Rising energy costs? Tax incentives to install solar heating systems? Haven't we been here before? Yes and no.



Solar is making a comeback for the first time since the late-1970s. To a certain extent, it sounds like the past repeating itself, with energy prices up and tax incentives to install solar heating systems. Some things, however, may have changed to help alternative sources of energy move at least a bit more to the center of the stage.

So what’s happening now that’s causing a rebirth of solar energy? Here’s a number of questions we had and the answers we found.

I’ve heard plenty of stories about solar hot water systems put in during the Carter administration. What I’ve heard doesn’t exactly fill me with confidence.

We’ve heard those stories, too, when fly-by-night companies were busy selling tax credits instead of installing quality equipment. But a couple of things are different today.

Like what?

A big difference comes by way of the Solar Rating and Certification Corp. The nonprofit group provides third-party testing, rating and certification of solar collectors and solar domestic water-heating systems.

The group developed two standards for testing and rating solar products:
  • Standard OG-100 requires that collectors undergo testing for both thermal performance and durability. Collectors are tested for thermal output under a range of solar intensity and ambient temperature conditions. The standard also requires testing for withstanding stagnation, severe weather and thermal shock.

  • Standard OG-300 combines the physical testing of collectors with a quality-assurance review of all major components in a solar water heating system. The standard also provides simulated performance estimates for the system in specific geographic locations.
In many cases, meeting these standards serves as the basis for qualifying installations for federal and state tax credits, as well as for other organizations offering financial incentives for solar installations.

You can find out more by going to www.solar-rating.org.

There’s also a movement to certify installers of solar thermal systems. The North American Board of Certified Energy Practitioners held its first certification exam last year. You can find out more by going to www.nabcep.org.

Finally, keep in mind that while the solar market collapsed in the United States, other countries still had to contend with high energy prices. As a result, progress in product improvements didn’t collapse.

Regardless of certification, much of the installation work for solar hot water systems has been streamlined, thanks in part to preassembled packages.

But those tax credits you mention are going to end this year, right?

The federal tax credits are scheduled to end on Dec. 31, but solar trade groups are lobbying hard to have those credits extended. However, there are plenty of other tax incentives and financial programs throughout the country run by states or municipalities.

How can I find out about them?

Several contractors we talked to told us about the Database of State Incentives for Renewables & Efficiency (www.dsireusa.org).

It would take a full-time job to keep up with all of the programs we found on this site. Luckily, that’s what the DSIRE does, tracking information on state, utility, local and selected federal incentives that promote the use of renewable energy technologies. The database was established in 1995 as a project of the North Carolina Solar Center and the Interstate Renewable Energy Council.

Out of curiosity, we clicked on our home state of Illinois and found information on almost 30 programs. While it’s much more than just solar hot water, you may be surprised at the various energy and energy-efficiency incentives out there.

The list of state incentives contains handy links to individual program summaries containing the following details: incentive type; implementing sector; eligible sector; eligible technologies; links to authorizing statutes, regulations or policies; program summary; links to incentive program Web site; and contact information.

Tax incentives are nice, but what will happen if energy prices drop like they’ve done before?

I have a distinct memory of a big debate that took place in my high school sophomore social studies class during the mid-1970s: What would happen if gas ever went past a $1 a gallon?

A lot of people were glad to hear about energy alternatives at the time. But by the mid-1980s, energy prices dropped and alternatives faded, too. Now with regular unleaded gas heading to $4 a gallon, everyone wants to know about alternatives again. But what if energy prices dropped?

Regardless of what happens to oil prices, other factors will continue to push even the biggest oil addict to make greater use of the sun, wind, geothermal and other alternatives, according to a report released last February by the Cambridge Energy Research Associates.

“Climate change and putting a price on carbon will change the dynamics of the energy marketplace,” the group’s chairman, Daniel Yergin, told the New York Times. He also said the ravenous demands of oil from China and India were not a factor in global energy markets at all during the first price shocks following the Arab oil embargo of the 1970s. “You need renewables as part of the solution to meet this astonishing demand,” he added.

(Incidentally, if you ever want to know about how we came to be addicted to oil, pick up Yergin’s book, “The Prize: The Epic Quest for Oil, Money & Power.”)

So there’s more interest in green these days.

Absolutely. Whatever we’re spending on energy five years from now, plenty of “green” consumers will be motivated to offset their carbon footprint. Sure, they’ll want to save on their heating bills, too, but if they can cut greenhouse gas emissions in their own personal way, that’s all the better.

According to the EPA, a single 80-gallon solar hot water system installed in sunny New Mexico annually offsets more than 9,000 pounds of carbon dioxide emissions - that’s roughly equal to driving a car 11,000 miles. Another report we read for the city of Durham, N.C., said switching from an electric hot water heater to solar would reduce a family of four’s greenhouse gas emissions by more than three tons annually. We didn’t major in math, but they do back up the numbers with some heavy-duty ciphering in the appendix.

Suffice it to say that, thanks to all the news about green construction, many people might look past higher first-time costs to save the environment.

All I ever read about is solar PV for electricity. But I’m a plumbing and heating installer. What’s going on with the solar thermal market?

As we prepared for this new supplement, we couldn’t help but think that solar thermal must be the alternative energy’s red-headed stepchild. Many of the articles we read in the mainstream press barely talked about using the sun to heat water. Everything was on solar photovoltaic initiatives, such as California’s Million Solar Roofs program.

