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 US $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 over 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 home owner installing a 2.5 kilowatt (kW) system (enough for half a typical home’s electricity needs) paid about US $17,500 with state and federal rebates. Under the new tax credits, that same system costs approximately US $14,000. This system will pay for itself in less than 11 years and save the homeowner US $21,000 in avoided electricity costs over 20 years, well within 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. 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 upfront costs, long term price stability, and include standard maintenance — great features for someone who wants the benefits of solar without high upfront costs and upkeep.
Some California companies like SunRun and SolarCity have lease programs that 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.
For example, a homeowner recently put no money down on a 4 kW system and was able to save approximately US $9,000 when compared to the cost of electricity from the utility over a 15 year contract (assuming a conservative 5.5 percent rate increase from Southern California Edison per year). This system covers over half of the electrical demand on the home, and since the 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. In fact, the University of California, 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 US $56 billion in electricity costs. The same report predicted that as many as 400,000 new jobs will be created by 2020 due to new state policies for reducing greenhouse gas emissions, including aggressive energy efficiency and renewable energy targets. With unemployment at its highest 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, 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. For more on CEC’s energy plans, visit www.cecsb.org.