Old king sol
Solar energy can save you money, but only in the long run

Almost everyone knows that harnessing solar energy is good for the environment. But is it also good for the pocket book?

The answer is “yes,” though it depends on variables such as the type of solar system installed, how much electricity the home uses and the terms of financing.

By taking advantage of state and federal programs, homeowners can save thousands of dollars on solar equipment and installation fees.

For 2008, rebates and tax credits can cover about half of the cost of residential solar water-heating systems and roughly a third of solar power, or photovoltaic, systems. Federal tax credits of up to $2,000 for both kinds of systems expire at the end of the year, although Congress may extend the deadline.

After accounting for such incentives, solar water-heating devices can cost less than $3,500. The statewide water-heater program is being tested in the San Diego Gas & Electric service area through Dec. 31.

Whole-house photovoltaic systems can be purchased for less than $25,000 after rebates and tax credits, said the nonprofit California Center for Sustainable Energy. The center, based in San Diego, helps carry out incentive programs for homes and businesses that decide to tap solar energy.

The amount of time it takes to recoup the cost of a solar system depends on several factors, including the future prices for electricity and natural gas, said Andrew McAllister, programs director for the energy center.

“Fossil fuel prices and electricity prices are going to trend up, so hedging against future rate increases is a good reason to go solar,” he said.

During the energy crunch of the late 1970s, solar panels gained popularity in California as a way to ease strain on power supplies. Then they faded into the background before being thrust into the mainstream in the past two years by state legislators and Gov. Arnold Schwarzenegger.

California will spend roughly $3.5 billion over the next several years — mostly in the form of customer rebates — to help residents statewide install 1 million solar power systems and 200,000 solar water-heating systems.

McAllister said household photovoltaic systems make the most financial sense for big energy users because the region’s power rates are structured to penalize the largest consumers. He said customers who regularly hit Tier 4 or 5 on their power bill are paying more for that chunk of electricity than they would for an equivalent amount of solar power.

“The optimal economic strategy is to size a photovoltaic system to bring your consumption down to the low-tier rates,” he said.

McAllister urged residents to view their solar purchase as a long-term investment and not as a large, immediate bill. “If you can finance over 20 years, your payments are going to pan out to be roughly equivalent,” he said.

Warranties for new photovoltaic panels generally last 20 or more years, McAllister added.

An alternative for people who can’t spend tens of thousands of dollars is a solar system that just heats water. That option is particularly attractive for residents who heat their water with propane or electricity, which are more costly than natural gas. Some water-heating systems require a second water tank, while others use only one tank. Some can be installed by do-it-yourselfers, while others require professional installation.

Regional and state officials maintain lists of contractors who are eligible to do installation as part of the incentive programs. McAllister encouraged potential customers to get estimates from more than one installation company, because there are a variety of systems on the market.

Whatever option homeowners choose, they need to keep all their related paperwork to obtain rebates or tax credits. The energy center and the IRS require verification that qualified solar systems were installed correctly.

Mike Lee: (619) 542-4570; mike.lee@uniontrib.com