The solar revolution

By Stacey Kronquest
Homeowners, the New Energy Producers
Part 1: State and federal incentives are fueling a growing trend and turning the American homeowner into a green energy producer.

Bruce Monson's solar array

“I got tired of waiting for a federal energy policy to put an end to the huge fossil fuel subsidies,” said Bruce Monson, a South Carolina resident who installed a 6-kilowatt solar array this year. According to his calculations, the 28 ground-mounted modules would produce just enough power to cover his home’s energy needs.

Like Monson, thousands of homeowners are looking to the sun as an alternative to dirty, costly energy and contributing to a 66 percent growth in solar installations during the first quarter of 2011, according to Solar Energy Industries Association.

Federal and state tax incentives, a decline in the price of photovoltaics and ever-increasing energy costs has made solar-generated electricity a viable financial option for home and business owners. Although Monson insisted that the primary reason he turned to producing his own solar energy was purely for environmental reasons, “I didn’t want to contribute to what I increasingly view as immoral, namely carbon pollution wrecking ecosystem after ecosystem,” he admitted that the time seemed right economically.

The federal tax credit, funded through 2016, allows 30 percent of the cost of a residential solar installation to be deducted from individual tax returns, and many states have equally attractive incentives. South Carolina offers a tax credit of 25 percent, enabling Monson to write off 55 percent of the $26,000 he spent on his solar system.

Twenty-five other states offer tax credits for residential photovoltaics, including solar water heaters. Most states calculate the tax credit as a percentage of what the solar installation costs. For example, Louisiana’s tax credit is 50 percent for the first $25,000 of the system’s cost, with a maximum credit of $12,500. Add the federal tax credit, and a Louisiana resident can write off 80 percent of a solar installation. Now, that’s a big easy.

Idaho is another state generous toward residential green energy: the first year an Idahoan can deduct 40 percent of the cost of a solar system, and then 20 percent for the next three years, essentially recouping 100 percent of the cost through deductions. If you’ve got a tax burden and you live in Idaho, solar is a no-brainer, especially if you consider that Idaho is a top-ranking state for solar potential, averaging 6-hours of peak sun a day.

Other states offer rebate and grant incentives, rather than tax credits. Before counting on a rebate check, however, it is important to verify that the money allocated to your state’s renewable energy incentive program hasn’t run out for the year. State revenue is disappearing faster than Arctic glaciers, leaving solar rebates and grants as vulnerable as the polar bear.

Depending on your utility company, and the size of your solar array, net metering can further offset the initial expense of solar panels. What is net metering? Simply put, net metering means that when your solar panels are producing more energy than your home is using, the surplus energy automatically shoots into the utility grid, effectively spinning your meter backwards and crediting your account. In other words, net metering allows individual power producers to sell excess energy to the grid.

But all utility companies, and net metering policies, aren’t equal. The majority of states have established a net metering policy, guaranteeing that the energy a residential homeowner sends into the grid is credited at the same value per kilowatt that the utility charges its customers. Depending on the policy, the credit can rollover monthly so a Florida homeowner, for example, can use the sizeable credit built up during winter months to offset the high cost of cooling in summer months.

Note: Numbers indicate individual system capacity limit in kW. Some limits vary by customer type, technology and/or application. Other limits might also apply. This map generally does not address statutory changes until administrative rules. Credit: Database of State Incentives for Renewables & Efficiency

In some cases, public utility companies will pay more for clean energy. Georgia’s largest utility, for example, buys residentially produced solar power for .17¢ per kilowatt, more than twice the retail value. But before you get all soft on Georgia Power, owned by Southern Company — the largest coal energy producer in the U.S. — it’s important to recognize that the program is subsidized by its customers who voluntarily pay an extra charge to finance the utility’s green power program.

In some cases, like for Bruce Monson in South Carolina, sending solar power into the grid is costing him more than if he were simply buying, and not producing, energy. Monson is one of 42 million people in the U.S. who buys his electricity from an electric cooperative, a locally and member-owned not-for-profit. Monson’s cooperative charges a monthly facilities fee to connect his solar system to the grid.

Despite the fact Monson invested in solar for reasons other than financial, he plans to fight the $50 facilities fee, which is impossible to offset with the .04¢ per kilowatt price his cooperative pays for his green energy. Monson refers to his situation as a reverse incentive. “I’m paying more to my electric cooperative now than before I began producing solar energy.” The biggest problem, as Monson sees it, is that the facilities fee will keep other cooperative members from even considering solar as an option. “Small solar producers shouldn’t be penalized for producing green energy.”

In the every-changing landscape of energy production, it is impossible to overestimate the importance of understanding not only your state’s incentive program, and the net metering policy of your utility company, but also the efficiency rating of the solar modules you are looking to purchase and the capabilities and certifications of your solar installer.

Because many state incentives and net metering programs have equipment and installation requirements, buying approved solar modules and using a state-certified installer will head off any major wrong turns on the road to becoming a solar energy producer.

• For a complete list of solar incentives in your state, consult the Department of Energy funded Database for State Incentives for Renewables & Efficiency.
• The Find Solar directory is a nationwide listing of residential and commercial solar installers.
• To calculate your state’s solar output potential, visit the National Renewable Energy Laboratory’s solar maps.