Solar has become the darling of the American public — a homeowner’s status symbol. Last year, 1 million households displayed solar panels; by 2022, 4 million are expected. Over the past five years, the price for solar fell 63 percent and should continue to tumble.
The Federal Investment Tax Credit lets homeowners and businesses deduct 30 percent of solar’s cost, minus rebates, from their taxes. But a dark cloud looms: That credit drops to 22 percent by 2021 and there’s a threatened tariff on foreign solar panels. Thankfully, states, cities, and utilities offer solar installation rebates and incentives. Enticing alternatives include Solar Power Purchase Agreements (PPA) and Solar Leasing.
PPA customers sign long-term contracts, purchasing power from panels the provider installs. With upfront costs around $1,000, contracts are transferable when selling the house. Electrical rates are set and customers only pay for what the system produces.
Solar Leasing means no down payment. The solar power you generate is free and your provider may manage maintenance, repairs, and system monitoring. But lease payments rise 3 to 4 percent per year — less than the annual 5 percent increase from your electric company. But there are no state rebates or federal tax credits; you’ll buy any needed energy from your utility and an excellent credit rating is required.
So where are these options and why isn’t solar more prolific here in the region? Local experts offered their insight.
“The economics in the Valley don’t work for a PPA for small scale residential or small commercial,” said James Brooks McCleery, general manager of Alba Energy in McAllen. “Rates are currently lower or at the cusp of where a company like California’s Solar City would set their PPA rate.”
Co-ops are another obstacle. Viewing PPAs as competition, with their tightly controlled grid, PPAs aren’t allowed.
It comes down to parity — the value of solar versus local electric rates. But PPAs or solar leasing could work in the Valley.
In Dallas-Fort Worth, Oncor Energy offers rebates through its deregulated grid. Rebates go to a PPA, allowing it to offer competitive rates at or slightly below what clients would pay in that market.
“That could work here if AEP (offered) the same structured rebate Oncor offers,” McCleery said. The economics are there, he added. “Paybacks for commercial are as good as they were in the Austin market five years ago with rebates (on) the price of solar.”
To help finance the Valley’s growing solar market, McCleery says they pushed to get Property Assessed Clean Energy (PACE) financing here. It now pays 100 percent of a commercial project’s costs. An assessment is added to a property’s tax bill to repay PACE for up to 20 years.
But larger commercial solar projects are out of luck — there’s no financing, and co-ops have tight restrictions on installation size. “If they offered net metering for systems above (a 50 KW commercial system cap), we have quite a few clients that would do that,” McCleery said.
Homeowners face a serious hiccup financing residential solar — the excellent credit score loan qualification. “That can be a high hurdle for people here,” McCleery said.
Eligible Valley homeowners considering solar fall into two camps.
Return on investment is one. Lower rates extend ROI, says Abraham Quiroga, Magic Valley Cooperative’s Business and Employee Development Division manager. “Installing solar doesn’t make sense,” he said. But for others, installing solar is doing something for the climate, protecting the environment.
A tough choice, Quiroga’s seen an uptick in home installations the past few years.
Medical professional Rene Villarreal recently installed solar on his McAllen home. Having always been interested in alternative energy, he contacted Alba.
He requested 100 percent conversion from solar. That required a platform on his roof to capture the north side’s sun. Aesthetics aside, it’s working. In the past six weeks, Villarreal has paid $0 to AEP.
Before proceeding with solar, you need to ask yourself how long you’ll be in your house. “Move in 10 years,” Villarreal said, “you won’t reap the benefits. If you plan to stay or to leave the home to your children, it’s worth it.”
There’s confusion about having solar. Solar power goes straight to your meter, so batteries aren’t always necessary. And “with solar panels, I can lower the thermostat,” Villarreal said. Having solar covers past usage. Lower your thermostat; you’ll pay more. “But your out-of-pocket will be minimal for what you’d installed,” Villarreal said.
Another misperception: homeowners insurance will go up. Solar panels can withstand hail and 150 mph winds. Rates won’t go up, said Villarreal’s insurance company.
Solar has a surprise benefit. Roof panels create a 4-inch gap. Sunshine hits the panels, not the shingles. “(That’s) thermal insulation,” Villarreal said.
Going solar is a process. You need patience and endurance. Do your homework. Check out the solar company you’re considering; choose a system that provides the quality and capacity you need.
These websites will help:
- www.dsireusa.org to find local solar companies
- solar-estimate.org calculates everything from the number of solar panels needed to how much power they’ll produce
“It’s one of the best investments you’ll ever make,” Villarreal said.