By Gary LaNoce
The solar energy market continues to build momentum. Growth this year is propelled by falling prices and continued government incentives — not only from the federal and state level, municipalities such as Philadelphia are also playing a role by creating a warm economic climate for solar.
Solarize Philly, administered by the Philadelphia Energy Authority (PEA), is launching Phase 2 of its plan to install solar panels on 500 homes. This ambitious goal hopes to bring the City of Brotherly Love to the forefront of residential solar capacity in the U.S. Northeast.
As the Data Analytics Manager at Clean Markets, my role includes conducting verification of renewable energy systems on behalf of the Pennsylvania Alternative Energy Portfolio Standard Program. As a residential solar inspector for the program, I approached Solarize Philly as an opportunity to understand the full perspective of owning and operating a PV system.
In the end, I added solar panels to my own West Philadelphia rowhome for four reasons: value driven from economies of scale, convenience, personal experience, and to contribute to Philadelphia’s economic growth.
Solarize Philly organizers realized the principle of having power in numbers. The Solarize Philly purchasing structure allows all participants to be grouped together as a single buyer. As a result, I was able to buy 3 kW of solar photovoltaic panels below market retail price.
Another attraction was its convenience. Once I signed-up, energy experts at PEA connected me with a local solar installer who then scheduled a free on-site assessment and provided a customized project report. I was assigned to installer Moore Energy, a nationally ranked firm based out of Southampton, PA offering maintenance, performance evaluation, and financing services for both commercial and residential solar projects. They coordinated with the City’s Department of License & Inspections as well as with the local electric utility, PECO, to handle all the necessary logistics. Essentially, their team collectively became my proverbial ‘Solar Sherpa’.
Finally, Solarize Philly is an investment in Philadelphia’s economy. The program is creating jobs and provides workforce training. It also serves an integral part of Philadelphia reaching its sustainability and clean energy goals.
I was presented an energy savings report (ESR) which detailed the installation of a 10-panel solar array totaling 3 kW of energy that would provide my home with 3,410 kWh of emissions-free electricity in year one. The initial cost of $9,255.00 caused some hesitation at first, but those fears were eased by a 30-percent federal tax credit for residential renewable energy investments. Furthermore, as the owner of my panels, this investment would be realized when selling my home or act as an incentive for tenants if I choose to rent it out in the future.
The energy from my solar array also has the ability to earn Alternative Energy Credits (AECs) which can be traded in the Pennsylvania market. These credits are purchased by utilities to meet Pennsylvania’s Alternative Energy Portfolio Standards (Act 213). Residential solar systems in Pennsylvania receive one credit for each 1,000 kWh of solar power production with a current market value of about $9.00 per credit. Since my system is estimated to produce 3,410 kWh in year one, I am expected to earn 3-4 credits. As of October 2017, AECs must now be purchased from Pennsylvania solar systems.
Based on my historical energy consumption, this investment would payback in just under 10 years and would have an Internal Rate of Return (IRR) of 8.5 percent. These figures were derived using an extremely conservative projection of retail electricity rates rising 3 percent annually and an AEC price of only $5.00 in the first 5 years of the life of the project.
The day after our beloved Philadelphia Eagles finally won their first Superbowl, I was standing on my roof as John Moore, son of Moore Energy founder Barry Moore, was putting the final touches on my 10-panel array. A few appointments later, an inverter was installed and connected to my PECO meter, allowing commercial use of solar radiation for at least 25 years.
Phase 1 of Solarize Philly has been a huge success. Over 2,200 residents expressed interest in the program and, ultimately, 186 homes have invested almost $3 million in new residential solar systems. The average size of a Philly rowhome installation in the pilot phase had a capacity of 5 kW and resulted in an average first year savings of $1,500. Phase 2 is set to begin soon and will include a new pilot program offering subsidized financing to 45 low-income residents at a first come first serve basis.
Solar has been waiting for its moment and it may finally be here. After all, it is always sunny in Philadelphia!
Gary LaNoce is a Data Analytics Manager for Clean Markets, a market development firm focused on the clean energy sector. He can be reached at email@example.com.