The future of clean – and potentially more affordable – home energy could look a lot like Bob Timmel’s backyard.
Beyond the porch that extends from the rear of his North Collins home, next to the small blue warehouse occupied by his disaster relief business, sits a 14-by-56-foot array of solar panels, which provide all of the power to the property.
He all but eliminated his electricity bill in April by installing the solar panels. It went from about $250 per month to $18, he said – the price to rent an electric meter from National Grid.
“Death, taxes, electric bill: It’s always been there’s nothing you can really do about it,” said Timmel, who also uses onsite propane and a water well for the essentials to his four-person rural household.
“I think a lot of families are seeing this and they say, ‘Maybe we can do something for ourselves here,’ ” he said. “It’s just one less bill. Now I have to figure out what to do about my phone.”
Timmel represents a regional uptick in solar power, as incentives, cheaper manufacturing costs and the trend of “going green” have placed more solar panels than ever onto Western New York rooftops.
But solar’s growth faces an uncertain financial future. Generous state and federal subsidies that have driven the market since 2002 are being phased out over the next 10 years.
Those invested locally in the solar industry hope the cost of panels will continue to drop as technology improves, offsetting the loss of rebates and tax breaks. The planned giant solar panel factory at the RiverBend site in South Buffalo – expected to be the largest in the United States – could help reduce panel costs. But installers say regardless, the loss of incentives will hurt.
“With incentives decreasing, they are going to be cutting out more people,” said Deborah Zarbo, an engineer who oversees the 2-year-old solar division at Frey Electric in the Town of Tonawanda. “It’s still expensive. Basically, you’re pre-paying for electricity.”
Zarbo, who has worked around solar energy for more than 20 years, said local interest is at an all-time high.
Most of her customers are small business and property owners whose primary concern is their bottom line: Does solar energy make sense as a long-term investment?
The verdict, she said, is still a mixed bag.
“The interest is very real, but solar doesn’t work for everybody,” Zarbo said. “People look at the cost of solar over a 25-year period. If grid power prices go way up, as they are prone to do, that’s when people are really saving a lot of money. It’s just like doing a 401k or IRA, but now it’s solar.”
According to New York State Energy Research and Development Authority data, 1,121 solar installation projects in Western New York have received state incentives in the last 10 years. Nearly 50 percent – 468 – have been installed since 2011, with 108 so far this year.
The majority are home or small business owners who, not unlike Timmel, have decided a hefty investment into solar far outweighed the uncertainty that comes with the rise and fall of an electric bill.
But despite solar’s modest growth here, expensive upfront costs still price out the vast majority of homeowners interested in making the transition themselves. For perspective, an average-sized residential system is a little less than purchasing a car – between $10,000 and $20,000 – once incentives are factored in. State incentives in installation costs can be coupled with a 30 percent federal tax credit for residential renewable energy systems.
Without state and federal incentives, solar energy installation costs can roughly double.
Today, the customer can expect to pay about $4 to $6 per watt to install a solar panel system, a price that has decreased by 8 percent since last year, according to the Solar Energy Industries Association. And the net cost of solar continues to go down as new technologies emerge, cutting manufacturing costs.
No more bills
Residential photovoltaic systems vary in size – between 3 and 25 kilowatts – but most households average 6 to 10 kilowatts. That’s typically enough power to accommodate the daily needs of a moderately sized home that has made a concerted effort to become energy efficient – adding LED light bulbs, proper insulation, low-energy appliances.
The total price tag for a 6 kilowatt system is around $30,000 before incentives, based on standard contractor rates.
Josh Wilson, of Buffalo, added a small-scale 3.5-kilowatt system to the roof of his Allentown home on Mariner Street in 2010.
Wilson overall is pleased with how the transition has gone, but he admits the investment was not cheap. It’s a cost he said he could not have taken on without incentives.
