Sometimes being “environmental” has the connotation of giving up something or doing without. With solar, however, the only thing to give up is high electricity bills.
In the past 18 months, the reality of solar electricity has changed, costs have come down and homeowners can save money immediately on their electricity bills.
More than 125,000 Californians have found solar energy to be an affordable and reliable alternative, and they are regularly generating 1.3 megawatts of power. That’s the same capacity as a Diablo Canyon nuclear reactor operating at full capacity.
Other than dramatic declines in the price of solar panels, the biggest shift in the residential solar sector over the past 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.
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 spending more than $100 per month on electricity. This is because the more power a homeowner uses, the more they pay per unit of electricity. Solar power makes the most economic sense when 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, it can mean substantial cost increases over the 20-year contract and make savings more difficult to determine. Often, a down payment of $1,000 to $2,000 can significantly reduce both the per-unit cost for electricity and the rate increases.
Without solar, homeowners can expect the price of electricity to rise about 5 percent per year, if future trends match historical increases from Southern California Edison.
The state also is 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 a rebate of 35 cents per installed watt. For an average 4-kilowatt system, that equals $1,400.
Unfortunately, the rebate is expected to drop in the next month to 25 cents — a decrease of $400 on the same system but still enough to make a difference.