Californians have led the nation for years in adopting forward-thinking solutions for their homes and businesses that support environmental sustainability. This is one reason solar power in northern California has seen tremendous growth in recent years. But will solar still be worth the investment in the coming years?
Solar has been a popular alternative to traditional fossil-fuel sources of power generation because it helps reduce the state’s carbon footprint even as demand for electricity continues to rise.
In 2013, California homeowners, business owners and utilities invested $7.1 billion in solar systems – an 83% increase over 2012. That added another 2,746 MW in electric capacity. At the same time, average prices for installed residential and commercial solar systems dropped 6% compared to 2012.
What does installing solar power in northern California cost?
Each system is custom-designed to match electricity needs, whether it’s part of new construction or retrofit, installation size and location, etc. And products vary among different manufacturers of photovoltaic equipment. All these factors affect overall system cost.
If you’re considering switching to solar, you should follow these steps:
- Evaluate your property’s solar capacity. Northern California enjoys plenty of sunshine, but if there are trees or buildings that block your sun, solar may not be cost-effective for you. You need to determine how much power you could expect to generate, so you can compare that with your electricity needs and the cost of installation.
- Estimate savings. By generating your own solar power in northern California, you’ll reduce utility bills and, over time, recoup your investment.
- Identify tax credits or other incentives that may help lower the cost of your initial investment.
- Explore financing options. You could obtain a home equity loan, participate in a power purchase agreement (PPA) where you actually buy solar energy from a third-party system owner, lease a solar system or finance through your local community’s Property Assessed Clean Energy (PACE) program that provides low-cost, 20-year loans tied to your property.
- Choose a contractor. As always, quality directly affects system performance and return on investment, so you should select top-quality products and an experienced, reputable installer. They can help you choose the right system and may also be able to help find financing.
- Use The Hero Program.
Problems in paradise.
The California Renewables Portfolio Standard (RPS) initially required 20% of statewide electricity usage to come from renewable sources by 2010. In 2008, the RPS was extended to require 25% by the end of 2016 and 33% by 2020. In July of 2014, Governor Jerry Brown signed a bill that retains the state’s solar property tax exclusion until January 1, 2025. This law enables homeowners and businesses to install a solar system without suffering an increase in property taxes due to increased valuation.
However, the federal 30% tax credit for solar investment ends in 2016, and industry watchers expect it will either disappear entirely or be reduced to 10%. Further, although the California Solar Initiative (CSI) was created to fund utility rebate incentives for solar installations, PG&E, SCE and SDG&E all ran out of their share of the money last year. Pacific Power and some local municipalities may still have resources available, but the reality is that CSI incentives are going away.
And some industry experts believe leasing will be less attractive when credits disappear, because costs will rise for providers, making it more difficult to make a profit.
It used to be you could combine federal tax credits with a range of state and local incentives to significantly reduce the cost of switching to solar power in northern California. Now, however, the only way to know if it’s still worth your investment is to get together with a reputable expert and pencil it out.
