Solar Grows Exponentially, But Is It Right for You?

Like mushrooms after a spring rain, solar panels are springing up on rooftops across America. Solar capacity has multiplied by some 30 times since 2015, enough to power over 5.5 million homes by the end of this year, according to the Solar Energy Industries Association (SEIA).

This astonishing burst is happening largely because the cost is plummeting. “The price has fallen by 50 percent” just since 2010, explains Tom Kimbis, Vice President of SEIA. Solar is getting “more and more affordable in more and more places.”

Yet, up until a week ago, an end to generous government credits threatened solar’s growth. Currently, the government directly refunds 30 percent of the cost of solar panel installation, but this tax credit was scheduled to end in January of 2017. On December 18, however, as part of an omnibus spending bill, Congress extended the credit an additional three years, after which they will be gradually phased out by 2022.

The situation for solar is now extremely sunny. The tax credit extension “has reestablished America as the global leader in clean energy, which will boost our economy,” exclaims SEIA President and CEO Rhone Resch. He says that it will spur 140 thousand new jobs and lead to a tripling of solar by 2022, resulting in “enough to power 19 million homes” representing “3.5 percent of U.S. electricity generation — up from 0.1 percent in 2010.” This is the kind of exponential growth needed to make a dent in the fight against climate change.

Jonathan Bass, Vice President of Communications for Solar City, also praises the extension of tax credits, explaining that what the industry most needs is certainty. He points out that government support of renewable energy “is justified given its extraordinary benefit to the environment and job creation” and that this support is modest “compared to the extraordinary incentives for oil and gas and nuclear over 75 years.”

Even before the extension, solar, explains Kimbis, had been enjoying a “huge uptick due to falling costs, increasing familiarity, the neighborhood effect of knowing friends and colleagues who have solar, realizing this works, this is a good alternative to what I have on the grid.”

I am usually not one to jump on bandwagons, but, wanting to help the environment, and fearing the end of tax credits, my wife and I signed up to join the solar revolution. On December 9, a small array of solar panels went up on our 1000 square foot home.

These are projected to provide 102 percent of our electricity, dramatically lowering our carbon footprint. This does not mean that we’ll be carbon neutral, however, as natural gas powers our oven, furnace, and water heating. Still, it’s nice to know that we’ll be sending electricity back to the grid so that the utility company will actually pay us!

The solar panels already have a relatively small electricity bill to cover. Some five years ago, we had an energy audit, after which we installed greatly improved insulation and had leaks sealed. This has halved our energy bill and has already paid for itself.

The solar panels will take longer to repay the cost of installation, about ten years, after which the rest is pure sunshine. The finances make sense, but only if one is thinking long-term.

For us, the environmental benefits are the even more important reason to go solar. Over the next twenty years, we will prevent 147,651 pounds of carbon from entering the atmosphere, the equivalent of driving 161,273 fewer miles, according to the contract we signed with Sungevity. We are already helping the United States meet its carbon-reduction goals from the freshly signed Paris climate agreement.

The other reason to go solar is to be a good role model. People are driven to match their neighbor in buying fancy cars or electronic equipment or enlarging their house—activities that harm the environment. Solar is one case where this keeping-up-with-the-Joneses phenomenon is actually good for the environment.

Unlike better insulation, solar is blatantly obvious to neighbors, who might want to jump on the bandwagon. The truth is, we probably wouldn’t have gone solar had not a relative told us how his solar panels had paid for themselves.

Is this article making you want to join the solar revolution? The decision is “always dependent upon a family’s finances and their timing,” explains Kimbis. “Going solar should be thought of as similar to redoing a kitchen or any other major home improvement.”

Conditions also vary by state, Bass points out, depending on local sunshine and the cost of energy in the state.  The more expensive the electricity “in a given place, the better the economics of solar will be.”

The SEIA suggests several steps in the process. First, is your roof appropriate? A south-facing exposure with little shade is ideal. If you’re not certain, you can always call a solar company for an appraisal.

Don’t just trust your first contact, though. Get multiple bids. Do your research — ask for references and check with your county or state about the firm’s status. Read the contract carefully and make sure you understand the tax incentives, not just federal but any state or local ones you might be eligible for.

Financing options have become much more solar-friendly in the past several years. Best is if you happen to have cash on hand, but there are also various loan programs. Only if you buy the panels outright do you get the tax credits.

Another option is a solar lease, in which a company buys the panels for you, but you agree to pay a leasing fee for the next twenty years (depending on the specific lease signed). Because you are saving money on your electricity bill, you come out ahead from the first month. The company, however, pockets the tax credits, making the deal financially viable for them.

Finally, there is a Power Purchase Agreement, in which the company installs and owns the system and you purchase the electricity for a set rate. Power Purchase Agreements are now the most popular form of financing solar, according to Bass, “because they make it possible for many customers to start saving money immediately.”

With all these variations and conditions, you will need to carefully compare options to see which is best for you.

In our case, my wife and I chose Sungevity largely because it has an agreement with our local Sierra Club to provide a refund both to the consumer and the Sierra Club, because of its strong reputation, and because we approved of the terms of the contract.

Although we will own our system outright, Sungevity is likely to stay involved. They guarantee that the system will perform at a certain level for twenty years or they will send a check for the difference. They also provide a 20-year warranty against defective workmanship or a breakdown of components and are available to assist with maintenance.

If you do go solar, you’ll be joining a burgeoning movement. Even when the solar credits begin to wind down, in 2020 the Environmental Protection Agency’s Clean Power Plan will kick in, mandating that states find ways to reduce carbon emissions. Solar’s future should remain bright.

One other danger for solar comes from the utilities, some of which see their model of centralized energy threatened. Solar households use the same grid that we all depend, receiving electricity from the grid when solar is insufficient and sending electricity to the grid when they collect more than an individual home or business needs. Some utilities, notably in California and Nevada, are trying to boost the monthly fee from solar, arguing that they need it to maintain the grid, that solar users are getting something of a free ride.

“We think that’s a completely false argument,” Kimbis exclaims. “Utilities are gaining enormous benefits—power when they need it most at the peak part of day, not having to build out infrastructure.” Indeed, many utilities realize that the future is solar and are working to adapt.

Yet some utilities are attempting to raise rates on solar households dramatically. Arizona utilities, for instance, asked for a $70-80 monthly fee, says Kimbis, but the state rejected this, maintaining the fee at about $5.

Meanwhile in California, says Bass, both the governor and the Public Utilities Commission have come out strongly in support of net metering, in which “solar customers receive appropriate credit for the electricity they provide to the grid during the daylight hours.”  The solar industry “is fighting utilities at every turn and we’re winning,” says Kimbis.

The battle over utility fees is but one skirmish in a longer war likely to be won by solar and other clean energies. The question is how much damage fossil fuels will do to the planet in the meantime. Investing in solar panels is one way individuals can do their part in moving toward the clean energy future we all need.