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02/24/15

  11:43:00 am, by Laurel Hamilton, Projects Coordinator, Run on Sun   , 488 words  
Categories: Energy Efficiency, Residential Solar

Energy-Efficient Homes are Hot!

Run on Sun PV installationLast I checked, people keep having babies, so the demand for homes is not going to slow down any time soon. But the fact is, times are changing. What was valuable in your home when you bought it may not be as important to prospective buyers today.

The challenges of climate change are becoming more widely accepted—a New York Times poll found that 83% of Americans now believe global warming will be a serious problem in the future. Thankfully, gains in residential energy-efficiency improvements offset  more than 70% of the growth in both the number of homes and increasing footprint sizes, according to the US Energy Information Administration (EIA). However, these gains in recent decades will need to significantly improve to make any kind of difference in terms of climate change.

But there is hope! The trend toward more efficient homes in the housing market is already getting attention. After surveying both home builders and home buyers, the National Association of Home Builders (NAHB) reported that Millenials want energy-efficient appliances and features as well as smaller homes. Smart technology such as programmable thermostats will also become the norm. Respondents said they were willing to pay 2-3% more for better energy-efficiency if they could see a return through lower electric bills. Respondents also said they’d be happy to sacrifice extra finished space for a more affordable first home.

If you are a home owner you should be tapping into the energy-efficiency trend to not only lower your utility expenses but improve the marketability and value of your home. If you follow our blog you may have seen our recent post discussing new evidence supporting the idea that solar increases property values. While installing a solar system is the granddaddy of all home energy-efficiency projects, we at Run on Sun always encourage clients to address low hanging fruit first, and make sure your energy usage is as low as possible. This will lower the size of the solar system you need to offset your usage, and thus, the overall cost of your solar investment.

Way too much of the energy we consume is wasted through poor insulation, leaky ducts, or inefficient household appliances. Fixing these problems can cut energy costs up to 25% for the typical home. One option is to ask a professional energy auditor to find exactly where your energy is going (we have some folks we can recommend). However, many energy saving tips are intuitive…installing double pane windows, better insulation, CFL or LED light bulbs, and ENERGY STAR appliances are all ones you’ve likely heard before. Others may be lesser known such as using power strips to avoid vamping power. And if you have a pool, upgrading that antiquated pool pump could save you a lot!

Once your home is up to snuff, going solar is a great investment to make your home even more desirable in the current housing market. Call Run on Sun today for a free site assessment!

02/16/15

  08:35:00 am, by Laurel Hamilton, Projects Coordinator, Run on Sun   , 877 words  
Categories: All About Solar Power, Solar Economics, Residential Solar

Top 5 Reasons to Stay Away from that Solar Lease!

Public Domain NREL solar home image

UPDATE: See end of post for National Renewable Energy Laboratory (NREL) report findings regarding solar leasing vs loans.


In the debate of owning versus leasing solar panels, the folks over at NPR weighed in with a story last week that caught our eye, er, ear.  While it offers a fair explanation of some of the pros and cons,  we don’t think it did a good enough job of highlighting just why that solar lease should be avoided.  Here’s our top 5 reasons to avoid a solar lease.

Reason #5 - You can’t get credit on your appraised home value with leased solar panels. 

As we noted in our recent post about solar ownership boosting your home’s resale value, if you don’t own the panels on your roof, they aren’t an asset toward boosting your home’s value.

Reason #4 - The “benefit” of covered maintenance is a myth!

Leasing companies tout that they cover the maintenance on your solar system, but the truth is that most maintenance is already covered by product and installer warranties.  (For example, Enphase microinverters come with a 25-year warranty - longer than the typical lease term.)  For most residential system owners the only maintenance their systems need is to wash the panels off with a hose.

Reason # 3 - You don’t have to be a Geek to own solar!

The NPR story suggests that to own solar requires a very “hands-on” approach, with the homeowner being forced to navigate the shoals of rebates, tax credits and permitting on their own.  Nothing could be farther from the truth.  A reputable, local solar installation professional, like Run on Sun, will handle all of those messy details for you.

Reason # 2 - A leased system complicates selling your home!

If you decide to sell and you have a leased system on your roof, your prospective buyer has to not only meet your required offer, they also need to satisfy the leasing company’s qualifications to assume the remainder of your lease.  A buyer might qualify for a mortgage, but not satisfy the credit requirements of the leasing company, and even if they do, they might not be interested in the hassle of dealing with a lease payment for the remainder of your twenty-year term.

Reason # 1 - The leasing company is ripping you off!

Bottom line, this is the number 1 reason to avoid a lease.  But don’t take our word for it, let’s look at what one of the largest solar leasing companies says, right there in the tiny print on their website:

Savings on your total electricity costs is not guaranteed. Financing terms vary by location and are not available in all areas… A 3 kW system starts at $25-$100 per month with an annual increase of 0-2.9% each year for 20-30 years, on approved credit.

