, “Xcel has gotten concerned,” Alexander says. “It cuts into their business model.”

Truth: The future of solar is cloudy.

The future of anything is cloudy, really, and solar is no different. But with all the changes the industry has seen in just the last 20 years, it’s natural to assume that things will look very different in 20 more years. Here are a few ways the solar industry might change, according to our experts:

A recent study by Greentech Media Research predicts that the price of solar will continue to decline steadily, to about 36 cents per kilowatt-hour by the year 2017. That’s half of what it is today.

Colorado Senate Bill 13-252, signed into law by Governor Hickenlooper in June, 2013, doubles to 20 percent the percentage of renewable energy that rural electricity cooperatives must provide by the year 2020. “This will likely result in beneficial solar programs in Colorado’s remaining utilities,” Giebler says. “Maybe even in Longmont and Lyons.”

In 2011, voters gave the city of Boulder the go-ahead to explore options for breaking away from Xcel and creating their own municipal utility, which the city hopes to have up and running by 2017.

One of the hurdles is agreeing on a price for the city to acquire Xcel’s equipment; it’s an ongoing battle that could last another several months at least. “Exploring the opportunity for Boulder to start its own municipal utility is very exciting, and in my opinion, it can only lead to a beneficial outcome,” Jones says. “I believe it will translate into better reliability, more renewable energy and similar or lower costs relative to Xcel’s.”

“Boulder is going to be able to do things that the existing utilities think can’t be done,” Alexander adds. “Boulder wants to be 50-percent renewable to start with, with goals of going even higher than that in the future.”

And, Coates points out, “Boulder wants to set a precedent of being mostly renewable by 2026. That’s pretty impressive.”

Solar Resources

Agencies and Organizations:

Alliance for Sustainable Colorado

American Solar Energy Society

Boulder County Solar Information

City of Boulder Solar Information

Colorado Renewable Energy Society

Colorado Solar Energy Industries Association

Million Solar Roofs

Solar Friendly Communities

Xcel Energy Solar Information

Local Solar Companies:

Custom Solar

Endurance Solar

Flatiron Solar

Lighthouse Solar

Namasté Solar

RGS Energy (formerly Real Goods Solar)

—L.T.

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