Solar Solutions
How Building for Energy Efficiency Benefits Homebuilders
By Rex Stepp
It's no secret that the housing market is going through a challenging time. Builders are looking for ways to separate themselves and stand out for active homebuyers. Aggressive pricing and incentives are common tactics, but this naturally increases pressure to drive down costs. Plus, this method is easy for other builders to mimic, making it a temporary advantage at best. A better way for builders to differentiate themselves from the competition is to offer a substantially different product.
Enter the Sun
By providing solar energy technology such as a photovoltaic (PV) system or a solar water heater, in addition to other energy efficient features, homebuilders have the advantage of standing out and the ability to offer savings to the customer in the form of lower cost of ownership.
There's no disputing the fact that interest in renewable energy has grown tremendously in recent years. As a utility, APS is seeing a marked increase in the activity level with various types of renewable energy, but because Arizona is a great solar resource, most of the activity can be seen in the areas of photovoltaic (solar panels) and solar water heaters.
Going solar is no longer a "fringe issue" with narrowly defined customer motivations; consumers are expressing a much broader interest and acceptance that is making solar power a mainstream technology. Advances in solar technology, increased consumer education and financial incentives help "scratch the itch" consumers feel about energy costs.
Concern over the environment is just one of the reasons behind the spike in demand for renewable energy resources. The idea of energy independence is also a theme that resonates in our state. However, most consumers aren't willing to make the switch to renewable energy unless it makes economic sense for them. There is a strong tie between the affordability and the adoption of solar; the propensity to act diminishes as the cost of being environmentally friendly or energy independent increases. Fortunately, the current economics of solar are moving consumers to action.
The Value of Solar
Solar crosses over both environmental and economic lines. It's an affordable way for homebuyers to be environmentally friendly and move closer to energy independence. When you roll the cost of solar into the mortgage of the home, the energy savings can make up for whatever increase there is in a monthly payment, which gives homebuyers with a solar home a substantially lower cost of ownership.
Photovoltaic (PV)
Installing PV allows homeowners to produce a portion of their own energy. System size and the homeowner's energy usage dictate what percentage they will be able to create on their own. No matter the size of the system, the homeowner will be paying less to a utility for energy, while reducing the family's carbon footprint and depending less on utility power.
Solar Water Heaters
Solar water heaters are perfectly suited for Arizona's climate. They don't create electricity, but simply use solar energy to heat water. Heating water can make up 15 percent of a customer's energy bill, so installing a solar water heater helps decrease this cost.
Along with a lower cost of ownership, benefits of solar include:
? Energy cost stability -- Once the system is installed, it produces or displaces energy for decades. Assuming energy costs rise over time, the value of that "free energy" increases.
? Energy buyback -- PV systems typically remain tied to the utility grid, meaning when the system produces more energy than the home is consuming, the excess energy flows back to the grid and the homeowner is compensated for it through energy credits or payments.
? Increase in home value and cash flow -- A solar installation is one of the few features that can add value to the home at resale, as well as increase monthly cash flow for the homeowner.
? Differentiation at resale -- In a soft market, sellers are looking for any advantage they can find over other homes on the market. Offering homes that use solar power--which ensures a lower cost of ownership--is a great way to do just that.
Whether homeowners have concern over the environment, are looking for energy independence or simply want a hedge against future energy price increases, today's solar power can help them meet their desires.
What's in it for the Builder?
Along with the increased interest in solar among residential consumers, builders are also expressing more interest. APS recently launched a program providing additional incentives and support to builders who meet the APS ENERGY STAR standards and build their homes solar-ready.
Based on the current market, it's safe to assume that the landscape of builder offerings will change over the next several years with increased emphasis on energy efficiency and renewable resources.
Even if consumers or builders do not plan to include solar now, an energy efficiency program such as this will be beneficial. The value it adds to homes and the image of a company, along with the competitive advantage it provides over other builders, is well worth the effort. And in addition to the financial incentives, the additional training and advertising received through similar utility programs can be priceless.
Builder Differentiation
There is a definite advantage for a company to be the first to market a product consumers want. While there are builders in the market that are quickly moving toward offering some type of solar or renewable energy offering to the market, no builder "owns" the solar home space in Phoenix. The homebuilder that embraces the role in this market will not only increase sales but will improve its image as a forward thinking and innovative builder.
Publicity
New developments that include solar will see a lot of attention from local and regional media. The first "solar communities" will also have the advantage of being part of the buzz around the water cooler among Realtors with clients who are energy conscious. As solar becomes more popular in the Phoenix market, eventually the "story value" will decrease, but the first homebuilders to adopt solar will certainly have the leading edge.
Incentives
The incentives being offered for builders going solar are in abundance. Currently, the federal government offers a tax credit to the home buyer of 30 percent of the system cost and the state offers a 25 percent tax credit (capped at $1,000). Utility incentives will vary, but APS offers up to $3 per installed watt (DC), which may cover anywhere from 30 to 50 percent depending on the type of panels installed.
APS and other utilities offer additional incentives if the builder takes part in solar homes programs.
By including solar in energy efficient homes, builders in APS areas can also qualify for up to $1,400 in additional incentives for each home sold, and have a product that is attractive to potential home buyers on multiple levels.
Rex Stepp is the Program Representative for the APS Renewable Energy Incentives program.
