Incentives

Great Reasons for Homeowners to Consider Solar Power

Solar power is a non-polluting renewable source of energy that can mean lower power bills and higher home resale values. On top of that, as of this year the federal tax credits have never been better so needless to say, it’s a no-brainer.

Installing solar panels to generate power is a significant investment in a place where the tax breaks and subsidies are not what they are in Austin. The final decision depends on a homeowner’s ability to put up the money, a willingness to wait for a long-term payoff and the amount of sunshine up on the roof.

The decision can be broken down into three variables:

• Who’s helping out? A federal tax credit offers a tax saving equal to 30 percent of the cost. Homeowners in the Woodlands may get a grant from Entergy, further reducing the cost by $2,500 per kilowatt of solar generating capacity added.
• How long does it take to break even? A good indicator of the payoff is the time it takes for the expected electric savings to cover the upfront cost. It’s also worth considering the potential appreciation. Solar can significantly add to the resale value of the house, as do other energy saving investments.
• How sunny is your roof? The available space on most Houston homes limits solar to a fraction of their total energy needs.  Direction also matters. A south-facing roof is best, west or east can work, but shade may be a deal breaker.

“Most people in Houston with solar installations use them for about one-quarter of their power needs”, said Ralph W. Parrott, Jr. Founder, President and CEO of Alternative Power Solutions in Houston. Often the limiting factor is the amount of roof space in a suitably sunny spot. And systems are not set up to store power so after dark it’s time to go back to drawing power from the power company.

According to the Public Utility Commission of Texas you may be paid something other than retail value for energy exported to the grid depending on the agreement you make with the Retail Energy Company (REC) that provides your electricity. This “outflow” to the grid may occur anytime the PV system is producing more energy than your home is consuming at any given moment during the solar production period. Currently Green Mountain Energy is the only Retail Energy Company with an established program to pay the retail value of any energy exported by your solar system to the grid. Other retail providers offer wholesale cost for exported energy. Those who still have an analog electric meter naturally experience a true $ for $ net metering exchange since the meter can typically be ran backwards during periods of power exportation.

Upfront help is crucial because solar power systems are not cheap to buy and install. To estimate the cost and the payoff, try the CALCULATOR provided by Solar Estimate.org – Based on rough estimates of power used by an energy inefficient ranch house in Houston, the cost of using solar to cover 50 percent of its electric use could exceed $25,000. That’s the cost after adjusting for the benefit of the 30 percent income tax credit. The additional tax exempt increase in property value plus the production value of energy from a solar system could reduce the payback period to under 10 years.  For those in a rebate area this period can be as short as 3 years. A more realistically sized system would likely provide about 25 percent of the power needed and cost considerably less.

The truth of the matter is that every home and what every person wants to accomplish with Solar can be vastly different and could potentially have a different payback.  The best way to know how your specific home will perform is by contacting your local solar provider for detailed information.

Solar Technology is moving at warp speed with other options for homeowners that want to do their part for the environment, save electricity and move towards Energy Efficiency. There are other options to consider:

• Solar water heaters can be a big money saver for those with all-electric homes.
• Solar powered attic fans that can cut the cost of air-conditioning during the hot months.  Parrott said the savings from an $850 investment in an attic fan can pay off in a couple years.

There’s a second way of looking at the rewards of solar – the increased resale value. Studies have shown investments that reduce utility costs can significantly add to the value of a home. In Texas that added value is not subject to property taxes, which is not the case with a kitchen remodel.

Here are some of the nuts and bolts about saving with solar.

Q. What is the federal tax credit?
A. The tax credit equals 30 percent of the cost of solar panels or solar water heating. An investment of $15,000 generates a credit of $4,500. (Every dollar credit equals a dollar saved in taxes).

Q. Does the IRS limit the credit?
A. Unlike added insulation or a more efficient air conditioner, where the credit is capped at $1,500, Solar is on a short list with no cap on the credit. It can be taken on an investment in a new or used home, or even on a second home.

Q. Where can I go for more about the rules for credits?
A. A summary of tax breaks for energy investments can be found HERE at EnergyStar. And a table breaking it down HERE.

Q. Does Texas offer any help?
A. The Texas legislature considered offering incentives this year but failed to act. However, there is a statewide property tax exemption for solar installations. Any increase in the value of the house due to a solar investment is not added to the value used to calculate property taxes.

Q. Some cities are now offering tax breaks for low-cost financing for solar electric investments. Is Houston in that group?
A. No. The city-owned utility in Austin offers a program and Entergy has quietly begun a pilot program to help fund solar in The Woodlands and other places in its service area.

Q. What is Entergy offering?
A. The pilot program that began in June offers $2.50 per watt which would equal $2,500 per kilowatt of installed solar generating capacity. For more details consult Entergy’s Solar PV Program website which includes a detailed FAQ.

Q. I’d love to see my meter run backwards. But what’s the payoff if that happens?

A. Sorry to say, but it depends. Every electric provider is different. Some like Green Mountain, offer a dollar-for-dollar saving up to a limit. Others offer a credit based on the wholesale price, which is significantly below the retail price. This OVERVIEW offered by Entergy shows it’s not an easy question to answer.

Q. Can a solar power system serve as a backup during a hurricane?
A. It’s possible but most residential systems are not wired that way. It can only be used when the electric grid goes down if a homeowner also installs a battery backup system, which can cost more than $3,000.

To visit a project from Alternative Power Solutions make sure you attend the 2010 Solar Tour!