September 25, 2007 4:00 AM PDT

Cutting solar panels' high price tag

For all the technical advances in the thriving solar power industry, the large up-front costs of solar electricity in the residential market remains a stubborn barrier to wide adoption.

A number of companies, from installers to panel producers, are taking different routes to try to improve the economics of purchasing rooftop solar panels.

Bringing down the high costs of solar compared to other forms of power is one of the big areas of discussion planned for the Solar Power 2007 conference in Long Beach, Calif., which starts Tuesday.

Installer Akeena Solar on Monday announced Andalay, a panel that it says is more attractive and quicker to install. It is scheduled to further detail the panels, which use 70 percent fewer parts, at the conference.

Panel manufacturer Sharp Solar, too, is expected to detail a mounting and panel system meant to streamline the process of installing panels, and thus lower the costs. Similarly, solar companies are working with builders to pre-install panels or power-producing roof shingles on new homes.

In addition to hardware improvements, solar companies are trying out new business models to make the jump to solar power easier on the pocketbook.

A San Francisco-based start-up, Sun Run, is borrowing a financing model commonly used in the commercial market and applying it to residential customers. On Monday, it announced that it has signed on REC Solar as another installer.

Sun Run's business model is structured around owning the panels on people's homes. So instead of paying all the money to install panels, the homeowner pays for the electricity they produce at a fixed rate.

"We've found that most people are really interested in going green but they also have economic focus in doing it," said Sun Run President and Chief Operating Officer Nat Kreamer, who founded the company earlier this year.

Even though much of the media coverage around solar power focuses on the incremental improvements of converting sunlight to electricity, the actual work of installing photovoltaic panels remains 30 to 50 percent of the total cost.

Sun Run's contract--called a purchased power agreement--won't eliminate the initial cost of getting solar electricity. But it will reduce by about 60 percent the pain of shelling out anywhere from $20,000 to $35,000 for solar panels, according to the company.

Working solar incentives
Sun Run is focusing specifically on California, where people pay different rates depending on how much they consume. But financing is increasingly being recognized as an important part of the solar power puzzle.

Sun Edison and MMA Renewables are two companies that specialize in providing financing and solar power installations for commercial customers.

Other installation firms with similar models have recently received venture capital funding, including Solar City, Tioga Energy and, according to reports, Solar Power Partners.

Solar City's twist on solar installation is group buying. The company canvasses residential neighborhoods. When it gets 50 or so committed customers, it purchases the panels and then sends out teams of five or so installers to erect them. Volume discounts and concentrated installation leads to a reduction of about 20 percent in the overall cost, according to the company.

Purchase power agreements are mainly used in the commercial world. Companies that offer them own and maintain solar photovoltaic panels on customers' rooftops and sell the electricity back to the customer.

In addition to avoiding a large capital outlay for the solar panel installation, customers fix into an electricity rate and thereby get a hedge against rising prices.

"Any way you can use renewables to guarantee stable power prices, allowing homeowners or large industrial customers to fix their power and fuel costs, is a good step forward and an effective way to bring renewables to a broader market," said Alex Klein, an analyst at Emerging Energy Research.

Sun Run's Kraemer said that his company's attempt to bring purchase power agreements to the residential field has met with a good amount of skepticism.

That's in part because electricity is so price sensitive that it leaves little room for a profit margin. Skepticism may also be fueled by the experience of Citizenre, a company that has been signing on homeowners for solar panels with a nominal up-front fee but has yet to deliver on its promises.

CONTINUED: Easier hardware…
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21 comments

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Who feeds power back to the grid? Hardly anyone.
It looks like it is time to get some numbers:
In any given day that you are home how many people that have installed photovoltaic panels on their roof actually feed power back to the grid?
How much did your panels battery installation and all cost to deploy residential solar cost?
The answers to these simple questions is why rofftop solar will not work and why many who would like to go solar stay away. We can remove that hurdle. Saying a system is almost worthwhile because incentives from tax dollars reduce the cost is not helping the planet or our taxes.
Posted by Manhattan2 (329 comments )
Reply Link Flag
Please make an argument, not a rant
You start by saying "it is time to get some numbers" , but then
you don't give any.

I don't get the impression that you know very much about the
solar industry nor the associated cost/benefit calculations.

I can only speak for California, but:

Most residential installations are grid-tied and feed power back
into the grid during the day and take power from the grid at
night. In essence they are using the grid as a battery.

The financial numbers work very well for a large number of
homeowners who save money over a relatively short period of
time, increase the value of their home, and enjoy a better
lifestyle. To argue that their is something inherently "bad" for
these homeowners to achieve these benefits is silly.

The advantages of having a distributed generation capability are
also pretty strong. There is a great deal of discussion in
Southern California about building a $1.3 billion powerline to
transfer electricity. Relying solely on concentrated generation
has significant costs and drawbacks.


That being said, there is also a strong argument for
concentrated solar power generation and that is also being
done. In the end, a system of including both concentrated and
distributed generation will evolve.

I don't know why it seems to irritate you that homeowners would
enjoy the benifits of residential solar. However, the "horse is out
of the barn" as they say. Thousands of homeowners are going
to choose solar because it makes sense for them. Thousands of
new jobs are going to be created to manufacture and intall
residential solar systems. This is done deal. Get over it.

PS: When you are commenting on taxes you should probably
consider the billions of dollars in tax breaks for the oil and coal
industry.
Posted by antblaster (2 comments )
Link Flag
What about this scenerio......
you live in an area that doesn't have a connection to the grid, and even if you did the cost per pole would be $4,000 to $5,000 (Aus) plus the possibility of a transformer being required.