But for all the hype on solar electricity, consider that the Department of Energy says that solar electricity amounted to less than 0.01 percent last year of the national electrical use and, at best, will account for just 2-3 percent of the total in the next 25 years.

But using the sun to heat water has significant advantages over using the sun to generate electricity.

How so?

From a cost perspective, solar panels that convert sunlight to electricity are really going to give consumers sticker shock. More importantly, what consumers get in return on solar PV pales in comparison to what they can get for investing in solar hot water systems.

Sounds good. Keep going.

Solar PV panels start right out of the box with two strikes against them. First, they’re more expensive to produce since they use semiconductors to convert sunlight into electricity. We’re oversimplifying, but think of them as computer chips - only so big you need a truck to bring it home.

Second, PV panels are much less efficient at turning the sun’s energy into electricity than solar thermal panels to capture the sun’s energy to heat water.

We read an interesting first-person account of one man’s attempt at solar PV for his home at the behest of one of the most committed green consumers out there: his 10-year-old daughter.

The homeowner was paying about $900 a year for electricity, or 10.8 cents per kilowatt, per the local utility’s rate. Long story short, the homeowner determined the final bill to install solar PV would be $48,000 for the solar panels alone and $65,000 for the completed job.

He figured he’d qualify for about $14,000 in federal and local incentives. Borrowing the balance would mean repayments of roughly $600 a month for 10 years. Bottom line: he’d ultimately save about $75 on electricity a month. Keep in mind, he enjoyed 300 sunny days a year in southern California.

I hope solar hot water offers a better deal.

Anyone who’s left a garden hose in the sun on a summer day knows how hot the water left over in that hose can get. While there’s certainly a bit of technological wizardry involved in solar hot water systems, it’s much more of a straight shot to make use of sunshine than a PV panel.

The efficiency of solar heating collectors is typically at least five times that of PV modules. In other words, you can get five times more useful energy from each measure of sunlight that strikes its surface.

Heating and hot water also amount to a much greater use of energy for the typical homeowner, too.

You’re catching on quick. The Department of Energy says the typical American household spends 15 percent to 20 percent of its total annual energy bills to make sure there’s plenty of hot water. Power for a hot water heater is essentially always “on” day and night, whereas you can easily turn off electricity you don’t need.

Recouping the high cost of a solar PV system can take as long as 20 years for a residential system. Meanwhile, a solar hot water system can cost roughly $5,000 to $8,000 to install in an existing home and can recoup its cost in seven years on average.

OK, I’m sold, but you’re always going to need a traditional fossil-fueled backup to solar, whether it be electricity or hot water, right?

That’s right. Even places in America that get 300 days of sunshine still get 300 nights plus 65 more to go along with that.

However, thanks to the efficiency, solar tends to be a majority player in domestic hot water - we hear as much as 80 percent in sunny climates. Other contractors in other parts of the country will conservatively estimate that 60 percent of a home’s domestic hot water load can be done with solar.

But what about solar hot water to provide radiant heat?

For the sake of brevity, we’re just talking about solar for domestic water. We certainly talked with plenty of contractors who do rely on it for domestic hot water and space heating. However, all of them said immediate applications would be for domestic hot water; certainly not everyone has a boiler and hydronic potential, but every home still has a conventional water heater that could be souped up with solar.

We certainly aren’t arguing against its use; the relatively low temperatures you get from solar hot water marry well with a well-designed radiant system. We’ll talk more about solar radiant heat in the next issue of the Solar Installer.

What’s going on in other parts of the world?

Plenty. We read an article that put the United States in 28th place, down there with Slovenia and Bulgaria, in terms of what countries have adopted solar power on a per capita basis.

That may have been a bad joke since we never did find the actual ranking, but other countries have naturally had to contend with much higher energy prices for much longer than we Americans.

Rizhao, China, population 3 million, may be the biggest city in the world that relies on solar power for hot water. Essentially, all the people who live in the urban area rely on the sun to heat hot water and another 30 percent of households in surrounding villages use solar water heaters.

The local regional government chose to subsidize research and development of solar systems rather than existing electric water heating. Researchers were able to figure out how to do more for less, essentially. The upfront cost of a solar hot water system was brought down to the same level as an electric system. The government also organized free educational seminars and created public advertising for solar hot water, while installing the equipment on public buildings.

China is the only major country with long-term national goals for solar hot water. If the targets are met, more than 25 percent of Chinese households would have solar systems by 2020, as well as big shares of commercial and public buildings. Building design and construction in many urban areas - where almost 600 million people live - incorporate solar hot water.

Research we saw at ISH China 2008 indicates that almost 60 percent of Chinese households intend to either buy a solar water heater or replace their gas/electric heaters with solar equipment within the next five years. Li Junfeng, deputy head of the Energy Research Institute of the National Development and Reform Commission, says the country would save more than 50 million tons of coal by 2010 by using solar energy.

In other countries, Israel had been the only country to make solar water heating mandatory on a national level since the mid-1980s. More than 90 percent of Israeli households own solar water heaters today.

In 2006, Spain implemented a new national building code that requires minimums for solar hot water. Last year, India, South Korea and Germany adopted some form of solar water heating mandates for their citizens. In addition, various cities around the world haven’t waited for their national governments to take action. Sao Paulo, Brazil’s largest city, for example, passed a law last year requiring solar water heating in all new buildings larger than 800 square meters (8,611 square feet). And the city of Betim, Brazil, is installing solar water heaters in all new public housing.

Links