Originally Posted at PortlandTribune.com
Read the original post here.

Boost in federal subsidies helps solar pencil out

Portlanders usually install photovoltaic solar panels atop their roofs to help the planet, not their pocketbooks.

But the federal tax break for solar electric systems tripled in January for a typical homeowner, and the price of photovoltaic panels is falling. Suddenly, solar electric systems are a much-better deal than ever, even in oft-overcast Portland.

Homeowners can now recoup the costs of a solar electric system in 15 years via lower utility bills, says Heath Kearns of Mr. Sun Solar in Portland.

That’s “unprecedented for this technology,” Kearns says. “This is going to be a big year for photovoltaic solar. I think it’s definitely going to move more into the mainstream.”

A typical 3-kilowatt home solar system costs about $28,500 right now in Portland, says Lizzie Rubado, residential solar project manager for the Energy Trust of Oregon. But two-thirds of that cost is now reimbursed through tax credits and cash incentives, so the ultimate cost to the consumer is about $9,225.

“I think we’re at a tipping point right now,” Rubado says. “It’s going to be more accessible for more Oregonians.”

Experts still say the most cost-effective way to cut home utility bills is conservation measures that curb the use of gas, electricity or oil. And solar water heaters still pencil-out better than photovoltaic solar systems that produce electricity.

“But you can’t run your hair dryer off your solar water-heating system,” Rubado says.

Solar electric systems typically employ a series of rooftop photovoltaic panels to convert the sun’s rays into electricity. On a long summer day in Portland, the panels usually provide more electricity than a homeowner needs. Under net metering, surplus electricity flows back to the utility to be used elsewhere, and the homeowner gets a credit on future electric bills.

Bailout bill bonus

When President George W. Bush signed the massive financial industry bailout bill four months ago, one provision renewed federal tax credits for solar water heaters for eight more years. A separate and more lucrative provision lifted the $2,000 cap on federal income tax credits for home solar electric systems, which use photovoltaic solar panels.

That means the owner of that typical 3-kilowatt Portland system gets a $6,526 federal income tax credit, more than triple the previous $2,000 subsidy. That’s on top of a $6,000 state income tax credit and a $6,750 cash incentive from the Energy Trust of Oregon, a nonprofit that disburses money collected via utility-bill surcharges.

The federal tax credit equals 30 percent of the total costs after deducting the energy trust’s incentive, so the amount varies.

Once the bailout bill was signed, Mr. Sun Solar advised customers to hold off pending installations until this year, to fully capture the expanded federal tax break.

Lori and Paul Howell, of Multnomah Village in Southwest Portland, took that advice.

“We got an additional two grand,” Lori Howell says. “It was worth waiting.”

The Howells were remodeling their home anyway, and changed the orientation of their garage roof so it faces south and, with newly mounted photovoltaic panels, captures more solar rays.

“We have two kids. We’re very concerned about rising energy costs and global warming,” Lori Howell says.

Her system is so new that she doesn’t know how much money it will save. But she expects energy prices to climb in future years faster than the rate of inflation.

“It will hopefully take care of about 20 percent of our energy needs over the course of a year,” she says.

The Howells bought a relatively small 1.8-kilowatt system that cost $18,050 before tax credits and incentives. Some of the upfront cost was financed through their home-improvement loan, the Howells say.

Other homeowners are eligible for a new solar loan program sponsored by Portland-based Umpqua Bank and the Energy Trust of Oregon, called GreenStreet Lending. Many homeowners lack the cash to make an upfront investment in solar, and balk at installing systems even though they could save money in the long run.

GreenStreet Lending offers home-equity loans of $5,000 to $50,000 for up to 15 years and unsecured home improvement loans of $1,000 to $50,000 for up to five years.

The program is helpful, Rubado says, because many other lenders don’t understand how solar electricity works.

A pending price cut in photovoltaic panels also figures to lower homeowner costs. SolarWorld, a large German manufacturer that opened a major solar plant in Hillsboro in October, expects a 10 percent drop in wholesale solar panel prices this year, says Anne Schneider, head of public relations for SolarWorld Group in Hillsboro.

Expert joins the crowd

Lizzie Rubado, who preaches the virtues of home solar electric systems, says she and her husband, Dan Rubado, waited until this year to install one on their home. The higher federal tax break “tipped the balance for us on affordability,” she says.

They figure their 2.5-kilowatt system, which cost $20,910, will pay for itself in 14 years, if electricity costs rise an average of 5 percent a year. The higher federal tax credit shaved five years off the payback period, she says.

If electricity prices rise an average of 9 percent a year, payback will take less than 12 years, Rubado calculates.

The Rubados purchased a North Portland home last year. They’ve already purchased energy-efficient appliances and invested in other conservation measures.

The new solar electric system, to be installed later this year, “is the frosting on the cake,” she says.

By selling surplus power back to PGE, and making behavioral changes to reduce their electricity use, the Rubados hope to get their electric bill down to virtually zero.

stevelaw@portlandtribune.com

How Lizzie and Dan Rubado’s system pencils out

• Total cost to install a 2,460-watt system: $20,910

• Energy Trust of Oregon cash incentive: $5,535 (paid to solar contractor)

• Amount the Rubados pay to contractor: $15,375 (with loan from GreenStreet Lending)

• State income tax credit: $6,000 (to be used over four years)

• Federal income tax credit: $4,613 (used as needed)

• Net cost after subsidies: $4,762 (23 percent of total)

• Current annual electricity use: 2,900 kilowatt hours

• Expected annual production from new solar electric system: 2,285 kilowatt hours

• Current electricity price paid (renewable/clean power option): 10 cents per kilowatt-hour

• Value of new solar system: $229 per year in energy production

• System payback if prices rise 5 percent a year: 14 years

• System payback if prices rise 9 percent a year: less than 12 years

Originally Posted at PortlandTribune.com
Read the original post here.