This article first appeared in the St. Louis Beacon, Feb. 24, 2011 - Financial incentives from the federal government and local power companies make 2011 a good time for Missourians consider solar energy. The Missouri Clean Energy Initiative, passed overwhelmingly in 2008 as Proposition C, requires that 15 percent of the state's electrical power come from renewable sources by 2021.
Ahead of that deadline, Missouri's power companies are offering financial incentives to customers who help them meet that goal. Those incentives, added to the 30 percent federal tax credit, can reduce the initial cost of a solar installation by up to two-thirds, according to Erin Noble, of the Missouri Coalition for the Environment.
In addition, the cost of the solar panels has come down about 30 percent in the last three years.
Solar Energy Becoming More Visible
Solar panels are an unusual sight in Missouri. Ameren, which provides electric and gas service of a combined 3.4 million customers in Missouri and Illinois, has about 200 solar power producers integrated into its grid. (Most commonly, Ameren supplies the power to supplement solar production and will buy excess power if solar production exceeds usage.)
But that's changing. The Missouri Botanical Garden recently installed a 25 kilowatt array of 100 solar panels on its science education center. The panels will produce about 32,000 kilowatt hours a year. That's about 5 percent of the building's electricity requirements, or enough electricity to power four to six average homes.
Visitors to the center can interact with a touch screen in the lobby. They see the real-time production of power, the daily energy harnessed and tallies for weekly, monthly and lifetime energy production.
Economic Incentives For Solar Energy
Until recently, the main impetus for using solar power was to make a green contribution. After all, the sun is the biggest source of energy around, and its rays are free. Solar power produces no pollution. Electricity production is highest when days are long and warm, coinciding with peak electrical usage for air conditioning. And each kilowatt hour of solar power keeps about two pounds of carbon dioxide from coal combustion out of the air. That 25 kilowatt system at the Botanical Garden will replace about 30 tons of carbon dioxide in a single year.
Until recently, the upfront cost of producing solar power did not make economic sense for most homes and businesses.
Beginning in January, several financial incentives combined to reduce the purchase and installation of a solar unit by as much as two-thirds.
- Congress extended he federal 30 percent tax credit for solar system installation until 2016.
- Power companies are awarding a rebate of $2 a watt of solar capacity installed, up to 50 kilowatts. If a home or business in St. Louis purchases enough solar panels to produce 2 kilowatts of electricity, Ameren must send them a check for $2,000, as required by Proposition C.
- Ameren has set aside $2 million this year to purchase solar renewable energy credits from the owners of 2-10 kilowatt solar systems. These credits are based on the amount of electricity produced annually, in kilowatt hours. In Missouri, a 2 kilowatt system will produce about 2,600 kilowatt hours of electricity, and the homeowner can sell the credits for that power for $2,600. 10-100 kilowatt systems are metered and can sell energy credits for the actual megawatt hours produced for the first five years after installation.
As an example, Erin Noble of the Missouri Coalition for the Environment in November installed a small (about 2 kilowatts) system on the roof of her home. The initial cost was $11,600, but with tax breaks and Ameren incentives her final cost was $3,600.
For businesses, the solar system can be depreciated in one year, giving an additional incentive.
Huge Energy Cost Reduction For Warehouse
The largest solar power installation in Missouri was completed in November for the St. Louis warehouse of Walsh and Associates chemical distributors. This 100 kilowatt system of 416 roof-top panels on the 88,000-square foot building culminates seven years of cost-saving through application of energy efficiency. The annual electric bill has been reduced 95 percent.
When Walsh first moved into its new warehouse on Macklind Avenue, said Randall Lewis, director of operations, company officials were stunned to find the electric bills the first year of operation added up to $35,000. Managers knew they needed to replace the heating, ventilation and air conditioning in the old building. The HVAC replacement reduced the annual electric bill by 25 percent, but $26,000 a year still seemed exorbitant to them.
