Bet on the Sun

solar_powerHawaii is known for being one of the sunniest places in the US—a tourist destination for visiting the extravagant beaches and enjoying the constant sunny weather. Restaurants, tourist hotspots, and hotels are running utilities such as electricity around the clock to sustain this demand for tourism. However, because Hawaii has no pipelines or oil fields, we are forced to import petroleum to accommodate our energy needs. This results in Hawaii having the highest cost of electricity of any state in the US. I have suffered, as many of you have, the high prices of electricity that the state charges.  As a member of the UH Mānoa Sustainability Council (UHMSC)—a group at UH Mānoa composed of students, faculty, and staff concerned with sustainability issues—I hope to raise awareness for the beneficial properties of solar—specifically regarding the cost savings that it can have for everyone. Solar panels are the answer for relieving some of the monetary struggles that we face living in the state that is ranked #1 in most expensive places to live.

At the most basic level, solar power is energy generated by the sun. The sun’s rays produce electromagnetic radiation which is then absorbed by solar panels used to power your home. Solar cells within the panels react to the sun’s rays and produce a type of electricity, called photovoltaic (PV) power. A complex circuitry system then transmits that electricity throughout your home, powering it just like standard electricity. There are abundant benefits of solar, with the cost savings being most beneficial.

The economics of photovoltaic power makes more sense in Hawaii than just about any place in the nation. Installation of photovoltaic systems has exploded in the past five years, providing a boost to the local solar industry that was previously limited largely to solar hot water systems.The boom in solar electricity generation has been driven by a confluence of factors: including the rising oil prices, the state’s Clean Energy Initiative, the availability of cheaper Chinese-made PV panels, and the growth of tax incentives.

Solar panels provide cost savings because of the return that they produce when you choose to resell your home. Because solar panels are considered an improvement to your home, solar energy can increase your home’s value and make it more attractive, should you decide to sell it in the future. A 1999 study in part funded by the U.S. Department of Housing and Urban Development found that home values increase by $20 for every $1 reduction in annual electricity bills. The annual electricity bill for a typical residential home in Hawaii is $2,524.44. With complete reliance on solar, the result would be an increased home value of $50,488.80!

The primary way cost savings are created by solar in Hawaii is through tax credits that you receive. Some of the tax credits currently instated in Hawaii are a federal personal tax credit, which can be redeemed for 30% of the total price of your solar electric system; a Hawaii personal tax credit, which can be redeemed for 35% of the actual cost of the system or $5,000 (whichever is less); as well as many other rebates on specific types of systems, depending on the brand. Net metering is also available, which allows solar owners to receive credits on their electricity bills for any excess electricity that they generate. In addition to federal and statewide incentives, solar incentives are also in place in some cities and counties.

Solar systems can lower electric bills by 70-100% or more, saving homeowners thousands of dollars annually on their electric bills. Hawaii has the highest cost of electricity in the US, a rate of 33.6 cents per kilowatt, 112% more expensive than New York which is ranked #2. In addition, electricity prices are expected to increase 3-10% per year—even with only a 3% percent increase per year, utility bills will double by 2035! A typical residential household in Hawaii spends about $210 per month, or $2,524 a year in electricity costs. The typical cost of installing, repairing, and maintaining a typical PV system in Hawaii after rebates, tax credits, and incentives is somewhere between $15,000 and $25,000. Factoring the total cost of the solar system compared to the savings made from lower utility bills, it is estimated that a typical PV system in Hawaii will take 3-5 years to pay off. After the payoff period, you get free electricity for the life of the system! Because a typical lifespan of a solar system is 25 years, and paired with the high cost of electricity in Hawaii, the cost savings in Hawaii are the highest in the entire US—an average 20-year savings of $65,000.

Although the initial cost seems high, the benefits are clearly there—what would you do with an extra $65,000? If you are hesitant about the initial investment, which is one of the biggest apprehensions for those debating on switching to solar, some homebuilding companies might just have the answer! KB Homes, and six of the top ten homebuilding companies in the US, have been increasingly standardizing solar panels in new home construction. This enables the cost of solar to be rolled into a mortgage payment, so the initial cost is seemingly not there, but is rather spread over the life of the mortgage. Installation costs can also be minimalized by installing lashing panels to roofs during the time of construction—this is about 20 percent cheaper than after a house is built.

How could anyone doubt the enormous cost savings that are associated with the use of solar panels here in Hawaii? With the observance and wide acceptance of solar becoming a responsible and clean way of producing energy, many incentives are being developed to enable people to reap the benefits that solar provides. Living in a state that has the highest electricity costs of any state in the US, and the most opportunity for cost savings with the implementation of solar panels, it would be foolish not to install! If I were you, I’d put my money on the sun!

 

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