By FrontDoor.com
In ancient Greece, praising the sun's power meant you'd give an offering to the sun god Apollo at Delphi for a chance that the oracle would reveal your future. These days honoring the sun's power doesn't cost you a prized goat, but it does offer a more practical return on investment. It can actually put a little "ka-ching" back into your pocket. The federal government is offering a residential solar investment tax credit for certified solar home improvements -- photovoltaic and solar water heating -- until the end of 2008.
Photovoltaic technology is what you see typically on roofs. The panels -- called photovoltaic modules -- trap the energy from the sun through photovoltaic cells, which convert the sunlight into electricity.
Solar water heating uses the sun to heat water in a solar collector. The heated water is stored in a tank that is similar to a standard water heater.
While the sun shines
For a three-year period, the federal government is offering a 30-percent tax credit for residential solar water heating and photovoltaic equipment. While this sounds great, read on before you start going solar. As with everything, there are a few catches:
The improvement must be put in service between January 1, 2006, and December 31, 2008. (You may have heard that this solar credit expires at the end of 2007, but Congress recently extended this credit for another year.) If the solar installation is on a new home, the "placed in service" date is the date of occupancy by the homeowner.
If you install both a photovoltaic system and a solar water heating system, you can apply for $2,000 credit for each system. This means a total of $4,000 tax credit. There's a maximum credit of $2,000 for each system, no matter how much you spend. So if your solar improvement costs $30,000, you still only qualify for $2,000.
The federal credit is taken from the net cost after any state credits or utility incentives are taken. This means that if you are fortunate to find yourself living in a state that offers solar incentives, such as California, New York or Connecticut (in Connecticut, for example, you can receive up to $25,000 back from the state) the federal 30-percent credit is applied after this amount is deducted.
Solar water systems must be certified by the Solar Rating and Certification Corporation (SRCC). Photovoltaic systems must meet applicable fire and electrical code requirements.
Solar improvements take many months to plan and install, depending on the system. So, if you want to qualify for the credit, get started now.
Photovoltaic (PV) Systems
Solar electric systems, also known as photovoltaic (PV) systems, capture sunlight and convert it into electricity for use in homes and businesses. PV systems allow homeowners to produce the energy needed to power all or some of their home from a clean, renewable source -- the sun.
While PV systems are capable of powering houses and small businesses without any connection to the electricity grid, many prefer the advantages that grid-connection offers. This is because any excess electricity you produce is fed back into the grid. When you need it, electricity from the grid supplies your needs, thus eliminating the expense of electricity storage devices like batteries.
Federal law requires the local utility to buy PV-generated electricity from homeowners. The rate paid for the electricity depends on the utility company. That means that depending on your energy consumption and solar panel return, your utility company might have to pay you. Now that's a bill that's easy to live with!
The components:
Solar cells. These are the basic building blocks of the system. They're made of crystalline semiconductor materials, the most popular being silicon. Solar cells are combined to form solar panels that output 10 to 300 watts of electricity. Several panels can be combined to form an array positioned on or near the home. Ten to 20 arrays can provide enough power for a typical household.
Thin-film photovoltaic (PV) cells that double as roof shingles are also available. The lightweight, easy-install shingles look like traditional asphalt shingles, but they collect solar power as they guard the roof.
Inverter. An inverter converts direct current (DC) electricity produced by solar cells to alternating current (AC) electricity required to run household appliances. Additional conditioning equipment is needed to ensure that the quality of electricity produced meets the load requirements and utility company standards.
Meter. A meter allows homeowners to monitor the amount of power being consumed. If the utility company offers net metering, the meter can also be used to record excess electricity the PV system feeds back into the grid. In this case, the meter spins forward when electricity is being drawn and backward when electricity is being produced. Utilities that don't offer net metering require homeowners to install a second meter to track the electricity the PV system feeds into the grid.
While PV systems are capable of powering houses and small businesses without any connection to the electricity grid, many people prefer the advantages that grid-connection offers. This is because any excess electricity you produce is fed back into the grid. When you need it, electricity from the grid supplies your needs, thus eliminating the expense of electricity storage devices like batteries.
Off-grid PV systems require additional components including batteries to store power for use when the system isn't producing electricity; charge controllers to regulate the electricity flowing from the generation source into the load or batteries; and safety features such as safety disconnects, grounding equipment and surge protectors.
The cost:
The cost of a PV system depends on the size of the system. It has high upfront costs, but homeowners can benefit over the life of the system by reduced monthly electricity costs. A small, single-PV-panel system that produces 75 watts costs about $900 installed, however, this size of system will cover a fraction of a typical home's electricity needs. Mid-range, a 2-kilowatt system that meets nearly all the needs of an energy-efficient home could cost $16,000 to $20,000 installed. On the high end, a 5-kilowatt system that completely meets the energy needs of many conventional homes can cost $30,000 to $40,000 installed.
Finally, regulations and permitting for a PV system vary widely. The system supplier or installer should know the requirements of the local community and utility company.
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