Sun rises over recession

At a time when many investors are sticking money into their mattresses, Californians are putting it on their roofs.

Applications for state rebates to install solar panels on Southern California rooftops hit their highest level ever in December, one of the few bright spots in an otherwise gloomy economy.

Residents filed a record 1,215 applications seeking solar subsidies, according to the California Public Utilities Commission.

That was the best showing in the programme's 24-month history. More than 18,000 California homeowners and businesses have applied for rebates over the past two years.

Although not everyone who files paperwork ends up installing solar panels, the figures are viewed as a reliable barometer of demand.

A record 133 megawatts of solar photovoltaics were installed in 2008, even as the state's economy stumbled.

Michelle Gerdes of Long Beach lost her job as a designer and her husband, Steve, works for an air-conditioning company whose business is slowing.

But that didn't stop the couple from buying $32,000 worth of photovoltaic panels that went up on their roof in December.

The state rebate and a federal tax credit will reduce their out-of-pocket costs to about $17,000 — a substantial saving but still a chunk of change.

“We decided to just go for it,'' said Michelle, 44. “It's the right thing to do for the environment ... and it will definitely increase the value of our house.''

Coming in the midst of a deep recession, continued strong demand for solar energy has thrilled — and puzzled — officials who oversee the California Solar Initiative, which seeks to put panels on 1 million roofs in California within a decade.

“In an economic downturn, people are looking for ways to save money on things that they are going to do anyway,'' said Nat Kreamer, founder of SunRun Incorporated, a San Francisco residential solar energy company. “Electricity is one of those fundamentals.''

Seeing new light

Launched in January 2007, the California Solar Initiative is an attempt to promote photovoltaics on a mass scale in California to help cut greenhouse gas emissions and shore up the state's energy supply.

The goal is 3,000 megawatts installed by 2018, enough to displace five good-sized power plants.

Funded by utility ratepayers, the $3-billion programme offers rebates to Californians who install panels on their homes and businesses. Incentives vary.

But refunds typically range from 20 per cent to 50 per cent of a system's cost.

The incentives are structured to decline over time as demand grows, meaning Californians who act sooner will get the biggest refunds.

The Congress recently expanded federal investment tax credits for residential solar arrays. Starting this year, homeowners have become eligible for tax breaks of up to 30 per cent of the entire cost of their projects.

Those benefits previously had been capped at $2,000 per system. “That has really spurred the market,'' said Lyndon Rive, chief executive of SolarCity, a Foster City-based solar installer.

“Our cash sales have increased dramatically.''

For consumers who still can't afford to purchase solar panels, SolarCity has a residential leasing option. It lets them put solar panels on their rooftops without the hefty upfront costs.

Customers cut their power bills while the rebates and tax credits flow to SolarCity, which maintains ownership of the panels.

The deal has proved so popular that it has turned SolarCity into the state's largest installer of residential rooftop photovoltaics.

Photovoltaics is the name given to the technology of converting sunlight into electricity.

Kreamer's SunRun offers a similar programme called “power purchase agreement''. His company installs, maintains and owns the systems.

Homeowners sign a long-term contract with SunRun for solar energy that is priced below what they pay for conventional power.

Californians pay some of the highest electricity rates in America. Rates in many parts of the state are rising.

Comfort on the rooftop

The Gerdeses' utility, Southern California Edison, is asking state regulators to allow it to collect more than $700 million extra from its ratepayers this year.

It won't be coming from the Gerdeses. With solar panels now snug on their roof, the couple need not worry about rising electricity bills as the recession deepens.

“We can think about turning the hot tub back on now,'' Michelle Gerdes said.