The people I know in these areas have been using solar water & power since the 1980's and although some of the systems could use a little T.L.C. they still do the job.

There are many small communities just like this dotted around Australia, people actually living their lives, with no reliance on a grid and all.

Right here, right now, solar panels are providing power for these people.

In-light of this, how is your concept a better alternative to what is already working (and has been for 2 decades)?

Kind Regards
Posted by m.o.t.u. (96 comments )
Link Flag
They all do that.
Even if there is no feed to the grid over a month, the system still displaces a certain amount of KHWs on the grid. When the sun is shining and its hot, when the owners air conditioner is not cycled on there is probably a flow to the grid that is useful during times of high demand. I know of a home in CA that hosts a web site with many computers adding to a normal domestic loads and the system is a string net contributor to the grid every month. If a system does not have a net contribution to the grid, it still reduces day-time peak loads. Getting a monthly net contribution to the grid is only a matter of sizing and economics. Systems that are smaller than that are still benefiting the grid.
Posted by KSman01 (4 comments )
Link Flag
Open it up to DIY.
No matter how easy is the installation of the solar panels, the contractors will simply charge the same installation price per kilowatt and get all the savings of installation all to themselves.

If the installation is easy enough, then simply open it up for Do-It-Yourself homeowners then have the city inspect and approve such installations.

As it is, only trained and licensed contractors can install solar panels, and thus they are the only ones who benefit from any advancement in the ease of installations. These savings have never been passed on to consumers. In fact that the solar panels became easier to install, that the solar panel companies will charge more because of the perceived savings in the installation, but heck, no way, it will end up costing more because the savings are not passed on, and the new higher prices will make it cost more.

Open it up to Do-It-Yourself homeowners, a large majority of us are smart and highly skilled, we are not dumb people, we can build more complex projects than solar installation. This in hope will pressure the contractors to really lower their prices when they have real competition from DIY. The improvement of the ease of installation of the solar panels as these various manufacturers have stated, will never result in price reduction unless real competition is brought in.

I do not support nor go against the use of solar panels on residential roofs.That is another big issue for debate.
Posted by Joe Real (1217 comments )
Reply Link Flag
Homeowner installation
Actually ( I can only speak for California ), the CSI solar rebate
allows for self installed systems. There is no problem for a capable
person to install their own system. You do have to go through the
process of getting permits and making sure everything is done to
code, but that is simple enough and makes sense. I heard that 5%
of installations in California are DYI, though I can't confirm that in
any way.
Posted by antblaster (2 comments )
Link Flag
DIY solar installations are possible in California. It is a matter of getting past the onerous permitting process and following the power company's guidelines. I installed my own 3000-watt system in a residential neighborhood in Ramona, CA saving ALL of the installation cost by doing it myself.
Posted by xanthur (1 comment )
Link Flag
But Solar Transfer is just an unexplained dream not a real product
Yes if I could put my solar panel in the desert in Arizona and actually get the energy at my house or get a nice check sent to me for power sold by my "Solar Transfer" partner. But after looking at the www.solartransfer.com site it is apparent to me that this is just an idea not a real company and not a fully vetted idea at that. I don't imagine too many people are gonna ship their solar panels down to an unknown company.

Without the governmental incentives solar just doesn't usually make "economic" sense. The reason Google and Walmart determine that after 30% back from the Federal government and nice subsidies from California that will diminish over the life of the program that acting sooner made more sense. It actually did make economic sense with a payback period of approx. 7 years if I recall and would have a beneficial PR impact. For businesses the 30% is uncapped, poor individuals maximum credit is $2000.

Hopefully as solar scales up it's price will continue to drop to the point where it is competetive with purchased power. Thin film should come down significantly and if you could replace shingles with a thin film installation the labor cost impact on solar would be significantly diminished.

Keeping my fingers crossed.......
Posted by stlwest (72 comments )
Reply Link Flag
Will the feds allow me to put my panels in New Mexico
What that means is: If I live in Maine or New York can I still get Federal and State incentives and tax breaks if I put my $10,000 in panels, mirrors, or fresnel lenses in another state? If so keep the incentives going. We will be deploying our program within a few months. If not all subsidies to deploy inefficient photovoltaic systems that cost more money and possibly CO2 than they generate should end.
Posted by Manhattan2 (329 comments )
Link Flag
How many installations have Sun Run
installed, to date, of these "rented" solar panels.?
seabiscuit
www.scottpelham.com
Posted by seabiscuits (1 comment )
Reply Link Flag
Monday, May 26, 2008

I just bought a house in Cape Coral, Florida and will be moving within the next 60 days. What is the best use of a house roof for solar energy today and what federal, state, county, and local grants are still there for ?ecogeeks? like me to reduce the cost of ?going solar? by use of solar units on the roof of their home?

I want to start as soon as I get to Cape Coral, Florida next month.

Thanks and regards,
Dwight
Dwight M. Lee
(Until July 1st)
3 Village Hill Lane #1
Natick, Ma. 01760-5724
(After July 1st)
3321 S E 10th Avenue
Cape Coral, FL 33904-4714
Cell = 508 801 5170
Home = 508 309 4874
Fax = 508 635 0049
Sr. Consultant
IBM Global Business Services
Distribution Sector
Supply Chain Management Practice
Access Line Tel/Fax: 781-253-3203
Tie Line: 3648889
Mobile: +1-508-801-5170
leemd@us.ibm.com
Posted by dwightmlee (13 comments )
Reply Link Flag
 

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