GreenSpace: Take another look at solar

Posted: September 04, 2012

Not long ago, Gov. Christie and New Jersey environmental groups wound up on the same side of an issue. Some of the groups actually praised the governor they are so frequently confronting.

Hold the gasps. The rest of New Jersey residents can cheer as well, because it benefits them.

The state took action that will make solar power somewhat more affordable. So if you're a resident who has been mulling the idea, now is the time to re-mull.

Basically the state increased the amount of electricity that utilities must obtain from solar power.

Here's how it works for you: To meet the goal, utility companies either have to produce a certain amount of solar power by installing and managing their own solar panels, or they have to buy an equivalent amount from others who have them. This would include homeowners.

The way they buy the power is a bit like the stock market. If you have a solar system, you get certificates for the amount of power you generate, and the utility buys the certificates.

If you want to illuminate your friends, the term for the certificates is solar renewable energy credits, or SRECs.

In the early days, utility companies were scrambling to get SRECs, so the price was high. SRECs are an important factor for shortening a system's payback time.

But the good-news/bad-news part of this story is that it turns out New Jersey is a national leader in solar power, second only to California in the amount of solar power installed.

Before long, utility companies were getting what they needed.

The market was, in effect, built out through 2014, said Fred Zalcman, of Sun Edison, and the New Jersey representative of the national Solar Energy Industries Association.

So the prices for SRECs soon cratered. A system that would provide a typical household's energy needs went from generating SRECs worth $600 a month to less than $100.

Then, in July, New Jersey passed legislation that, among other things, would accelerate solar goals for utilities.

One could argue, and many have, that the state didn't go far enough. But at least the price for SRECs has bumped up slightly to the lower 100s. (If you're in Pennsylvania, hold tight. Powers that be are contemplating new goals there, too, that could improve the market for homeowners.)

Industry sources expect the price to continue to increase as the law takes effect. Mark Logsdon, mid-Atlantic sales manager for Real Goods Solar, said he expects the price in New Jersey to settle out at $150 to $250.

And either way, he said, solar makes sense in New Jersey because electricity rates are so high, about 18 cents a kilowatt hour.

Already, solar companies - more than 300 work throughout the state, according to industry data - are seeing a spurt of new interest.

All this comes just as there is a significant new option in the market.

Previously, homeowners had to buy a system outright, at a typical cost of $25,000 to $30,000.

Now, with little to no payment up front, you can essentially rent your roof to a company that will install the system, own it, maintain it, and guarantee it.

The company gets the SRECs, and you guarantee to buy power back from the company for a certain period of time, often 20 years, and at a certain price.

This gives the company what it needs - a fairly predictable income. And you get to be sheltered from near-certain electricity price hikes on the open market.

So if you're risk-averse, loan-averse, or cash-strapped, consider this new option.

Along with these developments, the industry has seen its customer profile change. Previously, it was the younger, more forward-looking people who liked the technology and wanted to make a "green" statement. If all they did was break even, so be it; they were still happy.

Now, the typical customer is older, 45 to 55. They live in a first- or second-ring suburb and, primarily, are looking to save money, said Joe Miller, head of marketing for Solar Universe, a company that operates in 10 states, including Pennsylvania and New Jersey.

"It's a matter of "people doing smart things for their homes that give them a sense of independence and control," he said.

If it happens to be a "green" thing, all the better.

Typically, a customer can expect 20 to 40 percent off the monthly power bill, Miller said. And, happily, "that's the sweet spot" that the customer seeks.

He and others have found that people's eyes glaze over when they speak too many numbers and solar-ese, so they say things like this: If you have a child and you put a solar system on at the same time, you would have college paid for by the time he or she is 18.

For those mulling, here are tips from installers and the industry association:

First, reduce your power usage as much as possible. Switch out those lightbulbs, install a programmable thermostat, and ditch that aged, inefficient refrigerator humming away in the basement. That way, you can install a smaller - translation: cheaper - system.

Conversely, consider whether your power needs are likely to increase. Is there, for instance, an electric car in your future? Don't discount it out of hand. "We're seeing a high correlation between people who go solar, love it, and then next thing they add an electric car," Miller said.

Finally, call at least three companies and get three estimates.


"GreenSpace" appears every other week, alternating with Art Carey's "Well Being" column. Contact staff writer Sandy Bauers at 215-854-5147 or sbauers@phillynews.com, or follow on Twitter @sbauers. Visit her blog at www.philly.com/greenspace.

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