Despite the financial challenges brought about by the COVID-19 pandemic, as well as the fact that residents in California already pay up to three times what it costs to produce and distribute energy, the state continues to push through utility rate increases. The 14.4 percent increase in January of this year and an eight percent increase in March isn’t where these rate hikes end, either, with the California Public Utilities Commission authorizing additional, incremental price increases through to December 21, 2022.
Outside circumstances have worsened the impact of these rate hikes. The pandemic, for example, has resulted in millions of workers and students having to work from home, which means a higher rate and sustained use of electronics. Because of this, energy bills have increased substantially, on average $176 more than in pre-COVID times.
As such, many California residents are looking for ways to cut back on their utility spending. While lights being turned off in empty rooms can have a minor impact on energy costs, more drastic changes are needed for property owners to avoid further energy price increases. But what options do they have? One solution people are turning to in droves is solar energy.
This rush to adopt solar energy has been stark in contrast with previous years, with the number of households installing solar energy systems in California jumping 43 percent in 2020, reaching a record 19.2 gigawatts of new electricity capacity. Additionally, solar energy service providers have reported a boom in demand, with one service provider claiming business has increased by at least 60 percent and another stating they have added hundreds of employees to their workforce to keep up.
Considering California experiences an average of 258 sunny days per year, as opposed to the nationwide average of just 205, the use of solar power as a significant energy source makes sense. After all, this high number of sunny days directly translates into long-term savings, with most of the power being generated by panels and some even being fed back into the grid. Experts believe these potential savings will fuel the adoption of solar across the nation, with predictions that one in seven households will have installed a solar power system by 2035.
Despite the potential for long-term savings, a significant barrier that deters many homeowners from installing a solar power system in their homes is the initial cost of installation, which can range anywhere from $12,000 to $16,000. Thankfully, however, several initiatives exist for interested Californians that can reduce the cost of installation. One such initiative is the federal solar tax credit, which can reduce costs for solar power systems by as much as 26 percent.
Additional initiatives include local solar rebates, which grant reimbursements to homeowners ranging up to 95 cents per watt of installed power capacity. Middle-to-low-income earners are also able to join the solar revolution through the use of initiatives like the DAC-SASH program, which provides upfront rebates to income-eligible, single-family homeowners who install energy systems in their homes. There is also an opportunity to make some money back through net metering, enabling homeowners to receive bill credits for extra solar power fed back into the grid. The rate paid for this energy is equal to the retail rate from the homeowners’ specific utility company.
This solar revolution is set to change the way we think about utilities, and it isn’t just a passing trend. In fact, the state government has passed a number of laws to reduce demand on non-renewable power sources, which require all newly constructed single and multiple family residences up to three stories high to have a solar power system. Additionally, the Renewable Energy Act has mandated that all residences in California must go solar by 2045, which means that the switch to solar is inevitable.
Nationally, the Biden administration’s new $2 trillion infrastructure plan has hinted towards a carbon-neutral energy grid by 2035, so solar could become the norm – both in California and across the nation – much sooner than anticipated.
While utility price increases are sure to continue, the increasing rate of renewable energy initiatives at the federal and state level means that those looking to get out from under the burden of increased energy costs are not without options. By utilizing available resources and solar energy service providers, households of any size can install a solar energy system with minimal financial stress to get maximum benefits, both for their hip pocket and for the environment.
Alex Williams, Founding Partner of Solar Energy Partners, leads the solar industry with years of experience in entrepreneurial industries like security and the oil industry. Solar Energy Partners’ mission is to bring clean energy, abundant savings, and peace of mind through a simple, comprehensive process to every homeowner across the United States.
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