Volume 6 Number 10
November 2009

In this Issue
Paying for Energy Infrastructure Upgrades
Powered by the Sun
The Health of Our Cities’ Housing
Reevaluating Affordable Housing Policy Tools
In the next issue of ResearchWorks

Powered by the Sun

Housing and utility costs continue to be significant expenditures in most family budgets, prompting homeowners to try to cut costs using energy-efficient technologies. One such technology that, over time, limits the costs and environmental effects of heating and cooling residences is a photovoltaic (PV), or solar panel, system.

A shade-free home with a PV system installed on the roof.

Solar panels absorb energy from the sun and convert it into electricity for home use. These systems, usually built on rooftops, are composed of multiple solar panels, known as an array; an inverter that converts the power from the sun into usable electricity; and a panel that distributes electricity throughout the home. A common design is to combine residential PV systems with utility-supplied power. Electricity needs, if unmet by the PV system, are supplemented by utility-supplied electricity. Excess power can be routed back into the local electric grid so homeowners can receive credits or payment from the utility provider for the surplus.

Not every home can be equipped with a PV system. Generally, homes with roofs that are shaded or facing north, east, or west do not receive the necessary sun exposure to support the purchase and installation costs of a solar panel system; shade-free, south-facing homes are ideal. In addition, the roof must have sufficient surface area to support the required panels. If the home is a good candidate, its construction, size, and electricity demand will determine the features of its solar panel system. For example, a house with significant amounts of natural light and cross-ventilation will rely less on artificial light, air conditioning, and heating, necessitating a smaller system, whereas a home with poor lighting and ventilation will have greater electricity demands.

A home with half of its roof area supporting solar panels.As the configuration of the solar panel system is determined by the characteristics of the home, so too are the costs. Although PV systems have decreased in price since their introduction, the $8,000 to $10,000 per kilowatt (kW) cost, including installation, is substantial. According to the Partnership for Advancing Technology in Housing, a typical home would need a 4kW solar panel system to meet its electricity needs. If all costs, including those required for installation and maintenance, are calculated over the lifetime of the technology, the cost of the electricity produced is 25 to 50 cents per kilowatt-hour (kWh), whereas utility-supplied power currently averages 9.53 cents per kWh.1

To make solar panels more widely affordable, as well as to encourage homeowners to view them as a viable tool combating rising electricity use and expenditures, the federal government offers a significant rebate for PV systems through the Emergency Economic Stabilization Act of 2008. This legislation eliminated the $2,000 rebate cap on solar panels and extended the homeowner tax credit through 2016.

Many jurisdictions, including the states of California and New Jersey, offer benefits that can be combined with the federal rebate. California, the state with the largest solar panel market, provides per-watt rebates for PV-generated electricity. Participants in the program can also take advantage of benefits provided by local jurisdictions, some of which offer production incentives (often fee waivers or expedited processing) and additional rebates or incentives.

Initial Outlay for Solar Panel System on New Jersey Home.New Jersey, with the second-largest and fastestgrowing market, also offers rebates for installing solar panel systems. One estimate to install a 6.75kW solar panel system (projected to produce 8,075kWh of electricity) on 430 square feet of a New Jersey home’s rooftop totaled $50,625. However, New Jersey’s state rebate, the federal tax credit, and a state-sponsored loan program reduced the homeowner’s upfront cost to less than 12 percent of that total, or $6,049 (see table 1).2

The projected energy savings in this New Jersey home would lower the home’s monthly electric bill by $127.08, resulting in an annual savings of $1,524.92 with an expected payback period of 4 years. The estimated increase in home value is $30,500. In addition, because the home will consume less utility-supplied electricity, it will reduce its carbon dioxide emissions by 13,558 pounds per year. With concomitant reductions in nitrous oxide and sulfate emissions, the environmental advantage of this home’s PV system would be comparable to planting two acres with trees.

Property owners may encounter other barriers to installing PV systems. Many homeowner associations and jurisdictions restrict or prohibit solar panel systems, often for aesthetic reasons. A lack of personnel trained to install PV systems also inhibits use in some areas. To address these issues, some states limit the restrictions that localities and homeowner associations can place on solar panels, while local (often university-based) organizations expand the supply of skilled installers.

With the implementation of federal, state, and local installation incentives, solar panel systems show promise as an affordable, viable alternative to traditional sources of residential heating and cooling. More information about solar panel systems is available through the Department of Energy’s Energy Efficiency and Renewable Energy website at http://www1.eere.energy.gov/solar/ photovoltaics_program.html, as well as through Own Your Power! A Consumer Guide to Solar Electricity for the Home at http://www1.eere.energy. gov/solar/pdfs/43844.pdf. See also Tracking the Sun, produced by the Lawrence Berkeley National Laboratory at http://eetd.lbl.gov/ea/EMS/reports/ lbnl-1516e.pdf, and the North Carolina Solar Center’s database of state and local financial incentives for renewable energy at www.dsireusa.org.

1Partnership for Advancing Technology in Housing; see www.toolbase.org/Technology-Inventory/Electrical-Electronics/pv-systems.

2Written estimate for installing a solar panel system obtained by a New Jersey homeowner.

3As suggested by the Department of Energy, the estimated change in home value is based on a $20 increase for every $1 saved on annual utility bills; see http://www1.eere.energy.gov/solar/pdfs/43844.pdf.