Rapidly declining cost for solar panels and other hardware have made solar installations a competitive option for many homeowners, the new report says.
Kathleen Lavine | Denver Business Journal
Customers in 42 of the nation's 50 largest cities — including Charlotte and Raleigh — would save money by installing rooftop solar instead of buying all their power from local utilities, says the N.C. Clean Energy Technology Center.
Residential solar has prospered largely in states with high electricity rates — such as New York and California. But report authors Jim Kennerly and Autumn Proudlove say the data show consumers nationwide can benefit from solar — even in relatively low-utility-rate states such as North Carolina.
New York City and Boston unsurprisingly rank as the cities with the largest savings from a solar investment. But Raleigh ranked 30th on the list and Charlotte 34th.
In both N.C. cities, Kennerly and Proudlove say, the costs of a solar project will be more than offset by the savings on utility bills over time.
The report calculates that typical Charlotte customers would save about $57 per month on their electric bills in the first year after installing a solar system. Raleigh customers would save about $49 per month that first year.
Customers in San Francisco, by contrast, would save $187 per month in the first year.
Costs and incentives
But Kennerly and Proudlove's calculations are not based just on gross savings. The costs of the system and the relative difference in rates across the country also enter into the calculations. So do incentives offered in various states and cities.
So, for instance, Charlotte and Raleigh benefit from relatively low costs for solar installations. The Southeast and the mid-Atlantic states have the lowest installation costs in the nation, according to the data the report cites.
So a 5-kilowatt system, the standard used in the report, would likely cost about $18,500 in North Carolina. In the Northeast, a similar system would cost more than $21,000, on average. Thus, a homeowner in North Carolina pays less for the system and so does not have to save as much to come out ahead.
And Raleigh edges ahead of Charlotte in the rankings because Duke EnergyProgress offers a solar incentive that's unavailable from Duke Energy Carolinas.
Better than stocks?
The eastern N.C. utility has its SunSense program, under which it offers customers with small solar systems a larger credit for power sold to the utility.
The report compares the 25-year cost of buying utility electricity to replacing a portion of those purchases with a 5-kilowatt rooftop installation.
It also calculates the value of investing in a solar system versus investing the same amount in a fund indexed to the value of the S&P 500 Index. According to the center's report, residents in 46 of the 50 largest cities would make more money from putting their money in solar.
"We wanted to compare the investment that a lot of ordinary customers might consider making," Kennerly says.
An important caveat is that the advantage in utility savings disappears in most cities if the customer has to pay for the solar installation upfront. Customers in only about 14 of the major cities benefit under those conditions.
But if customers can finance the purchase over time, almost all consumers in the study can benefit from a solar installation. The financing assumption, however, was a loan at 5% interest over 25 years (the nominal life of a solar installation). That is not a standard loan that would be available to all customers.
The financing is important because the study calculated the levelized cost of power from a solar installation. That reduces the cost of the project to a per-kilowatt-hour number that can be compared with electric rates.
If the cash has to be paid upfront for the system, that drives up the levelized cost by front-loading the expenses.
That is why the report recommends that local governments and municipal utilities take steps such as engaging local lenders to provide low-interest loans or allowing customers to buy into community solar projects financed by municipal utilities.
The report makes no recommendations for steps that could be taken by investor-owned utilities such as Duke Energy.
Proudlove explained that is because the report was funded by the U.S. Department of Energy's SunShot program with the aim of developing solar strategies for municipalities and local governments.
Many of the recommendations made in the report could be adapted by investor-owned utilities as well, she and Kennerly say.