Solar Installers Race for San Francisco Subsidies
by: Jennifer Kho. June 23, 2008
Source: GreetechMedia.com
http://www.greentechmedia.com/articles/solar-installers-race-for-sf-subsidies-1038.html
Just a week after San Francisco Mayor Gavin Newsom officially signed a new incentive program into law, the race is on to take advantage of it. The program, the largest municipal solar-incentive program in the United States, will provide rebates of $3,000 to $6,000 for residential solar installations and up to $10,000 for commercial installations when it takes effect July 1. With the incentives capped at $3 million total for both residential and commercial installations, plus an additional $1.5 million in incentives specifically for solar projects at low-income and affordable housing approved last week, San Francisco could subsidize between 383 and 1,500 installations, depending on the size of each of the rebates.
That means the rush is on to get installations approved for incentives before the money runs out. And at least one installer, Sungevity, thinks the program will reach its first-year cap within the next month, according to Hannah Russin, a marketeer at the company. With the incentive, solar-power systems in San Francisco could cost as little as $2,000, the company said Monday, bringing a payback in electricity savings in five years. (Sungevity systems cost between $7,500 and $38,500 without the San Francisco incentive.)
Aside from new installations, the program also will apply retroactively to projects since Dec. 11, bringing the cap closer. An average of 14 solar projects have been installed in San Francisco each month, according to the city’s environmental department, suggesting that about 100 projects that already have been installed are likely to qualify retroactively.
Sungevity, which launched on Earth Day, has begun taking orders for its $2,000 systems, but Russin said the contracts give customers the chance to opt out if they aren’t approved for the incentives. The $2,000 systems, rated to provide up to 1.4 kilowatts of power in standard testing conditions, should cover about a third of the electricity that most San Francisco homes use, she said.
Most systems installed today are larger, but Russin said Sungevity is able to make money on smaller systems because of its proprietary software, which uses satellite data to provide estimates via the Web, she said. The company claims its technology can reduce installation costs by some 10 percent by eliminating the need for a site visit to come up with a quote. Other companies have to spend significant amounts of money to send technicians to get roof measurements, and only one in 10 customers actually buy the systems after the estimate is produced, Sunergy says (see this CNET story).
“Because we can do these remote roof analyses, we don’t spend as much time checking out houses where people aren’t sure they are going solar,” Russin said. “It is cost-effective for us to install these small systems in large volumes.” The small systems make the most financial sense for many customers because it enables them to replace the highest-priced electricity for a low total cost, she said. At $2,000, the system pays for itself, in energy savings, in about five years, she said.
According to Andrew Birch, a consultant for Sungevity, the system is expected to save customers a total of $20,000 over 25 years. That amounts to a return rate of 45 percent, meaning that customers are expected to save an average of $900 yearly starting with savings of around $400 the first year growing to savings of $1,500 by year 25 because of higher forecasted energy prices, he said.