Dec 152010
 
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Solar power is becoming less of a luxury

JUST below your correspondent’s hillside home in southern California, a house is being rebuilt with all the latest thinking in materials technology and construction codes. Much has changed in the eight years since your correspondent did the same. Most strikingly, the house below has a gleaming white roof of fireproof chippings embedded in a mastic undercoating. With summer temperatures in the nineties (32ºC and up), these new reflective coatings are said to reduce air-conditioning bills by 20% or more. Not content with that, the owner has added a five-kilowatt bank of solar panels.

Eighteen months ago, your correspondent ran the numbers to see what it would cost to use photovoltaic solar panels to replace the 8,300 kilowatt-hours of electricity he buys annually from the grid. Economically, solar turned out to be a dud. The 6.4 kilowatts of capacity needed would have cost $48,000 for the panels alone—and half as much again by the time the mounting frames, switching modules, power controller, fault protector, DC-to-AC inverter, service panel and installation charges had been included.

Admittedly, there would have been $14,000 worth of government grants to soften the blow. But even then, repayment of the loan (or the opportunity cost of paying cash) would have worked out at more than $600 a month over ten years—all to save a paltry $75 a month in electricity charges. With his conscience still twinging, your correspondent decided to buy a couple of tons of carbon offsets for a total of $70 a year and have done with it.

Now he’s not so sure. The price of carbon offsets has risen slightly, to around $50 a ton. So has the price of juice in his part of the country, to 12.2 cents per kilowatt-hour. And the borrowing costs of home-improvement loans have fallen, too. Moreover, two other factors have tipped the balance somewhat in solar’s favour.

One is the amount of government rebate now available. Starting this year, homeowners who install solar panels qualify for a 30% tax credit on the cost after state and other incentives have been deducted. A second factor is the tumbling price of the solar panels themselves. Eighteen months ago, typical 200-watt modules cost around $1,500 apiece retail. Today, such panels can be bought for $600 or less. The recession, plus the enormous oversupply caused by the surge of new factories in China and elsewhere making photovoltaic panels, have created spectacular deals for consumers.

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