Uploaded: Tuesday, February 20, 2001 2 p.m.
Costs plummet for home solar systems
the lights on:
An ongoing report of local power conditions
Substantial rebates also add incentives for 'localizing'
Costs of home solar electrical systems have plummeted in the past
two years, creating something of a rush to solar systems to avoid
steep increases in electrical rates, according to Eric Hassett of
Palo Alto Hardware.
Homeowners, more than businesses, are lining up to switch from
standard electrical to solar power, with the expectation of avoiding
what may be a return to the age of candles and wood-burning stoves
in the face of soaring energy rates.
Hassett and his father, Larry, are finding their small hardware
store at Channing Avenue and Alma Street in downtown Palo Alto is
becoming a regional center for solar-power inquiries. They are planning
a separate spinoff business to accommodate the rush to solar.
Hassett said that just two years ago a home solar electrical system
was costing from under $40,000 to nearly $60,000.
Not anymore. A homeowner can put in a system for under $10,000--even
less if they seek a rebate from green-power programs such as Palo
Alto's "Green Future."
Payback time for Palo Alto residents and businesses is much longer
than for PG&E customers because Palo Alto's utilities rates are
half or less than PG&E rates.
Hassett said those living in PG&E service areas especially are
looking for alternative power sources, and their solar business
is beginning to boom--which means a new line of business.
"We are in the process of forming it," Hassett said of a new spinoff
business. "It's still more of an idea than reality, but we are definitely
moving towards a separate office with enlisted installers and dedicated
salespeople. Right now its kind of a side business for me and for
"I have had a couple of apartment house managers come and talk
to me about it, but 90 percent (of the interest) has been from homeowners,
both in Palo Alto and from the whole Bay Area. I've been getting
calls from Berkeley, San Jose, Morgan Hill, Brisbane."
They just finished an installation for a woman in Brisbane, which
illustrates the sharp drop in prices.
"The retail price of that unit was $14,500," Hassett said of the
Brisbane solar unit. "The rebate she will receive in the next week
or two reimburses her for $6,000 of that."
After the rebate the owner will have paid $9,500, including about
$1,000 installation costs. Had the owner lived in Palo Alto the
rebate would be around $8,000 since the city's "Green Future" program
pays more than the state rebate program does.
By contrast, in December 1999, a system installed in the Gyr/Friedman
home in Palo Alto cost $57,767 (batteries included) before the rebate.
A system for the Slater home, also in Palo Alto and also installed
in December 1999, cost $38,000 before rebate. No batteries were
installed and the unit runs on high efficiency single-crystal silicon
But just five months later, a system in the Ebenhoech home in Palo
Alto cost $18,188 before rebate.
"Palo Alto has a $4-per-watt-installed rebate for photovoltaic
systems," Hassett explained. "Anybody in the PG&E area gets a $3-per-watt
rebate from the state."
The rebates are not "free" money. All power users pay into a state
rebate fund as part of their electric bills.
"It's a state program that requires the utilities to collect (money)
for a renewable-energies fund," Hassett said. "The state maintains
the fund and Palo Alto maintains its own fund. PG&E does not."
Hassett said there are five other businesses selling commercial
solar-power systems, but added they are not selling to homeowners
because the profit margin is less.
"Solar has been so pricey for so long it was only the commercial
customers that you could make money on," he said. "So you see very
little business for them. We are the first ones (in the greater
Bay Area) to have a whole pre-engineered kit for the homeowners."
Because of the escalating power rates, Hassett said it is difficult
to determine when the system would finally pay for itself, the payback.
"There's lots of variables. Typically, if rates were to remain
flat where they are right now, in the middle of power crisis, it
would be about a 15-year payback to recoup the price of the kit
and the installation," he explained.
"If the rates go where PG&E is pushing, we're looking at closer
to a six or seven year payback for PG&E customers. PG&E customers
are currently being billed 13 to 15 cents per kilowatt hour. If
you look at your bill, they give you a price they would like to
charge you and then they refund you back down to that rate. The
rate they would like to charge you right now is 32 cents a kilowatt
hour. PG&E would like to see a flat, agreed-upon rate of 25 cents
per kilowatt hour.
"The basic kit that I sell is a 1-kilowatt system," Hassett said.
"The retail price on that is $7,500. The rebate from PG&E on that
is $3,013 while the rebate from Palo Alto is $4,024."
So, for about $3,476 (after Palo Alto rebate) a homeowner can save
approximately 2,000 kilowatt hours per year. "During the day it
is providing power for anything you use in the home," Hassett said.
"If you need more power than what the system is producing, your
utility is still there behind it, so there is no flickering. At
night you are still drawing off the utility.
"What we're trying to do is build a system that, during the day,
provides all your power needs or over produces and spins your meter
backwards, and then at night you buy that power back," he said.
The one kilowatt system, according to Hassett, will provide between
25 and 50 percent of the homes' needs depending on what appliances
are used and if it is a family of two or six.
"The typical home usage that I see is between 6,000 and 8,000 kilowatts
per year. What I have been finding is that the most popular size
is the 2-kilowatt system," which fits on most home roofs.
"At under $10,000 it fits within most budgetary restraints and
it provides 50 to 60 percent of an average household usage."
Hassett said he has sold triple and quadruple systems for high
And then there are the "monster homes," the ones with the 600-volt
switch boxes needed to power the large air conditioners and heating
units, and multitude of gadgets, appliances and home-entertainment
"Typically, their consumption is astronomical," Hassett said. "Of
the four or five homes that I have gone to, their monthly consumption
has been between 10,000 and 15,000 kilowatts per year. Their bills,
a couple of them, are between $300 and $400 a month."
Hassett said a major problem is that roof designs do not provide
for easy installation of solar panels. "Weird angles everywhere,"
Strange shapes of some monster-home roofs leave few options for
installation unless the the installation is custom-designed for
that particular home.
Hassett said his system is ideal for mounting on Eichler homes
because the roofs are basically flat."
Typically, he said, the post-rebate cost is in the $8,000 range.
That can be cut down if the homeowner does most of his own work,
which the solar kits that Siemens manufactures allows. "That would
eliminate 90 percent of the installation charge," Hassett said,
"if they feel comfortable doing it.
"If they don't, I have several people I can recommend to do the
installation, ranging from an electrician and handyman to a full
Hassett said he recommends only licensed contractors who know what
they are doing and back up their warranties.
Hassett noted that PG&E also has a program that charges customers
a high peak-hour. "That peak time is when solar would be producing
peak power too, and by law they are required to pay you retail for
that power," he said. Customers can opt to pay the peak-power rate,
and get paid back at that rate when their system is feeding power
to the grid.
"It's a good way to return that investment very quickly," Hassett