Like the sun, the use of solar is rising

Tax breaks and other incentives reduce the cost of electricity and cover a large portion of a solar system's cost. Washington Post

Installing solar panels on your roof is not just for tree-hugging environmentalists. The increasing ease of the process and the financial returns have made going solar practically mainstream.

"By the end of 2020, the amount of installed solar capacity will be 300 percent higher than today," said Dan Whitten, vice president of communications at the Solar Energy Industries Association. "Nationwide, it grew 10 times between 2008 and 2015."

In Washington, residential solar installations have tripled since 2011, said Chelsea Barnes with EQ Research.

Sun shining on solar panels generates electricity that goes directly into your home's breaker panel, which supplies electricity to power your appliances and devices.

The power that panels produce but don't use goes out of your meter and back into the grid for later use. A net meter -- installed by your utility company in place of the standard meter -- rolls backward, and at the end of the month calculates your "net" usage from the grid. This is called net metering.

Power generated from the sun is meant to offset your electric bill. How much offset you get depends on how many panels are installed and how much electricity your family uses.

Whatever the amount is, your household remains connected to the grid and you receive an electric bill from the utility.

The goal is to reduce your utility expenses as much as possible.

Eventually, the savings on the electric bill will add up to what you paid for the system, which means from then on you're basically getting free electricity. The average return on investment is 5 1/2 years in Washington, said JD Elkurd, executive director at Solar Solution.

Andres Quiroz, an installer for Stellar Solar, carries a solar panel during installation at a home in Encinitas, California, in 2012. - bloomberg

The process starts with a site evaluation.

"We go up on the roof. We look at the direction of sunlight, take measurements of the space, see obstacles like air conditioners, vents, ducts, compressors and skylights. Then we know where everything is, how many panels can fit, and we can set them to maximize sun exposure," Elkurd said.

"People assume solar panels have to be on your roof, but they can be on an adjacent structure," said Chris Pierce, who lives on Capitol Hill in Washington. "Our roof is slate, which can't accommodate panels. But the garage is shingled, and Solar Solution said we could put up 18. They made a computerized drawing on the spot to show us what it would look like."

Installers told Washington resident Greg Crist that based on the sun's position, a porch would be ideal for panels. So as part of a house renovation, he added a front porch and 13 panels were installed on it.

The navy blue, 250-watt, 3-by-5-foot glass panels are manufactured in the United States, China and Mexico. The aluminum racking system Solar Solution uses is made in North Carolina and California. California-made micro-inverters attached to the back of each panel convert the solar energy from a DC current to AC so that the electricity can be used in your home. Panels and micro-inverters have 25-year warranties.

SolarCity Corp. employees install solar panels on the roof of a home in Kendall Park, New Jersey, in July 2015. - bloomberg

Tax breaks and other incentives reduce the cost of electricity and cover a large portion of a system's cost. "That's why 90 percent of our customers are in the solar business. For financial reasons, it makes sense," said Elkurd.

Here are ways to defray the cost of your system:

-- Federal tax credit: One nationwide incentive is an FTC equivalent to 30 percent of the cost. This credit was supposed to expire in December 2016 but was extended for five years.

-- Solar Renewable Energy Certificates: Government policy has further incentivized solar on a state level with SRECs.

SRECs are a credit homeowners get when they supply power to a brokerage market and can help offset the initial cost of the system.

Customers can sell SRECs to Solar Solution. "We'll buy -- in advance -- eight years worth of SRECs and apply that money to your project cost, bringing it down about 35 percent [including federal tax credits]," Elkurd said.

The average system size installed in Washington last year was five kilowatts, with 20 panels and costing $16,000, he said. After a 30 percent tax credit of $4,800 and an upfront credit of $5,500 for the SRECs, the cost would be $5,700. This size system typically provides an electric savings of $950 per year at today's rates.

A homeowner can instead broker their SRECs independently (via SRECTrade.com or another brokerage) and receive a check each time a credit is produced. That's what Crist did.

"I chose to go with a brokerage because I ran the numbers and thought I could make more than the $11,000 Solar Solution offered," he said. He said he hopes to pay off his system in a couple of years and make a profit on SREC sales.

-- Property tax exemption: In Washington, a property tax abatement ruling allows homeowners to exclude the added value of a solar system from their property value. For every dollar of electricity savings per year, property value is estimated to increase by $20, said Elkurd. The property value of the system described above increased by about $19,000.

-- Income-based grants: The federal government sets qualifying income levels. For a household of two, the maximum annual income is $40,967; for a household of four, it's $60,245.

Solar Solution obtained support from D.C. Sustainable Energy Utility, a nonprofit contractor to the D.C. Department of Energy and Environment. DCSEU provides grants to solar contractors who provide and install solar systems for low- and moderate-income District residents at no cost.

In 2014, Solar Solution installed 80 systems under this program; last year, 130. "We expect to put in 150 this year," Elkurd said.

-- Option to lease: If you don't want to buy a solar system, you can lease one for a small application fee. Solar providers own the system, so you don't pay for installation. You pay for the electricity, but at cheaper rate than the utility charges.

The North Pointe development on the edge of the historic district of Frederick, Maryland, features green homes with solar panels on the roof. - bloomberg

"We sell you back the electricity but at about 35 percent below Pepco's (the regional utility) rate," Elkurd said. "And we don't raise the rate. You lock in the cost of electricity for 15 years, which is the lease contract term. Then ownership reverts to you at no cost. So leasing is actually a delayed purchase." Electricity typically goes up about 5 percent annually.

"From a money perspective alone, I don't know why everyone in D.C. doesn't have panels," said Washington resident Neha Bhatt. "Financially, solar roofs are becoming a no-brainer, even if you're not trying to 'save the environment.'"