Nothing says “green building” more clearly than a gleaming line of solar panels tilted to catch the sunlight.
Branding a building as green is becoming increasingly important as renters and buyers in a few markets have become willing to pay as much as 10% to 15% more to live in a high-performance building. Solar panels are also a big help for projects trying to earn a Leadership in Energy and Environmental Design (LEED) certification, which can help market a project.
Photovoltaic solar panels can also draw an impressive array of subsidies out of usually tight-fisted state and local officials – and a growing number of developments are using the money to pay for solar.
Unfortunately, developers still must rely on these subsidies for solar panels to make economic sense. Other less glamorous green building techniques can often save more energy than the panels will produce and for less money than the panels will cost.
When Orchard Gardens is finished in early 2006, the 35-unit project’s roof will be loaded down with $61,100 in solar equipment. Of that, about $41,100 will pay for a set of photovoltaic panels. The remaining $20,000 will purchase a solar system that will warm water before sending it on to the project’s water heater.
Orchard Gardens is an affordable housing project in Missoula, Mont. The project’s developer, homeWORD, is now negotiating with vendors to see how large a set of panels its money will buy. However, both systems will probably take well over 10 years to produce savings equal to the cost of putting the systems in, according to Betsy Hands, program manager for homeWORD.
Fortunately, the builder raised all of the money for the panels from grants, so that the benefits of the panels flow straight to the residents and the project at effectively no cost to the developer.
Thanks to the panels and all of the project’s other energy-saving ideas, Orchard Gardens should use 43% less electricity then a typical apartment building in the area. These savings will be especially important if the cost of electricity keeps rising.
Because of the expense, solar panels often get dropped out of projects. Solar energy systems cost on average $5.32 per watt of capacity in January 2006. That’s down only slightly from $5.37 in January 2003, according to industry research from Solarbuzz, Inc. Installing the panels on a building can add another $3.50 to that price, bringing the total cost up to nearly $9 per watt.
Considering these costs, the local price of electricity and the strength of sunlight in the region, it would take decades for an array of solar panels to pay for itself in most parts of the U.S.
The solar industry needs to drive solar panel prices down by nearly a third to $1.50 to $2 per watt over the next decade if it is to make large inroads into the electricity markets without subsidy, according to Solarbuzz. Increasing energy costs may also eventually help make photovoltaic cells cost effective.
The Seattle Housing Authority tried hard to include solar panels at its 1,600-unit HOPE VI redevelopment called High Point. When it is finally finished in 2008, the project will probably be the biggest sustainably developed housing project ever built.
“Photovoltaics didn’t make the last cut,” said Paul Cummings, chief acquisitions officer for Enterprise Community Investment, Inc.
Despite the initial financial drawbacks to using solar panels, there are still compelling reasons why some developers are interested.
For example, Massachusetts offers a tax credit for solar energy. This subsidy plus a grant from the energy company BP was just enough to pay for a set of solar panels that sits on top of Maverick Gardens, a HOPE VI redevelopment in Boston. However, for Enterprise, cases like this one are the exceptions that prove the rule.
“We’re not going to do the fancy stuff – which is solar – because it takes a while to pay off,” said Bart Harvey, chairman and CEO of Enterprise Community Partners, Inc.
Full Spectrum of New York, LLC, received grant money from the state of New York plus a tax from the federal government to put an array of solar panels on top of its Kalahari project in New York City.
But even with that help, the panels will take a long time to pay back the investment Full Spectrum made in them.
“Ours take about nine years with the subsidy,” said Carlton Brown, chief operating officer of Full Spectrum. “That’s not what we would call economically viable.”
Solar panels are less effective in New York because the local utility, ConEd, doesn’t allow its customers to sell electricity back to the utility. With these facts in mind, Full Spectrum still invested in solar to help with its “market positioning,” Brown said.
He expects that the market-rate condominiums at the Kalahari will sell faster and will probably sell for more than conventional units because they will be green, and the solar panels are part of that. Solar panels will also help the Kalahari earn a LEED rating, which helps to brand the building as green.
Solar panels also fit into Full Spectrum’s mission as a builder. “Even if there was no LEED, we would do it because that’s what we do,” Brown said.
For a complete list of state incentives for solar energy, visit the Database of State Incentives for Renewable Energy at www.dsireusa.org.
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