Energy
Jun 3,  2010

Sunny weather typically brings to mind barbecues, swimsuits and outdoor jaunts.

But for Doug Kay of Reno, good weather also means a nice assist to the good, old wallet.

Thanks to new solar panels on the roof of his home, Kay's May power bill was $8.49.

"That's basically the basic service charge there," Kay said. "We're almost zeroing out."

Once treated as a novelty, increased interest among businesses, agencies and consumers such as Kay is leading to a surge in solar installations. The increase is especially noticeable in Northern Nevada, which accounts for the bulk of new solar capacity installed through NV Energy's Solar Generations program.

Last year, Northern Nevada installed 99 new solar projects that totaled more than 836 kilowatts of solar capacity -- about 60 percent of the new capacity installed in the state for the year under the Solar Generations program. In contrast, the area had 46 new projects in 2008 for a total capacity of 399 kilowatts.

To put the numbers in context, a residential installation with a 5-kilowatt capacity will generate around 10,000 kilowatt hours of energy per year. The average Northern Nevada residence uses about 740 kilowatt hours of electricity per month, or 8,880 kilowatts per year.

Northern Nevada also is on pace to eclipse last year's numbers. Through April, a total of 42 new projects generating more than 646 watts of solar capacity have been installed. Meanwhile, the Solar Generations program received about 5,800 kilowatts worth of applications for the next three years for residential and small-business installations alone.

The growth in solar isn't lost on installers such as Reno-based Hamilton Solar.

"We went from eight projects last year to 45 so far this year," said Reid Hamilton, a partner with Hamilton Solar. "You just have a ton of interest and people getting involved in solar. We get calls for leads almost every single day."

Changes

The increased interest in solar coincides with several changes that make the technology more palatable for consumers.

One is lowered installation costs, including the price of materials such as panels.

"Depending on who you listen to, solar prices have come down by 50 percent last year," said John Hargrove, program manager of NV Energy's Renewable Generations green energy program. "It's much less expensive and more in reach of the average person."

In Nevada, the state legislature also enacted several green energy-friendly measures, including a law that prevents homeowners' associations from banning solar panel installations.

Then, there are the rebates and tax credits available these days, which provide consumers even more incentive to give solar installations a shot.

Options include an FHA program that loans up to 120 percent of the value of a home for borrowers who want to install solar panels.

NV Energy also provides a one-time rebate of $2.30 per watt of capacity. For a 5-kilowatt installation, that translates to a rebate of $11,500. Meanwhile, the federal government did away with its $2,000 cap on tax credits for solar installations a couple of years ago and moved to a straight 30 percent tax credit.

Using both the NV Energy rebate and the federal tax credit, an average $35,000 solar installation with, say, a 5-kilowatt capacity will ultimately cost $16,000. Installation also is cheaper when done while a new home is being built, though the difference isn't too significant compared to installations on an existing home, according to Hargrove.

"If you have lower project costs, then the payback for your solar investment is much faster," Hargrove said. "Recouping your investment within 15 years isn't unrealistic. And in certain situations, it might actually be quicker than that."

Solar challenges

Despite the gains being made in residential solar installations, the sector still faces its share of challenges.

One is that it's subject to the whims of local weather.

Solar installations in Nevada work through a system called net metering, where rate payers earn credits for days when they produce more energy than they consume. Those credits can then be used to make up for overcast days when solar energy production goes down.

In California, homeowners can be paid for the excess power they generate depending on the utility company. That isn't the case in Nevada, but consumers can at least keep their credits indefinitely, Hargrove said.

Since Kay's system didn't go into full swing until October, he hasn't had a chance to build up energy credits, particularly during the winter. Still, he expects things to even out in the long run once his system gets a full summer under its belt.

Not all roofs are ideal for an installation.

Typically, consumers want to install panels on a south-facing roof that's slanted, an issue for homes that only have roofs that face east or west. Concrete tiles -- especially Spanish tiles -- pose a challenge for installation as well, though skilled installers should still be able to work with them, Hamilton said.

The fact that many homes in the area are upside down on their mortgages can dissuade some homeowners from making improvements such as solar panels. Available capacity for rebates under the Solar Generations program also is starting to outpace demand.

Cost, however, continues to be the main road block for solar installation. Even with the rebates and tax credits, installing a system still can be expensive for many homeowners.

"One misconception people have about solar is that it's free," Hargrove said. "Yes, it's free to run once you've paid for the installation. But it's very expensive to do up front. That being said, it's also a very low-risk investment in that once you put it up on your roof, you pretty much know what you're going to get over the life of the installation."

Scratching surface

Even as solar installations see unprecedented growth, Northern Nevada barely has scratched the surface for residential solar.

"The potential for solar is just huge," Hargrove said. "Just looking at roof-mounted solar, we're not even close to 1 percent penetration in the state of Nevada. If everybody puts a solar panel on their roof, it would be an extraordinarily large amount."

Contractors apparently agree. When NV Energy started its Solar Generations program in 2004, there were only two to three contractors in the state, Hargrove said. These days, there are more than 80 contractors.

The number of rebates paid out in Northern Nevada through the Solar Generations program also jumped from just $45,000 in 2004 to more than $3 million in 2009. Through April this year, the program already has paid out $2.78 million in rebates. The rebates are funded through a charge of $.000085 per kilowatt hour that's included in general electric rates. Using Northern Nevada's average power consumption of about 740 kilowatt hours per month, that translates to about 63 cents per month per household.

With awareness about carbon footprints and green energy growing, demand for solar should continue to grow, industry insiders said.

Kay, who had his first brush with solar when he installed panels in his previous home in Davis, Calif., says he's quite happy with how his 18-panel, 4.1 kilowatt installation turned out. About the only downside for him was the six weeks it took for the city of Reno to clear the permitting process for the installation.

"The cost of materials were significantly less than what I paid for in my old house and the tax credits are better," Kay said. "Even if you have to move and sell the house, you should get better resale value for it. As long as someone can afford (a solar installation), I highly recommend it."