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sustainable energy for your home: it’s more affordable than you thinkby Molly Jones

Who wouldn’t want to have their home energy needs met by the sun, or have their home heated by the earth’s natural heat? The idea of getting “free” energy at some point is very enticing and has many people studying their options. But while most homeowners would entertain the idea of going for a Photovoltaic Solar System to power their electricity needs, or a geothermal system to heat naturally at a low cost, few feel they can come up with the $30,000 to $50,000 price tag that such systems entail, and so their research often ends when the reality of the cost sets in. However, as John Wright from Hudson Valley Clean Energy, explains, once the rebates, tax credits, and low interest loans are taken into account, the actual cost of a full system is dramatically less than the initial price. John was kind enough to fill us in on the costs and savings of home systems and how a homeowner can save up to $200,000 in electric costs over the lifetime of a system.

What is an average amount of time to finance a complete PV Solar installation?

There are a couple of finance options. The first is a 10-year 3% fixed rate home equity loan that the state subsidizes. The limitation to that is that you can only finance up to $20,000. That’s where a 0% loan comes in. That 0% loan is really a bridge loan, to bridge the gap between the contract price and the tax credits. So let’s say the initial price out of pocket is $30,000. They borrow $20,000 from New York State. They borrow $10,000 through the 0% program for 1 year, to bridge the $10,000 in tax credits they’re going to get back in a year. The manufacturer also offers some solar loans that are 5, 10 or 15 year.

How long does it take to recoup your investment? What is the average savings over the lifespan of the system?

The answer to your first question is that you recoup it immediately by increasing the value in your home, dollar for dollar. So, you pay $20,000 for a PV system, you increase the value of your home $20,000. The comps have shown that in a resell situation, a homeowner gets every penny back on the system. If you didn’t want to take that into account, say you’re not going to sell your house for the next 25 years, typically you recoup in around 10 years. That’s a payback calculating a 5% inflation rate in electric prices, which is fair. Electric rates have been going up closer to 8 to 9% a year.

So after 10 years, when you have recouped the cost of the system, the savings are all yours?

All yours for a minimum of the next 15 years, since the warranty on the system is 25 years.

What are the average savings over the lifespan of the system?

You can see savings of up to the $200,000 range on systems, because what happens is, the first year, you might only be saving $1,500, but that compounds 5-10% a year. Electricity rates go up 5-10% a year. So the first year savings might be $1,500, while the average 10-year savings might be $5,000 (a year).

So, provided your electricity usage remains the same each year and the cost of power provided by the utility continues to rise—as it has historically—your savings per year increase in proportion to the cost of power.

Most folks calculate a 30-year or 25-year recoupment on their investment, because they calculate a simple payback, which is much too simple. They say, “Ok, first year savings: $1,500. System cost me $30,000. It’s a 30 year payback.” They’re ignoring electric price inflation.

Of the three systems that you install—geothermal, solar thermal, and PV solar, which do you feel gives the most “bang for the buck” in terms of investment and savings?

I think PV solar electric because that is the only system of the three that has literally zero maintenance. So, for homeowners who want to put a system in their house and want zero maintenance, that’s the best system. Although geothermal could have a faster rate of return—the payback for geothermal is seven years, there is maintenance involved, and there are more moving parts. With PV solar electric there are no moving parts.

What’s the typical installation cost for geothermal?

Probably around $50,000 for a new home. For a retrofit, it’s probably around $35,000.

Tell us about the rebates and grants available to homeowners.

For PV solar electric, there is a New York state tax rebate, and we handle all the paperwork. There is also a New York state tax credit of up to $5,000, which is 25% of the cost, as well as a 30% federal tax credit. Then there are the state subsidized loans for financing. For the geothermal, the only incentive available is the 30% federal tax credit; there is no New York state tax credit or rebate.

And then for solar hot water, there’s no New York state rebate, but it does have the 25% NY state tax credit and the 30% federal tax credit.

What are the advantages to hiring a professional company, such as Hudson Valley Clean Energy, to do your installation?

In order to get the state rebate, you have to have the system installed by a state electrical installer. You are dealing with high-voltage direct current electricity, which can either kill somebody, or burn a house down. You really want to know what you’re doing. It’s not some weekend project. Then, the manufacturer warranties are so long, 10 years on the inverters and a 25 year warranty on modules, you really want a certified installer to get that warranty for you, because having a system installed by someone who’s not an eligible installer will void the warranty.

Also, even though these systems seem easy, there is a lot of behind-the-scenes engineering that goes on, and to maximize efficiency of the system, it’s very important that you use a company that has a vast experience in engineering and designing these systems.

With the rebates and tax incentives, as well as the zero percent financing available, what is the typical monthly payment for a typical home roof-mounted PV solar system?

Probably around $180 a month for a PV solar system, which is comparable to a monthly electric bill. If you are generating any excess electricity, you get a check back at the end of the year from the utility.

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