Here Comes the Sun
Solar power is catching on in New Orleans.
Lately, the sun keeps coming up.
For years, solar power has been the domain of the environmentally conscious. But during those years, the contributions of solar power to the world’s energy supply have been increasing at an exponential rate. Do you remember the first time you saw a PC? It wasn’t that long ago. Remember the first time you heard the word “Internet”? Even less time.
So what does the future hold for solar? Well, according to the Earth Policy Institute, annual solar power production more than doubled between 2009 and 2010. And 2010 production was 87 times the amount generated just 10 years earlier. If the past is prelude, then you better get used to seeing solar panels.
“We’re on the cusp of solar being a regular thing,” says Tucker Crawford, CEO of South Coast Solar in New Orleans and president of the Gulf States Renewable Energy Association. “We’re building up an industry now to get ready for the future.”
Not only is the supply of solar power increasing, but the cost of going solar has been decreasing rapidly, as well. This means that not even the most curmudgeonly of global warming deniers are likely to turn up their noses at solar power in the coming years.
But the declining cost of technology is just the beginning of the economic argument. The thrust of the argument lies in incentives.
Louisiana offers perhaps the most robust incentives in the U.S. For every dollar you spend to install a solar system, the state provides a 50 percent refundable tax credit. That means that if you spend $20,000, the state will give you back $10,000 toward any tax liability you have to the state – and then write you a check for the balance. If you have no tax liability, the state simply pays you $10,000.
You can cover another 30 percent of the cost with a carry-forward nonrefundable federal tax credit. In that case, you would receive up to $6,000 from the federal government but in the form of reduced future tax liabilities.
Between the state and federal tax credits, you could end up paying $4,000, in effect, for a $20,000 system.
How generous is Louisiana’s program? For perspective, I contacted my friend Romain Strecker, who owns Boston Solar, a solar system installer (as you might guess) up in Massachusetts. I laid out Louisiana’s 50 percent tax credit for him.
“That’s insane,” he said, referring to the program’s generosity. “At that level, there should be 100 percent homeowner participation.”
Massachusetts is one of the most active solar markets in the country, Strecker says, and the combined state and federal tax credits cover only 35 percent to 45 percent of installation – not 80 percent.
Another (comparatively minor) savings in Louisiana is on property taxes. While a solar system raises the value of your home, assessors are not allowed to include the value of the system in their assessment, meaning that it won’t drive your tax bill up.
Obviously, all of the aforementioned savings focus on the installation. They don’t take into account the reduction in energy bills. This comes in large part through “net metering.” Under Louisiana law, energy utilities must interconnect with individual solar systems and give credits for energy that a homeowner’s system provides to the electric grid.
It works something like this: When you leave for work in the morning, you shut off the lights and turn off the air- conditioning. But all day long, the sun is shining and your system is producing energy. The excess energy goes to the electric grid, and the power company credits you for the value of this energy. Then, when you come home at the end of the day and flip on the lights and AC, you draw down on those credits. The give-and-take is reflected on your energy bill, allowing you to calculate your savings.
But that’s not all of the savings, says Gregg Soll, who had South Coast Solar install a system on the Lake Vista home he and his wife, Ellen, built a couple of years back. “What you don’t find out from that figure is the amount of energy that I produce from the solar panels that never gets sold to the electric company because I use it,” he says.
Soll says he’s had no problems with the system, it’s producing well, he’s saving significant money on his bills and the financing went smoothly. “We paid for 20 percent of the system,” he says. “And we got our credits within a year.”
The solar industry in Louisiana is still young. Crawford urges caution in selecting an installer. “We’re seeing a lot of contractors who don’t know the first thing about solar,” he says, recommending aggressive due diligence.
He also cautions that no two jobs are alike because the size of the home and its position relative to sun and shade must be taken into account.
Finally, there are financing and lease options that require careful consideration. In general, Crawford says, you’re better off buying your system than leasing it.
But once you figure those mundane details out, it’s all blue skies and sunshine.