Solar electricity—it's the coolest thing going. Science! Technology! Freedom from fossil fuels! A peaceful and productive future! Whether your motivation is political, ecological, or gadget-driven, photovoltaics, or "PV," appeals. Historically, the high cost of PV systems has dissuaded many from making the investment. But recent developments designed to encourage residential PV deployment, including state-level rebates and a generous federal tax credit, are prompting Massachusetts homeowners to take another look.
How many years will it take for a homeowner to recoup an investment in photovoltaic technology? There is no easy answer because so many variables are at play.
"Every installation is different," explained Kim Pinkham, a worker-owner at PV Squared, a Greenfield-based solar company. The numbers for cloudy New England and sunny New Mexico will be different. The angle of a solar array may be less than optimal, or it may be partially shaded. If technical or construction problems are encountered at the site, the overall cost of the system will be higher. If the cost of electricity goes up more than the rate of inflation over time, the payback time will go down. Finally, loan interest rates can have a significant effect upon this calculation.
A back-of-the-napkin estimate might look like this: Let's assume a 3-kilowatt system, which might meet about half the average American household's electricity needs, with an up-front installation cost of $27,000 (a typical figure). Simple division returns a figure of $9 per watt. Apply all rebates and tax credits—let's say you qualify for the full $4.40 per watt rebate from the Commonwealth Solar program (see sidebar). This takes the installed cost down to $4.60 per watt. Take full advantage of the newly-enhanced federal tax credit for 30 percent of the net cost, after state rebates. Now you're at an installed cost of $3.22 per watt.
The net cost of your 3 kW system is now closer to $9,660. Amortize that over 20 years at an interest rate of 7 percent and your monthly payment will be $75. If you only qualify for the base rebate of $1.00 per watt, the net cost of your system will be $16,800 after the federal tax credit, and the amortized monthly payment at 7 percent for 20 years would be around $130. While that's manageable for many, it's still a lot of money to throw at half of a family's monthly electric bill. (SolarBuzz, a research and consulting firm, has calculated that at retail rates of 20 cents per kWh, and an installed cost was $4 per watt, payback time will be just over 15 years.)
To Christopher Kilfoyle, president of Berkshire Photovoltaic Services in Adams, straight dollars-and-cents analyses only tell part of the story. "It's not about the payback. We've been in this business for 26 years—people have wanted PV systems installed even before there were government incentives, even when the cost of panels has been very high. Virtue is its own reward. People want to do the right thing.
"Consider that homeowners take out loans at 8 or 9 percent for granite countertops and French doors. It's a matter of priorities. I've never met anyone who has regretted investing in a photovoltaic system for their home."
There is another way, and it is controversial. Two-hundred-watt solar panels are for sale on eBay for $520.00. Fifteen of these (for our 3 kw system) would cost $7,800. You would need to buy an inverter ($200-$500), industrial batteries, and other peripherals. Of course, you'd need to know what you were doing.
Another eBay retailer offers complete 3 kW kits for about $10,000. The system consists of used industrial batteries, 14 new Sharp 216-watt solar panels, an AC-DC inverter with a built-in charger and wiring distribution center, a charge controller, a system monitor, and an installation guide. Government rebates and tax credits would not apply to a homeowner-installed system that contains used parts, but the initial outlay is so economical that it doesn't matter.
To Kilfoyle, who also serves as the vice president of the Solar Energy Business Association of New England (SEBANE), these "guerrilla installations" are unacceptable. "Those kits are junk," he told the Advocate. "They use cheap inverters from China, and the components are not UL-listed. Guerrilla solar systems are not only illegal, but they don't contribute to the efforts of clean energy, since their capacity goes unrecorded. Most do-it-yourself efforts will be unsafe. Eventually a house is going to burn down because of a faulty installation."
Kilfoyle also emphasized that a 3 kW system would comfortably meet the needs of a household committed to conservation and efficiency. "Keep in mind that many PV owners have reduced their usage to the 100-200 kWh per month range with no sacrifices in comfort. It all depends upon your personal energy conservation ethic."
The Database of State Incentives for Renewable Energy (DSIRE) provides comprehensive, up-to-date information; visit www.dsireusa.org.
