News of the Long Island Power Authority (LIPA) reducing its rebate for residential rooftop solar is no surprise. Declining rebates are standard in state and utility solar incentive programs. But it is another reminder that the cost of rooftop solar for your home is not actually declining despite all the news of dropping solar prices. The cost of solar for your home is actually increasing. So the time to go solar is now.
“If solar panels are less expensive, isn’t the cost of solar for my home going down?” you might ask. Actually, the answer is “No”. Getting solar for your home is gradually getting more expensive just like utility electric costs.
First of all, let’s make sure we have one fact straight. Solar power still requires subsidies to make it competitive with other sources of electricity, namely your local utility company. The federal government offers at 30% tax credit in place through 2016. Solar in New York, Connecticut, Massachusetts and New Jersey only works because of state incentives in place on top of the federal tax credit. Long Island has an additional incentive in the form of the LIPA rebate which is now decreasing.
The goal of policymakers and the solar industry is for solar to be cost competitive WITHOUT SUBSIDIES. With solar panel prices at historic lows today and subsidies still required, how could solar ever become cost competitive?
The big factor that isn’t often mentioned is that electric prices must go up for solar power to be cost competitive without subsidies.
With the prevalence of financed solar lease options, like those offered by SolarCity, people looking at solar for their homes today are given the opportunity to review options in terms of price per kilowatt hour and compare directly to the utility rate. It used to be that you just looked at the pure cash investment of tens of thousands of dollars, but today you can compare directly to your current electric rate. And as utility rates go up, so will the price per kilowatt hour of solar electricity under standard leasing options. That’s how solar becomes cost effective without subsidies.
So there will never be a better time to choose solar power. With a solar lease or Power Purchase Agreement (PPA) option you can lock in today’s utility price rather than waiting to lock in next year’s utility price. And with electric prices starting to recover from the depths of the great recession, you can bet next year’s price is only going to be higher. So if you want solar power for your home without the upfront investment, you should start looking at it now before prices go up.
And LIPA’s reduced rebate doesn’t help lower the cost of solar for your home either.