Just how bad a deal is that?  Well, let’s take a typical 3 kW solar project.  That is really small, so the cash price from a local installer is probably around $4/Watt - which works out to $12,000 up front.  However, if you own, you receive the rebate (if any) and the tax credit.  In PWP territory, that rebate works out to roughly $2,200 but in SCE territory, the rebate is zero.  So to take the worst case example for ownership, we will assume no rebate.  In that case, the tax credit is worth 30% of $12,000 or $3,600 leaving the ultimate cost to own at $8,400.

Now what happens in a lease for that same system?  No rebate or tax credit goes to you - the leasing company pockets those.  What about your payments?  Well, let’s take the middle ground suggested in the leasing company’s quote above and look at a cost of $60/month in year 1, with an annual increase of 1.45%.

Cost of solar - owning vs leasingHere the green line represents the cost of ownership - $8,400 which is constant over the life of the 20 year lease.

The orange bars are the annual payments which in year 1 amount to $720 (12 x $60) and by year 20 have increased to $947.

The red bars are the cumulative cost of leasing solar.  By year 11, the owner has come out ahead.  By the time the lease ends in year 20, the solar leasing customer will have paid $16,567 in lease payment - nearly twice what the system purchaser paid - and they still will not own the system on their roof!

 While it may be true that not everyone can afford to purchase a solar power system outright, that is changing as solar becomes more affordable for more people.  Plus, with the emergence of solar loans, which can provide for little or no out-of-pocket cost while still retaining the benefits of ownership, cash-constrained consumers can still go solar without resorting to the leasing trap.

For all of these reasons, and a whole bunch more, we at Run on Sun have never offered residential leases, and we never will.  If you want to go solar but avoid the pitfalls of leasing, give us a call - we are waiting to help!


UPDATE: Two reports from NREL bolster our conclusions above: “To Own or Lease Solar: Understanding Commercial Retailers Decisions to Use Alternative Financing Models,” and “Banking on Solar: An Analysis of Banking Opportunities in the U.S. Distributed Photovoltaic Market“. Analysts found that businesses that use low-cost loans to purchase a PV system and homeowners who use solar-specific loans can save up to 30 percent compared with those who lease a system through a third-party owner.

02/05/15

  08:07:00 am, by Laurel Hamilton, Projects Coordinator, Run on Sun   , 364 words  
Categories: Solar Economics, Solar Tax Incentives, Ranting, Solar Policy

President Obama: Extend Solar Tax Credit... Congress: Don't make me laugh!

Two weeks ago I included the looming 2016 expiration of the federal Solar Investment Tax Credit (ITC) as one of the “Top 5 reasons you shouldn’t wait to go solar“. The 30% ITC rebate for residential and commercial solar projects is slated to drop to 10% for commercial projects (effectively stopping utility-scale solar growth) and to zero for residential projects (making going solar much less feasible for many homeowners). I mentioned that the likelihood of an extension is far from certain given our partisan federal ‘climate’.White House Flickr Photostream

Then…on Monday the White House released President Obama’s fiscal budget for 2016. To my delight the budget includes:

  1. Boosting clean energy funding to $7.4 billion;
  2. The Clean Power State Incentives Fund allocating $4 billion to encourage states to exceed the minimum requirements for cutting emissions; and
  3. The permanent extension of the solar Investment Tax Credit!

The $7.4 billion figure is up from the $6.9 billion proposed in Obama’s fiscal 2015 budget, a 7.2 percent rise, and over the $6.5 billion actually passed by Congress for this year. The extension of the ITC and further state incentives to reduce emissions would be immensely valuable to keep the ball rolling in the solar field. Given that solar is booming - providing over 170,000 living-wage jobs and eliminating over 13 million metric tons of harmful CO2 emissions in 2014 alone - it makes sense to continue to incentivize. 

However, it may come as no surprise to hear that some lawmakers have said they plan to block the President’s budget priorities entirely. An article in Politico titled “Republicans: Obama Budget ‘Laughable’” cites many congressional Republicans disdain for the budget.

“Obama’s budget is a retread of past proposals that died instantly on the Hill.”
Senate Finance Committee Chairman Orrin Hatch (R-Utah)

The website www.gop.gov cites the singular case of Solyndra as definitive evidence to oppose funding clean energy…despite also claiming to support job growth. (See here as to why Solyndra just doesn’t matter.) With Republicans now controlling both the Senate and the House of Representative, this party line opposition will be a serious challenge to overcome.

Even with the President himself in favor of extending the ITC, and improving funding to support clean energy, the fate of federal support for the solar industry is still quite uncertain.

Watch this space.

01/29/15

  06:36:00 am, by Laurel Hamilton, Projects Coordinator, Run on Sun   , 406 words  
Categories: All About Solar Power, Solar Economics, Residential Solar

Its Official...Solar Boosts Home-Owners' Property Values!

Selling into the SunMany solar stakeholders have always assumed rooftop solar systems add to the resale value of a property. Homeowners and residential solar companies frequently use this benefit as one of the many reasons to invest in solar even though until recently there had been little statistical evidence to support the assumption.

