Mar 022010

Despite the fact that fuels used by many power companies are falling in price, along with most commodities in the current market, many communities are experiencing rising electric prices as fuel costs were negotiated during the peak fuel price period of this past summer. My local power company has recently asked for a major rate hike (greater than 25%), and was approved for a three-year rate hike plan with 10.2 percent of the rate hike to apply this year, a likely 10 percent rate hike the second year, and the balance applying in the third year. However, as a result of the current economic situation, the Emergency Economic Stabilization Act of 2008 was signed into law on October 3, 2008. Part of this Act contained provisions for extending the renewable energy tax credits, a tax credit of 30 percent of the cost of a solar energy system, up to $2,000 (the cap disappears for systems placed in service after January 1, 2009).

With the tax credits extended, effectively reducing the cost of renewable energy systems, and the cost of energy expected to rise strongly, this is a very good time to invest in a solar power system for your house. Especially since many states allow residential power generators to “roll back” their power meters, effectively selling back to the electric company, often at a higher rate than the residential customer would pay for power obtained from the electric company, power that they generate but do not use on site.

However, before you rush out to get a system, there are a few things to consider first: the suitability of your site for solar power production, solar panel system selection, power inverter selection, financing, warranties,…

Let’s assume that you have determined that your site has enough sunlight available throughout the year to make a solar power system useful. Even with the tax credit, a solar power system is still a large investment. To reduce the cost of your system and to shorten the time that it takes to pay for itself in energy bill savings, consider some more traditional home improvements first. The largest use of energy in the home is climate control, especially in regions with hot summers, cold winters, or both. Any energy usage that can be eliminated before installing a solar power system can lead to a significantly smaller and less costly solar system, which returns its investment much more rapidly.

Three areas that can help reduce power demand considerably are: sealing air gaps in the attic and along walls; adding insulation; and replacing old windows and/or doors with new, energy-saving units. Depending on the particulars of the house, any one of these may be the largest cause of high energy usage, so it’s difficult to determine which to start with, although since sealing air gaps requires physical access to the attic floor, this is usually best done prior to adding insulation. Many electric companies offer free or low-cost energy audits to help home owners determine their current power usage causes and potential corrective actions.

Both insulation addition and window and door replacement are also eligible for a tax credit (if they are placed in service after January 1, 2009). For windows and doors, the tax credit is 10 percent of the cost of all Energy Star compliant windows and doors (excluding installation), up to $200. For insulation, the tax credit is 10% of the cost of insulation (must meet 2000 International Energy Conservation Code and excludes cost of installation), up to $500. However, a cap of $500 tax credit is imposed for those upgrading both insulation and windows and doors (the $500 cap does not apply to the solar power system). These are just the federal tax incentives, there may be state or local incentives, as well.

Some of the new windows on the market can save a substantial amount of energy over previous designs, incorporating insulating frame materials, multiple glass panes, low-emissivity glass, spaces between the panes filled with an insulating gas instead of air, and spacers between the panes of glass to keep them from moving closer over time and reducing their insulating efficiency.

A typical cost for a solar power system (including inverters, panels, support hardware and excluding batteries for those that use them, inspections, power meters required by the electric company, etc.) is $9 per watt. If your home improvements reduce your electricity usage from 400 kilowatt-hours per month to 300 kilowatt-hours per month, you can save up to $6,000 ($9 per watt, not kilowatt-hour) on the price of a solar power system to provide full power replacement for your home.

Daniel Peplinski


Author: Daniel Peplinski
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Daniel Peplinski

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