Quiz: What major improvement to your home can you make that will, without fail, pay for itself in 10 to 15 years? A new granite countertop? Not really. An outdoor fireplace? Um, no. Replacing your windows? Probably not.

How about a solar system? Yes, indeed. Installing a solar-electric or photovoltaic (PV) system, which captures the light energy of the sun and converts it into energy for use in your home, pays for itself...and then some.

If a homeowner is interested in solar-electric, a lot of financial help is available. The New York State Energy Research and Development Authority (NYSERDA) will pay, upfront, about 50 percent of the cost of a solar system. A New York State tax credit is available up to $5,000 and a federal tax credit up to $2,000. You can also borrow money to pay for the other half of the cost, and NYSERDA will buy down the interest rate by 4 percent. Net-metering allows you to sell back any excess electricity you produce at retail rate. And a solar system is likely to increase the resale value of your home.

So with all this financial encouragement and support, and a guaranteed payback, why aren't solar panels everywhere? True, more than 600 systems (residential and commercial) have been installed in the state so far, and the market is growing at a rate of 60 percent a year. But homeowners still approach the idea with caution.

A recent article in the New York Times by Damon Darlin claims that solar "still makes no economic sense." A review of the article shows fairly accurate numbers in terms of costs and paybacks, but the author's conclusion doesn't quite warrant such a harsh response. Darlin rejects the financial gains of solar by comparing it to the return on investing in a government bond. And he regards the increased resale value of your home as mere guesswork.

Refusing to believe that the booming solar market is driven by a slew of irrational financial decisions, as Darlin suggests, I asked several solar installers and homeowners what ultimately leads to a decision to invest in a solar system.

This year he decided to invest in the installation of a 4kW solar-electric system from Solarias, Inc., enough to provide one-third of his electric needs. The total cost of the system was $31,000. NYSERDA pitched in about $16,000. New York State offered a $4,000 tax credit, and the federal government will pay $2,000 towards the system, bringing Shah's grand total down to $9,000.

"Now the government gives many rebates making it viable economically," says Shah. "It's still not financially a great investment, but when you consider the other benefits, it's a nice thing to do. And when more and more people install these systems, it gives an incentive to the manufacturer to make them cheaper."

Shah expects to make his investment back in 12 years, but thinks it could happen in 10, depending on what happens to the price of electricity. He also expressed the desire to get away from fossil fuels, which contribute to global warming and other environmental problems, and to depend less on foreign sources of energy.

"The primary reason has to be people who care about global warming and the environment because of the up-front costs of solar," says Sara Hambleton, owner of Solarias, Inc., a solar-electric company based in Middletown, Orange County.

Echoing Hambleton's sentiments, Charles "Buddy" Damiani, owner of Damiani and Sun solar energy contractors, based in Orange County, says the number-one reason people invest in solar "is the joy of generating their own, clean energy. Many think it's because of the payback, but it's not—the payback is just a nice little perk."

Damiani adds, "It's still a wise investment. You're prepaying for your electricity for a cheaper price than the utilities, and you're making it yourself from the sun."

John Wright of Hudson Valley Clean Energy, a full-service solar installer based in Dutchess County, weighs in more on the financial benefits, saying people invest solar for "a combination of financial and environmental reasons." After all rebates and incentives, John estimates the average payback to be 10 years. Compared to investing in a conservative mutual fund, solar has a similar rate of return—without incurring taxes. "Write that in big, bold letters," he says.

Hambleton takes a slightly more conservative outlook when calculating the financial benefit of a solar system, estimating the average payback to be 12 to 14 years. She has been a solar installer for the past two and a half years and recently started her own company, Solarias Inc., this past January. Like all solar installers, she focuses on the environmental aspect of her business, especially in the selection of the solar paneling she installs. Her panels have a low "energy payback"—the time it takes for the panels to produce the amount of electricity needed to offset the environmental impact of producing them—of two to four years and are produced within a more environmentally benign manufacturing process.

Financially speaking, it's hard to predict the future of markets. Anything can happen: hurricanes, climate change, conflicts in the Middle East. We can guess some things with more certainty than others, but nobody has a crystal ball.

We all know what's happened to the price of oil—it rose from $25 per barrel in 2003 to around $62 per barrel last month. But as a commodity, electricity is a different animal. Reviewing the history of electric prices, we see that electric rates have remained relatively stable for the past 15 years, with a little less than a two percent annual increase. That's not much. We might expect a similar escalation in price for the next 15 years if it weren't complicated by the fact that we are facing deregulation and an aging power grid, which could substantially influence electric prices. Such variation accounts, in part, for the difference in predictions on paybacks for solar systems.

"You pay a lot for electricity no matter how it comes to your home," points out Larry Brown of Sun Mountain, a solar installer based in Olivebridge, Ulster County. Like Hambleton and Damiani, Brown believes the primary reason his customers invest in solar is still environmental. He stresses that what's not factored into the amount you pay in your monthly bill is the real price of fossil fuel-based electricity—the hidden costs of electricity production: acid rain, lifeless lakes, contaminated fish, mercury pollution, climate change, and poor air and water quality. None of this shows up in your monthly utility bill. Solar systems also have hidden social benefits, which include producing electricity when it's needed most on a hot summer day, which can reduce the occurrence of blackouts and the need to build more power plants.

More progressive countries—including Germany, which has experienced a growth in the renewable-energy market at a pace rivaling that of information technology—recognize the advantages of solar energy and offer financial incentives. In fact, Germany's renewable-energy law, implemented in 2000, currently pays the owner of an installed wind or solar system 57 to 78 cents per kilowatt-hour to produce clean energy. Similar incentives in the U.S. would make investment in solar a financial slam dunk.

In any case, an investment in solar is an investment in the development of the solar economy, a technology that will play a major role in addressing some of the most challenging global issues of our age: climate change, human and environmental health, and energy independence. That's something more and more homeowners value that's not captured in the price tag. "And your grandchildren are gonna love you for it," says Damiani.

The technology is simple. The silicon-based photovoltaic panels convert sunlight to DC power. It's not remarkably efficient at doing this, as only about 15 percent of the available energy hitting the panels is converted to usable electricity. On the other hand, comparing the efficiency of a solar panel to a power plant makes solar fairly competitive. By the time electric power arrives at your home from a coal-fired power plant, the efficiency is also about 15 percent.

An inverter converts the DC to AC power for use in your home. The system is connected to the utility power lines, so if the system produces more than is needed, the excess is fed back into the grid. Some people like the idea of going "off-grid," attracted to the idea of complete energy independence. However, unless you are in a remote location with no power lines, off-grid systems make no economic sense. Off-grid systems require the installation of a battery back-up system, make selling back excess electricity not possible. Besides, the State provides incentives to grid-tied systems only, because of the benefit to society.

Site conditions are essential. A south-facing roof with very little or no shade is necessary for solar systems. If you have property with some open space, a ground-mount system is an option.

CONTACTS
Damiani and Sun, Inc.
Monroe (Orange County)
(845) 783-6020
buddyray@optonline.net

Hudson Valley Clean Energy
Rhinebeck (Dutchess County)
(845) 876-3767
www.hvce.com

Solarias, Inc.
Middletown (Orange County)
(845) 699-5543
www.solarias.net

Sun Mountain
PO Box 1364
Olivebridge (Ulster County)
845-657-8096
sunmountain@netstep.net

For a complete list of NYSERDA-approved solar installers in your area, and to learn more about solar systems of all kinds, visit www.PowerNaturally.org or call 1-866-NYSERDA.