Lighting for businesses is often responsible for about 30 percent of the electricity used. Lewis attended a lighting seminar at St. Louis Community College at Meramec, where he learned about energy-saving lights. With the first 52 lights he updated, the company immediately saved $250 a month, with a payback of 6.7 months. He was hooked on energy efficiency.
Since then, Walsh replaced or retrofitted another 400 lighting fixtures, and added 50 Solatube light diffusers. After some other improvements, such as motion sensors, an energy audit found the building was as efficient as conventional means could make it.
By 2009, however, the tax advantages and rebates were beginning to make solar power more economically attractive --- and the company decided to go for it. The system, designed by StraightUp Solar of St. Louis, was priced at $500,000. But with one-year depreciation, the 30 percent tax credit, the wattage rebate from Ameren, and the sale of energy credits, the actual cost was about $150,000.
With an annual electric bill now reduced to an estimated $1,500 at today's rates, the Walsh system will pay for itself in about five years. Solar panels have a lifetime of about 25 years, and the inverters that change the AC current they produce into DC current usually have a 10-15 year guarantee. For five to 10 years after payback, the solar system should make Walsh about $33,000 a year -- more if electrical rates increase.
Residential Solar Power Becomes An Option
The payback for residential solar power usually takes longer than for commercial. But solar panels last at least 25 years, so even a 15-year payback will eventually make money for the owner, Dane Glueck of StraightUp Solar says. And during the pay-off years, the return on investment from savings on electric bills is about 7 percent. He suggests thinking of it as locking in today's rate. If rates go up -- Ameren has increased its rates three times since 2007 -- the payback will obviously be greater.
"People need to realize that when you turn on your lights, you are burning coal," Gleuck says.
Environmental awareness has been a strong motivator for Glueck's residential customers.
Bernard Waxman of Olivette had done as much as he could to reduce the carbon footprint of his 2,100-square foot ranch house. He had insulated, switched to compact fluorescent bulbs and put computers and TVs on power strips so they could be turned off completely when not in use. In the 1970s, tax credits had enabled him to put in a solar greenhouse that provided 40-60 percent of his home heating. An addition to the house featured solar heating panels.
The new incentives allowed him to purchase a 2.76 kilowatt solar system in February 2010. That panel supplied 60 percent of the electricity. He felt he could go further and added another 2 kilowatts worth of paneling. The electricity his household uses on cloudy days is compensated by the power Waxman sells back to the grid during the long sunny days of summer.
Lee Grasfeder has a 5,000-square foot home near Festus. He already used a geothermal system to heat and cool his house, using electricity to pump water from a well. Because the 55 degree well water cools his house in the summer, his "air conditioning" cost is the well's pump; the 5 kilowatt solar system he installed eight months ago produced excess electricity in the summer.
But in the winter the well water needs an auxiliary heater, so he is adding another 5 kilowatts of solar power.
"I try to take a long-term approach," says Grasfeder. "I can't understand why we stay addicted to oil when energy from the sun is free. And I think alternative energy is a great opportunity to put people to work."
John Gee of Maryland Heights says, "Watching your meter spin backward is priceless." The 3.5 kilowatt solar system on his 1,200-square foot house has reduced his electric bill by 45 percent.
"I wanted to show people it's possible to do solar on a regular place, as a little bit of green leadership. The electricity I generate from solar power is coal Ameren doesn't burn for me."
The payback time for these residential units ranges from 12-16 years at today's rates for electric power.
Not all residences are suited for solar energy, says Marc Lopata, co-owner of Microgrid Energy of Clayton. Shade from as few as three nearby trees can cut the electrical output by 70 percent.
"We certainly don't want to encourage people to cut down trees," Lopata says. But homeowners can get an energy audit and work toward an energy-efficient house.
Jo Seltzer is a freelance writer with more than 30 years on the research faculty at the Washington University School of Medicine and seven years teaching technical writing at WU's engineering school.