So we were thrilled to read the new study, “Selling into the Sun: Price Premium Analysis of a Multi-State Dataset of Solar Homes,” which finally quantifies the resale value of residential photovoltaic  (PV) solar systems. The study was a collaborative effort including esteemed scientists from the U.S. Department of Energy’s Lawrence Berkeley Lab, Adomatis Appraisal Services, Real Property Analytics/Texas A&M University, University of California at San Diego, San Diego State University, and Sandia National Laboratories.

The team analyzed some 22,000 home sales, of which nearly 4,000 had PV rooftop solar systems (more than double the number in previous studies), in eight states over a 12-year span including the housing market boom, bust, and recovery. This is by far the largest and broadest dataset ever analyzed on the subject.

Results prove that homebuyers are consistently willing to pay more for homes with host-owned solar systems — averaging about $4 per watt of PV installed — across various states, housing and PV markets, and home types. This amounts to a premium of about $15,000 for a typical rooftop system. Other important conclusions the team discovered are as follows:

  • PV premiums had little variability between new and existing homes.
  • The dollar per watt premium decreases incrementally as system sizes increase - with the best value at 4 kilowatts (average household PV size) or less.
  • As systems age, the PV premium depreciates sharply from $6/watt for systems less than two years old to $3/watt after about eight years.
  • PV premiums correlate to the net cost of the solar system — which take into account rebates and incentives — and appear to be independent of the PV system gross cost estimates.

As residential solar systems become more and more common, it is important to be able to value them accurately. The evidence of the added investment value shown from this study is a critical step for the growth of residential solar. And PV premiums are obviously a benefit homeowners should consider when doing their cost-benefit analysis of going solar.

Please note that this study only focused on host-owned solar, not those with leased systems. It would be interesting to see a future study including this growing portion of the PV market.

01/23/15

  03:40:00 pm, by Laurel Hamilton, Projects Coordinator, Run on Sun   , 600 words  
Categories: All About Solar Power

Top 5 Reasons You Shouldn't Wait to Go Solar

Who wouldn’t want to cut energy bills by 80% or more while effectively eliminating one’s negative energy impacts on air, water and finite natural resources? But with solar booming in recent years and technology updates reported almost daily, many home and business owners feel they should wait for the latest and greatest, or simply for the cost to continue to go down. However, there are a number of important reasons why you shouldn’t wait…

Sundail

1. Minor Technology Gains Aren’t Worth the Wait

Research in the solar industry is ongoing and I have no doubt that panel technology will improve. However, most changes in design and efficiency are small. And the research and development necessary to ensure the technology works in the field and not just the lab takes time. The bottom line is this: the financial value of small efficiency gains from panel improvements is outweighed by the cost of waiting. Any money you might save by installing more efficient panels is significantly less than the money you would save immediately by installing solar today.

2. Further Price Cuts Aren’t Worth the Wait

The cost of solar panels has fallen tremendously the last few years – now half of what they were in 2008, and 100 times lower than they were in 1978! So, should you wait for the price to drop lower? We’ve actually started to see the prices of PV solar modules begin to flatten and even slightly increase since 2013. Now that demand for solar is gaining momentum, the costs will likely continue to rise to meet that demand.

3. Electric Costs Keep Rising

The rate of increase varies depending on your state and electricity source but based on the last decade you can expect around 4-5% hikes in grid electricity each year (Energy Information Administration). That means that if you invest in a solar system that meets 100% of your electricity needs today, you will fully save on this year’s costs. But each year thereafter you’ll save an additional 4-5% for the life of your solar system (up to 40 years). As energy prices skyrocket you can rest easy.

4. Rebates and Tax Breaks Are Going, Going…

Disappearing rebates...Rebates for installing solar, once as high as $4.00/Watt, have largely gone away (Pasadena being a happy, and notable, exception).  Since 2006 many owners have benefited from the 30% federal tax credit to make a solar installation more economically attractive. However, on December 31, 2016, the 30% Solar Investment Tax Credit is scheduled to drop to 10% for commercial projects and to zero for residential projects. While we’re all crossing our fingers and toes hoping for an extension, with imminent grid parity – solar power reaching a cost comparative status with grid electricity – predicted to happen in 2016 in much of the US, and a federal government with little support for solar…it is entirely possible an extension is no more than a pipe dream.

5. The Environment Can’t Wait

If you’re concerned about climate change, you know that we need to act quickly, and in any way possible to prevent overshooting the global goal of a maximum 2 degree rise over pre-industrial temperatures. The typical residential solar system, about 5 kW, cuts about 6.7 tons of carbon emissions each year (using EPA’s CO2 emissions calculations). While there isn’t a dollar figure attached to that, you may want to consider the larger environmental value of going solar sooner rather than later.

So, yes, you can wait and hope for the technology to improve or costs to decline. But meanwhile you’re tied to your polluting, fossil-fuel-based power company with its steadily escalating electricity prices. Ugh. In contrast, your choice to go solar will quickly prove to be a great return on investment. Why not start saving now?

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Jim Jenal is the Founder & CEO of Run on Sun, Pasadena's premier installer and integrator of top-of-the-line solar power installations.
In addition, Run on Sun offers solar consulting services, working with consumers, utilities and municipalities to help them make solar power affordable and reliable.

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