A "Free" Source of Energy?

Solar power is all the rage. It is so popular that many people want it for their homes or businesses without considering the cost vs savings. Is solar power really the answer to our energy crisis? Will solar power sweep the world and become the wave of the future? We don't have those answers, but we can tell you how to determine if solar power is right for you.

>Jason: First up this week, let me set one thing straight - solar energy is NOT the answer to a greener future, it is only AN answer to a greener future. Solar companies and government-sponsored environmentalists have everyone hypnotized into believing that if you buy a solar panel for your home, you will magically save the planet and simultaneously give yourself free energy. Wrong. What you will get is a rather expensive, home-based power plant that will in 5-30 years pay itself back and reduce greenhouse emissions by approximately one car. So, for only $50,000 you can effectively remove one car of emissions from the road, and quit paying your utility company for electricity. Of course you need also to consider that the maximum allowable loan for a solar system (assuming the bank will lend you money in the current economy for such a project) is 15 years, which at 5% interest is a $395 per month cost.

Don't get me wrong, I am not here to tell you that solar power is a waste of time or money, but you do need to fully understand it. The above numbers are averages, and may be higher or lower depending on your electrical needs. What's important to understand is that solar power is like buying your own power plant; its expensive but you own it, and all the power it produces is yours to keep. Sunlight is free; harvesting it is not. I'll let Ken take over from here.

>Ken: Jason and I may not see solar quite the same way. I was involved with the photo voltaic (solar electric) and passive solar (water heating) industry for several years. If you are concerned with the length of payback you will get by putting a power plant on your roof, perhaps you need to ask yourself what kind of payback are you getting now by renting your power from the utility? If you own a home and are paying an average of more than $200 per month for your power, look into solar. The payback will be under 10 years and the investment would be worth it in my opinion. In Central California, a $200 monthly power bill is low. I have personally seen averages topping $1500 per month! The life expectancy of most solar systems is 25 years. If you amortize the amount of installing a solar system over the life of the array, the cost would be approximately 12 cents per kilowatt hour. If your utility is charging you more than this, perhaps solar is right for you. Of course the amount of shade on the roof, orientation of the roof line and other factors must be considered to determine if a system would benefit you. Ask a professional because training of sales personnel in the solar industry can take months, so don't think you can figure it out for yourself.

Businesses are another story. Typically, business utility rates are much lower than residential and usage is much higher. This translates into a much larger system to reduce your bill significantly and a greater cost. Payback for businesses will typically be far longer than 10 years.

Other factors to consider are the tax breaks and rebates that are available. Right now there is a federal tax credit of 30% available for power plants. This is significant because a tax credit reduces the amount you pay the feds by the entire amount of the credit. In other words if you owe $5000 in taxes annually and you purchase a $60,000 solar system, the tax credit would be $20,000. You can spread the tax credit out for 5 years, so for the next 4 years you would owe no taxes.

>Jason: This is a lot of information to take in. Ken I think it may be best to finish this up next week. If you are confused (as I am becoming) please re-read the post and remember that you mostly just need to figure out if solar would be a cost effective measure for you. Until next time -be Energy Smart!