Residential solar use up with CPS rebate, tax credit
July 27, 2012 | posted by The Institute
Beth Graham had been interested in powering her house with solar energy for years, but with all the snow and ice in Massachusetts, where she lived at the time, she was hesitant to make the investment.
When Graham moved to San Antonio last year, she decided to install rooftop solar panels when she learned that CPS Energy offered a rebate. She also was eligible for a federal tax credit for solar.
“I might have thought twice about it if it hadn't gotten the tax credit,” Graham said. “The package was too good to resist.”
Graham's system cost $23,000, but with a CPS rebate and tax credit, the solar system's final cost was cut by more than half.
Although the cost of rooftop solar installations has declined, the systems are still expensive and the payback, even with rebates and tax credits, can take years. Also, because CPS electricity rates are relatively low at 9.7 cents per kilowatt-hour, there's less of an incentive to buy solar to take a bite out of the power bill.
Still, prices are slowly coming down because of more competition and lower material costs. In addition, the average homebuyer has more access to solar through volume builders, such as KB Home, which is now including discounted solar packages as an optional upgrade on its “net zero” house.
But solar owners say they're glad they spent the money to add solar because it helps cut their utility costs, adds to the value of their homes and is a socially responsible choice for generating electricity.
The monthly savings in electricity costs “are like getting a dividend,” Graham said. “It's a good investment and good for the environment.”
The number of CPS rebates for residential solar installations jumped to 259 in fiscal 2011 compared with 137 the year before, an 89 percent increase, according to the city-owned utility.
So far in fiscal 2013, which started Feb. 1, rebates went to 98 new solar owners, CPS said.
CPS has one of the most robust rebate programs in the state, said Don Stanton, director of customer solutions and delivery at CPS.
Residential solar “is very important,” Stanton said. While CPS now is more focused on bringing commercial-scale solar to San Antonio, the utility also is working to lure solar manufacturers to town.
“We think solar will take off for residential and commercial,” he said. “We expect prices on panels to come down with local manufacturers.”
Prices already have been dropping for residential solar, CPS figures show.
According to CPS, for the past five months, the average size of a solar installation in the San Antonio area was 6.87 kilowatts at an installed price of $30,446. After the utility's rebate of $11,816, the balance was $18,630. Buyers also are eligible for a 30 percent federal tax credit of $5,589 that can be applied to the balance, bringing the system's total cost to $13,041.
When CPS began to offer rebates in 2008, a residential solar system cost $7.64 a watt before rebates. The cost fell to $5.56 in fiscal 2011 and since Feb. 1 of this year, the cost has dropped to $4.43 a watt, CPS said.
San Antonio's recent averages have stayed well below the national average cost of $6.87 per watt in 2011, according to Energy Department figures.
One reason for the declining cost is that “we're seeing material costs coming down as we get more solar installers that are being more competitive,” Stanton said. “That's the idea of putting the rebate in place.”
Lanny Sinkin, executive director of Solar San Antonio, a nonprofit solar advocacy group, added that prices are falling because the industry is growing quickly and “the solar panel marketplace is extraordinarily competitive, and everybody is doing everything to squeeze the price down.”
He believes the cost of solar will continue to fall. Also, technology is improving, and the panels are becoming more efficient. “As the quality improves, you need less, and you save on the cost of labor,” Sinkin said. As technology advances, options are popping up for prospective buyers, including Dow Powerhouse Solar Shingles, marketed by Dow Solar, a division of Dow Chemical Co. The shingles are more expensive than conventional rooftop solar.
Dow's solar shingle is flat, much like a regular shingle, but it has a shiny look. Dow, in a statement, said its technology combines a roofing shingle with a solar cell, and is installed by a roofer.
When the installation is complete, a certified electrician connects the system to an inverter and the energy generated from the solar shingles helps offset the home's energy costs.
Bobby Ross, president of Ross Electric Co. in San Antonio, installs conventional solar rooftop panels as part of his business. But he was impressed by the Dow shingles when his company helped hook them up to a house in Katy.
When he got a claim check for hail damage to his roof from his insurance company, Ross opted for the solar shingles.
Ross can monitor the system's output from his computer. The system had been installed for less than 10 days, Ross said, and “it (was) telling me I have saved $38.19 so far.”
Ross figures that electricity costs are only going to go up. And should CPS eventually go to a tiered pricing system by charging more for power at times of heavy demand, “I think you'll see solar really erupt,” Ross said.
“That's because solar is producing the most when you're using the most power.”
Solar as an option
Solar use is likely to grow as more home builders offer it as an option, including KB Home.
That a volume builder such as KB Home now offers solar signals “a turning point in the market,” company spokeswoman Cathy Teague said. Solar has moved “from an environmentally clean focus to a focus on savings and efficiency,” she said.
KB Home has built a 1,647-square-foot “net zero” model home, with a $23,000 solar rooftop system, in its La Fontana development near the intersection of U.S. 281 and Evans Road. A similar system would cost $34,000, after the CPS rebate, if it were a retrofit on an existing house, Teague said. The CPS rebate goes to the solar installer.
So far, no buyer has purchased a net zero house from KB Home, but the company is building three homes now in San Antonio for buyers who choose to add rooftop solar, Teague said.
KB Home asks buyers to pay 50 percent of the cost of the solar system up front, but they can roll the rest into the mortgage if they so choose, she said. The CPS rebate goes to the solar provider.
John Friesenhahn, a partner at San Antonio-based Imagine Homes, said that about 15 buyers, or about 5 percent of those who have bought a house from his company, made the investment in rooftop solar. Imagine first offered rooftop solar about 31/2 years ago.
Imagine Homes, which constructs under the Build San Antonio Green program, just broke ground on its Willis Ranch development, near the intersection of East Borgfeld Drive and Bulverde Road near U.S. 281, where 50 rooftops will have a 1.44-kilowatt Dow Powerhouse Solar Shingle system that can be expanded if the buyer wishes.
Imagine is adding the solar shingles, Friesenhahn said, because “I think renewables are the next big thing we'll see as a standard feature in homes.”
The Dow shingles are a good option, he said, because there are still people who don't like the look of rack-and-panel applied solar panels. “If response is good,” he added, “we'd like to expand (solar shingles) to our other neighborhoods.
Now it's easier to put solar panels on a house even in restrictive neighborhoods. Last year, the Texas Legislature passed a law that says HOAs and historic districts must allow solar panels within some limits. An HOA or district might restrict solar panels that extend higher than the roofline or that don't conform to the shape of the roof.
Shelby Ruff, vice president of sales at Austin-based Solar Community LLC, predicts that solar panels will advance by offering more watts per square foot.
“It will be more of a holistic thing, in the building phrase and even in retrofits,” he said.