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Thursday, May 17, 2012
Feature: April 2006
Here Comes the Sun
A $2.8 billion initiative is spurring utilities and homebuilders to go solar
Story by Don Lipper
With energy prices poised to rocket sky high, Sacramentans are looking heavenward for answers. Thanks to the $2.8 billion California Solar Initiative, many straitlaced businesses and homeowners are becoming unabashed sun worshippers.
The big news for homeowners is that, with solar rebates, solar panels — which cost between $12,000 and $18,000 to install — have a quick return.
“Our analysis shows that even if the increased cost is $18,000, even with a higher interest rate than we are currently seeing, you are cash-flow positive in month one, right away,” says John Ralston, vice president of sales and marketing for Roseville-based Premier Homes. “Put simply, while your mortgage payment goes up, your utility bill goes down.”
The 95 homes in Sacramento’s Premier Gardens average a monthly $30 electric bill. In Roseville’s Premier Oaks, the average electric bill is $32. In addition to solar-powered electricity, these homes also have a host of energy-saving features. Touted as “zero-energy homes,” they are designed to produce 70 percent of an average user’s energy needs. As an added bonus, preliminary resale data suggests that solar homes appreciate faster than conventional ones.
When Vonette McCauley, public relations manager for Roseville Electric, moved into her new solar home, which has twice the square footage of her old conventional home, her electric bill remained the same.
“It is fabulous!” gushes McCauley. “Solar was the first option we chose when building a new home. Now, a lot of my friends and neighbors are wishing they’d done it too.”
Currently, Roseville Electric has 97 solar customers, most of whom became solar customers when they purchased new homes.
The city of Roseville has a proposal requiring solar systems on at least 10 percent of new homes, which would add 2,000 solar homes to the market in 10 years.
Pacific Gas & Electric has 10,000 solar customers, more than any other utility in the nation. PG&E solar customers have the capacity to generate more than 70 megawatts of solar power. The investor-owned utility offers a Self-Generation Incentive Program for customers who install on-site generation systems — including solar, wind, fuel cell and cogeneration systems — of 30 kilowatts or larger. This year’s incentive for solar power generation is $2.80 per watt.
“We had a great working relationship with PG&E,” says Rich Coyle, a director of purchasing for national homebuilder D.R. Horton. “They helped us through the process and made things much smoother. When we installed solar in our sales office for a new development, our first electric bill for part of the month was only $3.”
Why is Northern California seeing such a solar boom? “The main reason is SMUD has been aggressively pursuing solar as a clean power alternative for a number of years,” says Rob Hammon, principal with ConSol, a Stockton-based energy-consulting firm.
Why would a utility that makes its money selling a high-demand commodity subsidize the building of additional supply? “We’re diversifying the fuel portfolio and avoiding future business risk,” says Jon Bertolino, SMUD’s superintendent of renewable assets. “[Not to mention] the greenhouse gas situation. Solar and other renewable energies in combination are crucial to meet the state’s future needs.”
“It is my intention to build every house that we can as a zero-energy home.”
— John Ralston, VP of sales and marketing, Premier Homes
SMUD and local builder Treasure Homes partnered to build the 32 zero-energy-home development of Fallen Leaf at Riverbend in North Natomas. The homes, ranging in price from $370,000 to $500,000, feature the latest in energy-efficiency equipment, tighter building standards and low-profile solar modules to generate electricity.
“The technology has matured,” says Jim Bayless, president of Treasure Homes in Roseville. “The controls are simpler and everything is automated. One of the most obvious signs of maturity in the industry is that the panels have a 25-year warranty. With the SMUD rebates [around $6,100, or a little over a third of the $15,000 installation cost], the payback is in the eight- to 10-year range.”
One of the largest solar subdivisions is Premier Gardens, which has 95 zero-energy homes near Bradshaw and Goethe roads. Premier Homes offers solar as an option in the 65 units of its Live Oak complex. It will also offer solar as a standard feature in a 148-unit development in Lincoln and a 250-unit complex in Wheatland.
“It is my intention to build every house that we can as a zero-energy home,” says Premier’s Ralston.
Solar homes sell excess electricity back to the local utility by selling high and then buying low. While the sun is shining, demand pushes energy prices — and solar production — higher. At night, demand is lower, and so are prices. As a result, solar meters run backward. But even if you are electricity-eschewing Amish, most utility agreements will only give you a credit; they will never cut you a check.
“Net metering is a win-win for us,” says Carl Hoff, president of the Butte County Rice Growers Association, which uses solar power to run 24 large fans in two of its warehouses. “We don’t use the fans during the summertime. We generate electricity during the summer and then bank it with PG&E. The power goes to the rest of the state. We draw back on that credit during the harvest time in the fall months.”
The local math for the rebates can get complicated, but the simple numbers of higher energy prices, higher solar rebates and falling photovoltaic-panel prices (which have been lowering by 5 to 7 percent per year) are creating 35 percent annual growth in worldwide solar installations.
According to press materials from the Solar Energy Industry Association in Washington, D.C., “solar could be the lowest-cost retail electric option within 10 years.”
A silicon shortage in the photovoltaic industry is slowing this growth, but analysts expect the shortage to be resolved within a year or two. There is some debate about whether, in the face of a silicon shortage, government subsidies lower the cost of photovoltaic systems or keep them artificially high. Most analysts say initiative programs spur competition, which lowers prices. If so, California’s massive Solar Initiative has the potential to move markets.
With $2.8 billion in consumer rebates and incentives on existing residential buildings, all public buildings, industrial facilities, businesses and agricultural facilities, and $400 million in incentives earmarked for new homes, industry experts expect that within three years, the annual photovoltaic market in California will exceed the entire 2005 U.S. market.
ConSol sees the California solar market moving perpetually skyward. According to Hammon, in 2007, the Solar Initiative could support 5,000 new solar homes, pushing growth up 10 to 30 percent a year after that.
“If they had a huge jump in the market in the next year and then 20 to 30 percent a year after that, the photovoltaic industry would be very happy,” says Hammon.
