Jan 03 - Oakland Tribune

Despite the turbulent economy, or perhaps because of it, solar energy remains a growth industry in California.

The amount of electricity generated in the state by solar energy soared in 2008, and applications for rebates under the state's Million Solar Roofs program reached record levels in the last five months of the year.

"While we don't have the final numbers yet, it appears we nearly doubled the amount of solar installed in 2008 vs. 2007," said Molly Tirpak Sterkel, director of the California Solar Initiative. "That's a magnificent story."

Experts attribute the surge in solar sales to a big increase in the federal tax credit, an ongoing state rebate and new innovative financing programs, as well as to mounting consumer concerns over global warming. The growth comes despite a U.S. economy suffering from a battered stock market, severe declines in house and car sales, and growing unemployment.

Perhaps 150 megawatts or more of new solar panels were installed in California in 2008, Sterkel said, up from 81 megawatts in 2007. (In California, one megawatt is enough electricity for 750 houses.)

She noted that California has more than half of the solar capacity in the United States, and that the state ranks as the world's No. 4 solar entity after Germany, Spain and Japan.

Solar's growth here is "somewhat surprising, as we expected the economic downtown might have some dampening effect," said Damon Franz, an energy analyst with the California Public Utilities Commission.

Sales increased because consumers now see solar as a safe economic bet, and a hedge against rising energy prices, said Lyndon Rive, chief executive of Solar City, a solar installer based in Foster City.

Others credit inaction, then action, by the U.S. Congress for boosting solar. Fears that Congress wouldn't extend the federal solar tax credit past the end of 2008 spurred activity in the early fall as consumers and installers rushed to get projects completed by the end of the year. Then once Congress extended the tax credit for eight years and lifted a $2,000 cap in favor of a 30 percent credit, consumers jumped in to be first in line to get their systems -- and their credit -- after Jan. 1.

Combined, the federal tax credit and the California incentives can reduce the cost of a residential solar system, which typically costs $25,000 to $35,000, by as much as $14,000.

In the 24-month history of the California Solar Initiative, the busiest five months for applications were August through December of 2008. More than 1,000 applications were received in August, the largest monthly number to that point in the program's history, and the number reached a record 1,316 in December.

The California Solar Initiative is run regionally by public utilities. Pacific Gas & Electric has collected many more applications than Southern California Edison, which serves the greater Los Angeles area, or the California Center for Sustainable Energy, which runs the program in the San Diego area.

Through Dec. 31, applications in PG&E's Northern and Central California territory represented 52 of the 79 megawatts for residential systems and 118 of 219 megawatts for nonresidential systems.

Chuck Hornbrook, PG&E's senior manager for solar and customer generation, expects the utility to connect more than 1,000 solar systems to the grid in January.

Many of those will be customers who had put off making the connection in order to get the larger federal tax credit, he said.

"There's a big momentum," Hornbrook said.

Statewide, 18,199 homeowners or businesses have applied for rebates on 298 megawatts worth of solar panels since the program started in January 2007. The goal of the California Solar Initiative is to have 3,000 megawatts of solar power installed by 2016, and $3.3 billion have been allocated to three programs to reach that goal.

On Friday, 1 Block Off the Grid, a San Francisco startup that negotiates communitywide discounts for solar projects, said it had selected Solar City for its next round of Bay Area installations, which includes San Jose.

While its original goal was to put solar on 75 homes, Dave Llorens, 1BOG's general manager, said the company already has 667 people who have signed up to have their homes evaluated.

Such communitywide efforts, Llorens said, push down solar prices while providing homeowners with a well-vetted installer and a pre- negotiated deal.

"It's the magic of knowing everyone else is getting the same deal," Llorens said.

For Solar City, working with 1BOG means it doesn't have to spend as much on advertising and sales calls to attract new customers. So it can offer discounted rates, Rive said.

1BOG was acquired by another San Francisco startup, Virgance, in November, which has expanded the solar-buying cooperative to 20 cities nationwide, including San Jose.

In San Jose's Blossom Valley neighborhood, Fiona Marshall has signed up to get a solar system via 1 Block Off the Grid. "They've done all the legwork," she said, adding that was important because she and husband Tim just had a new baby.

It was the change in the federal tax credit that spurred their decision.

"Now we can have a solar system and not have to wait 20 years to break even," she said.

Contact Matt Nauman at (408) 920-5701 or at mnauman@mercurynews.com.SOLAR INCENTIVES-- Federal: In late 2008, Congress extended the federal tax credit for solar systems by eight years, and waived a $2,000 tax cap in favor of a 30 percent tax credit. For most consumers, this makes putting a solar photovoltaic system on their roof thousands of dollars cheaper.-- State: Incentives from the California Solar Initiative decline as the number of installed megawatts grows. Its residential incentives began at $2.50 a watt and have dropped several times since. Customers scrambled to get the $1.90-a- per watt rate before it fell to $1.55 a watt on Dec. 1. Other incentive programs are available for new homes, low-income housing and nonresidential systems.-- San Jose: This past summer, Mayor Chuck Reed challenged local solar installers to offer systems to city residents that required no money down. Several companies responded, including Horizon Energy Systems, Petersen Dean Roofing, Power Solutions, REC Solar, Regrid Power, Solar City, StablSolar and SunPower. But the city never endorsed any of the installers and, unlike San Francisco and Berkeley, never offered financial incentives for residents.

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