Stimulus adds tax credit for home solar panels

Solar installer Delmar Oliveira (right foreground) carried a panel to a new location on the roof. The solar industry has been a bright spot in a down economy. The Los Gatos based company Akeena Solar is installing 44 solar panels on a home in the Oakland hills Thursday January 15, 2008. less Solar installer Delmar Oliveira (right foreground) carried a panel to a new location on the roof. The solar industry has been a bright spot in a down economy. The Los Gatos based company Akeena Solar is ... more Photo: Brant Ward, The Chronicle Photo: Brant Ward, The Chronicle Image 1 of / 1 Caption Close Stimulus adds tax credit for home solar panels 1 / 1 Back to Gallery

Homeowners interested in sticking solar panels on their roofs got a big boost from the $787 billion economic stimulus package signed Tuesday by President Obama.

Homeowners will now be able to get a federal tax credit worth 30 percent of the cost of their new solar system even if they're also receiving state or local financing.

That could make a big difference in California, which offers rebates to homeowners who install solar systems. And Berkeley has a new solar financing program that lets homeowners pay the cost of their solar systems over 20 years, a program that San Francisco and other cities plan to emulate.

A typical home solar system generates about 3 kilowatts of power. The installation cost in California averages roughly $8.10 per watt, according to Adam Browning, executive director of the Vote Solar advocacy group, meaning the typical cost is $24,300.

The state rebate is now $1.55 per watt for homeowners in Pacific Gas and Electric Co. territory. So the average rebate is worth $4,650, bringing the overall cost down to $19,650. Although it's unclear just how the stimulus provisions will work, several solar industry sources said they expect the federal tax credit to be based on a solar system's price after the state rebate is subtracted. So for the typical California homeowner, the 30 percent tax credit will be worth $5,895, cutting the overall cost to $13,755.

Finally, the Berkeley program allows homeowners to borrow the cost of installation from the city's Sustainable Energy Financing District and pay it annually on their property tax bills. So they'll pay minimal up-front costs.