Solar energy too pricey?

Solar energy too pricey?

Aug 19 - Saint Paul Pioneer Press (St. Paul, Minn.)

Ross Thompson, 28, wanted a solar-energy system for the 93-year-old Minneapolis house he bought two years ago, but there was a problem.

The price tag was $15,000.

"As a young first-time homeowner, it's challenging to finance these things if you're looking to purchase them outright," Thompson said.

So he's leasing it. He's paying $32 a month for 15 years, plus a $1,000 deposit, for 10 photovoltaic panels that were fitted last week to the sunny south-facing roof of his two-bedroom home in the city's Standish-Ericsson neighborhood.

Thompson's house is part of a nearly three-year pilot project financed partially by Xcel Energy to see whether leasing can promote the usage of solar energy.

Leasing -- common in the car business -- is almost unknown in the solar industry. Only a couple of solar-system installers across the country offer it on a regular basis for systems that use photovoltaic or PV cells to make electricity, according to the Solar Energy Industries Association.

"It's a great way for homeowners who otherwise wouldn't be able due to the upfront costs (to) install solar PV systems," SEIA spokesman Jared Blanton said. "Leasing and other innovative financing options are a big reason that the residential solar market has grown so much in the last couple years."

Solarflow Energy, a small Minneapolis installer of solar-energy systems, has the state's only solar lease program.

The company won a $1.5 million grant from Xcel's Renewable

Energy Development Fund in December 2008, but it took another year to obtain additional funding it needed after the banking sector collapsed, said Gerardo Ruiz, chief executive and founder of Solarflow Energy.

Ultimately, Bloomington-based Venture Bank, which also has offices in Eagan and Golden Valley, provided the additional funds. The money was secured by Abengoa Solar, a Spanish solar-technology company with an investment in Solarflow, Ruiz said.

The project ended up with $2.4 million to buy solar-energy systems, and installations began last November.

The 15-year leases include maintenance, and if the person breaks a lease, he forfeits a $1,000 deposit. The company would collect the system and reuse it, Ruiz said.

The plan is to develop 280 kilowatts of solar electric power through about two dozen projects serving homes and businesses, said Tim Edman, Xcel Energy's regulatory administrations manager who oversees the Renewable Energy Fund.

Xcel is pleased by what it sees so far, Edman said. Solarflow is on track to finish the last of its installations this fall, he said.

After the pilot installations are done, Solarflow hopes to continue using leasing backed by private capital to expand the company, Ruiz said. Solarflow employs six full-time and six part-time workers, he said.

Despite the optimism, solar energy will remain a niche in the total energy picture for the foreseeable future.

It provides less than 1 percent of the electricity for Xcel Energy in Minnesota, compared with the 10 percent the Minneapolis-based utility gets from wind-power operations for the state.

Last year was a record for solar-electric system installations, but that brought the total to just 274 for the state, the Department of Commerce's Office of Energy Security reported this spring.

That generated a total of only two megawatts of electricity. Xcel Energy has about one megawatt of solar electric power in the region and expects to boost that to 20 megawatts by 2020, spokesman Tom Hoen said.

It's more common to see solar electric systems installed on low-income apartments than on single-family homes because they can also qualify for tax breaks for low-income housing, said Jon Peterson, an attorney for Minneapolis-based Winthrop & Weinstine.

Xcel started a Solar Rewards program this year in Minnesota that will offset about 30 percent of the cost of solar-energy installations for homes and businesses, copying a program it uses in Colorado.

Thompson expects that his new system will help offset nearly all his electricity usage.

"I plan to keep it as long as I live in the house, and if that's 15 years, at that point, I'll look at making it my own," he said.

Leslie Brooks Suzukamo can be reached at 651-228-5475.

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