“You add 30 percent cost to the system and I could not have done it,” Wilson said, referring to the 30 percent renewable energy federal tax credit, which is set to expire in 2016.
Susan Shea, also of Buffalo, invested in a 9-kilowatt system in 2006 when incentives were even more favorable.
She and her husband added the solar panels along with a geothermal unit after the October surprise storm hit. In the cleanup, they decided to make their 100-year-old home on Woodbridge Avenue more energy efficient.
Shea agreed the incentives were the catalyst to making the transition.
“There’s no way we could have done it if the incentives weren’t there,” Shea said. Becoming more energy efficient “is certainly an investment, but it’s just nice not having an electric or gas bill. That’s what it boils down to.”
Depending on the size of the system installed, most homeowners can expect their investment to pay for itself in around 10 years.
“It’s all dollars and cents,” said Wilson, who works for Buffalo Energy, Inc., a small home energy assessment company in Elma. “People look at it on a pay-back basis. As much as you say, ‘Hey, that’s cool. I’d like to do that,’ if it’s going to have a 20-year payback, no one’s going to do it.”
State incentives, first put in place in 2002 to kick-start the solar power industry, have been on a steady decline since, especially of late. NYSERDA initially offered as much as $5 per watt. It is now $1 per watt – and dropping.
Gov. Andrew M. Cuomo recently disclosed the state’s new plans to structure solar incentives, called the “megawatt block structure,” which has allotted 3,000 megawatts of solar energy projects that can receive incentives across three regions of New York.
Western New York falls within the upstate block, consisting of 444 megawatts for residential installations. The state rebate incentive will decrease by increments of 10 cents per watt as predetermined “energy blocks” – allotments of solar-generated power – are used. Once that installation quota is met, the incentives will be gone for good.
The $1-per-watt block for upstate New York is already 79 percent full and will likely top off within the year, meaning incentives soon will decrease to 90 cents per watt.
That 10-cent gap would add $600 to the price of a 6-kilowatt system.
“After many years of using subsidies and grants to build the clean energy market, costs of solar systems are decreasing and private investment is increasing,” NYSERDA spokeswoman Kate Muller said. “It now makes sense to transition away from subsidies as the main instrument to accomplish the state’s energy goals for photovoltaics.”
There are options available to homeowners interested in solar but unwilling or unable to pay a large sum up front, especially as incentives continue dropping. Most solar contractors have added loan and lease programs to offset initial costs. Instead of paying an electric bill, qualifying customers make monthly payments to the installer.
Other savings come from net metering, where power companies buy power coming from private solar systems at the state’s market rate when the systems produce excess power.
Solar systems may not add tremendously to the value of a home, but sellers can expect to at least get their investments back. Aaron Stanley, owner of Green Home Revolution, a Williamsville energy consultant to real estate firms, said homeowners who install solar can ask for at least the price they paid for the systems when reselling their homes.
“Generally people understand having solar on their home reduces energy costs, therefore a homeowner looking to sell should be able to ask for a premium,” Stanley said. “There’s still not this big market of people who are looking for it. It’s a plus, but there aren’t necessarily buyers who think of it as a must-have.”
The statewide investment into solar is paying off in other ways around Western New York.
SolarCity, the nation’s leading solar panel installer, earlier this year purchased the assets of Silevo, a smaller solar panel manufacturing company. The giant California company is planning to greatly expand what Silevo had planned at Buffalo’s RiverBend project, the centerpiece of Cuomo’s Buffalo Billion economic development initiative.
SolarCity wants to team with the state to build the nation’s largest solar panel plant with annual capacity to make enough solar panels to produce 1 gigawatt, or 1,000 megawatts, five times larger than Silevo was planning.
Once operating, the solar conglomerate hopes to be able to produce more efficient panels at cheaper costs, lowering the price point for installations.
“Solar could be the next Buffalo steel,” said Adam Rizzo, co-owner of Solar Liberty, one of Western New York’s highest-volume solar installers.