Pat Bagley, Salt Lake Tribune

Going Solar

Financial Innovations Make It Easier to Capitalize

Solar electricity used to be expensive. Solar electricity used to be rare. Now it is an affordable and reliable source of energy. In fact, 125,000 people in California have already installed solar, resulting in 1.3 gigawatts of solar capacity. That’s the same capacity as one of Diablo Canyon’s nuclear reactors.

In addition to dramatic declines in the price of solar panels, the biggest shift in the residential solar sector over the last couple years is the availability of solar leases and power-purchase agreements. While there are some technical differences, both types of agreements allow a third party to own the solar electrical system, charging the homeowner less for solar electricity than the utility was charging – thus saving the homeowner money immediately.

Megan Birney
Click to enlarge photo

Paul Wellman

Megan Birney

There are two things to keep in mind with a third-party-owned system. First, these types of agreements make the most economic sense for people paying over $100 per month in electricity. This is because the more electricity a homeowner uses, the more they pay per unit of electricity. Solar makes the most economic sense when it is used to offset usage in the top three tiers of electricity rates.

Second, some of these agreements will include a set price-increase per year. While not necessarily a bad thing, a long term agreement can mean substantial cost increases and a homeowner needs to be aware of the price of electricity in 20 years. Often, a down payment of one to two thousand dollars can significantly reduce both the per-unit cost for electricity and the rate increases.

The State of California is also helping to bring down the cost of solar through the California Solar Initiative, a rebate program in its fifth year. Southern California Edison customers are currently eligible for $0.35 per installed watt. For an average four-kilowatt system, that is equal to $1,400. Unfortunately, the rebate is expected to drop in the next month to $0.25, decreasing to $1,000 on the same system – still hefty enough to make a difference.

Another exciting trend in solar is a move toward community-based group purchasing. By combining purchase power, homeowners can decrease costs and increase accountability. Right now the Community Environmental Council has such a program, called Solarize Santa Barbara.

Solarize Santa Barbara is a limited-time, group-purchasing program that began August 6 and runs through November 9, 2012. Participants must live within Southern Santa Barbara County, including Santa Barbara, Carpinteria, Goleta, and surrounding unincorporated areas, and own a home that is suitable for solar electricity.

CEC will host its final educational workshop, where homeowners can learn about energy efficiency, conservation, and solar energy, on Tuesday, October 23 from 6:30-8:00 p.m. Homeowners can also learn more about the program at the website

This article was changed on October 24, 2012 to make the following corrections: Californians’ installations have added 1.3 gigawatts (not megawatts) of solar capacity, and the web address for the program is

Megan Birney is a renewable energy specialist at the Community Environmental Council.

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