2011: The summer of solar

Southwest neighborhoods are pushing solar energy for homeowners

Just a month after coming online, the solar panels installed on Paul and Kristin Markert’s Bryn Mawr home are paying dividends.

The Markerts’ 16-panel photovoltaic (PV) system— mounted inconspicuously on the alley side of their Cedar Lake Road home — is projected each year to generate about 20 to 30 percent more electricity than their young family uses, with the surplus electricity sold to Xcel Energy at a 15 percent green energy premium.

“I’m going to retire,” Kristin said with a facetious smirk.

Kristin may have been joking, but the Markert’s story illustrates how Minneapolis, the state of Minnesota, Xcel Energy and neighborhood organizations are making it easier and more affordable than ever for Southwest homeowners to go solar.

According to Paul Markert, the couple’s PV system would’ve cost about $30,000 without any incentives. But after taking advantage of a $3,000 Neighborhood Revitalization Program grant from the Bryn Mawr Neighborhood Association, an Xcel Energy solar rebate covering roughly 25 percent of the installation cost, federal tax credits and a state of Minnesota solar rebate (no longer available), the Markerts’ PV system ended up costing the couple under $3,000 to install.

The surplus electricity produced by the PV system should generate just over $100 a month for the Markerts, meaning that the couple will be able to pay down all installation costs within three years.

The productivity of the Markerts’ PV system may not be typical, however. A variety of factors — including shading and the direction a roof faces, among others — determine just how productive a particular solar array can be.

“Production is going to be related to what sort of array we can spec for a project,” said Dustin Denison, owner of Applied Energy Innovations, a Minneapolis-based installer. “The larger the array we can put up, the larger the production value, but we are often limited by the size of a roof.”

The Markerts were one of seven Bryn Mawr households that utilized about $20,000 in neighborhood NRP funds to install PV systems last year. Bryn Mawr still has about $20,000 in unspent funds allocated for the solar program, funds that they hope to exhaust this year by getting more neighborhood households to install either PV or solar thermal water-heating systems.

Other Southwest neighborhoods are following Bryn Mawr’s lead. This spring, the Linden Hills Neighborhood Council is rolling out a residential solar program offering a total of $125,100 in grants aimed at encouraging neighborhood homeowners to install solar systems. Homeowners can apply for grants covering up to $5,000 dollars or 50 percent of the total installation cost, whichever is less.

“With a lot of these environmental energy programs, it’s the up-front cost that reduces people’s interest,” said Lesley Lydell, Linden Hills council chair.

Last year’s inauguration of Xcel’s Solar Rewards program, the availability of state rebates, and Bryn Mawr’s neighborhood grant program combined to make 2010 the busiest year ever for new solar installations in Minneapolis, and officials at all levels of government expect that solar energy’s momentum will only continue to build this year and beyond.

The economics of solar

Despite the increasing efficiency of photovoltaic cells, solar electricity remains more expensive than conventional energy.

According to the Department of Energy’s Annual Energy Outlook for this year, the averaged levelized cost (calculated in terms of price per megawatt hour) of a new solar PV plant is more than twice as much as the cost of a new conventional coal-fired power plant, more than three times as much as a new conventional natural gas-fired power plant and more than twice as much as a new wind-powered plant.

But solar advocates point out that these figures don’t include the significant environmental costs associated with carbon emissions produced by coal and natural gas.

Gerardo Ruiz, CEO of Solarflow Energy, a Minneapolis-based solar company, argues studies like the DOE’s don’t report the true cost of electricity generated from fossil fuels — instead, they report the price at which it is sold.

“What does coal really cost when we account for all the externalities? The perspective I take is that if you subsidize solar and level the playing field, solar is competitive,” Ruiz said.

According to information provided by the city of Minneapolis, the cost of installing solar PV and solar thermal systems decreased 20 to 25 percent from 2009 to 2010. The state of Minnesota estimates installation costs may decline by another 50 percent between now and 2015.

While the number of permits for new solar thermal installations in Minneapolis declined to 7 in 2009 and 2010 from 24 in 2006 and 2007, the number of new PV installations skyrocketed last year as costs decreased and homeowners took advantage of numerous available subsidies.

The city issued 31 permits for solar PV systems last year alone, compared to a total of 17 from 2006 through 2009.

But despite the last year’s PV boom and declining costs, solar “remains a green issue,” said John Wold, product manager for Xcel Energy’s Solar Rewards program.

“Your best return on investment is to look at energy efficiency. If you’ve done that and have the disposable income, the next logical step would be to do something like (a PV system),” Wold said.

The problem, Wold added, is that the return on investment for solar is still much further out in the future than it is with less costly energy efficiency measures.

Carol Anderson, a Bryn Mawr homeowner and solar-savvy master electrician who utilized Bryn Mawr’s NRP funds to install a PV system on her garage last summer that covers about half of her household’s electricity needs, said she anticipates demand for solar will increase exponentially as costs continue to decline.

“I think people are still feeling some sticker shock, but people are starting to see that the return on investment isn’t as far out as they thought. There is something unnerving about a 15- to 20-year payback, but the closer we get to a 10-year return on investment, we are really going to see solar boom here,” she said.

Making solar affordable

Though the state no longer has money available to subsidize PV installations, a variety of incentives remain.

The state still has grant money available for solar thermal installations, and Xcel’s Solar Rewards program is set to spend $4.6 million annually to incentivize solar PV for the next handful of years. In addition, the Minnesota Renewable Energy Society recently rolled out the Make Mine Solar H20 program, offering deeply discounted solar site assessments, structural engineering reviews, equipment discounts and assistance with rebate paperwork for homeowners interested in solar.

Furthermore, Silicon Energy, a Mountain Iron-based PV panel manufacturer, is set to begin selling panels later this year. Xcel customers in Minnesota  purchasing panels from Silicon Energy will be eligible for a ‘Minnesota made’ discount of up to 60 percent of the install cost.

A 30 percent federal tax credit is available, and Minnesota exempts solar equipment from sales and property taxes.

And of course, if you live in Linden Hills or Bryn Mawr, NRP grants can further reduce the up-front cost of solar energy.

Put it all together, and perhaps there will never be a better time to go solar in the foreseeable future — especially if the available subsidies decline along with the cost of solar systems, as Xcel’s Wold expects.

“The cost of PV systems has come down, and since it’s trending down, the incentives through utilities and government logically should trend down too,” Wold said.

Summer of solar in Southwest?

Linden Hills Neighborhood Council member Jeff Stites installed a PV system on his home last year and was instrumental in developing the Linden Hills grant program.

He said that neighborhood property owners interested in solar thermal or PV systems should check out the neighborhood council’s website for information about signing up for subsidized site inspections and engineering reviews. Of course, properties must have structurally sound, south-facing roofs basking in unobstructed sunshine in order to be eligible for a grant.

Stites said that he hopes 15 to 20 Linden Hills homes will be decked-out with their very own PV or thermal water heating systems by the end of this year.

“We’re trying to make solar as competitive with standard electricity as possible,” Stites said. “What I’d like to do is use the Bryn Mawr and Linden Hills deployments as a pilot, then see if any other neighborhoods are interested in rolling out a similar community program using NRP funds or grants.”