Whether it’s the next door neighbor installing solar panels on their roof or the promotional blitz from solar retailers, residential solar is steadily becoming mainstream. Central New Jersey residents may have noticed the solar mail brochures and television commercials promising enticing deals are not only being offered by obscure area installers, but are deals backed by NRG Energy, one of the nation’s largest independent power producers.
Headquartered at 211 Carnegie Center, NRG has invested heavily in solar and has repositioned itself to offer an array of energy services in the distributed energy market, in other words to commercial and residential consumers. This past March NRG acquired Roof Diagnostics Solar, a company based in Wall that was the eighth-largest solar installer in the U.S. Earlier this month NRG acquired Pure Energies Group, an online solar customer acquisition platform with headquarters in San Francisco and Toronto.
“We’re positioning our company to be the 21st century energy model,” says Kelcy Pegler Jr., who co-founded Roof Diagnostics and is now president of NRG Home Solar. “We’re going to continue strategic partnerships and vertical integrations.”
In an interview with Bloomberg Businessweek last year, NRG CEO David Crane said NRG is adapting to a post-grid world, articulating a future where renewable technology allows homeowners with rooftop solar panels, for example, to no longer need utilities and the grid.
Although solar still only accounts for 0.4 percent of total electricity generation in the U.S., the number of solar installations has tripled since 2010. As one might expect of a big player in any market, NRG is offering consumers easy access to its product. NRG Home Solar installs and manages rooftop panels for little or no initial cost, retaining ownership of the system, and the homeowner then makes a monthly lease payments, usually for a term of 20 years.
In March of 2013 Robbinsville resident Rick Austin was shopping for hardware at Home Depot when he spotted a booth promoting residential solar leasing. Through a no-money down, 20-year lease agreement, Austin now has a five-kilowatt system, 16 solar panels aligned in two rows of eight, installed on his home’s flat roof. NRG manages and monitors the rooftop system’s performance, and the company would be responsible for any needed repairs.
“The overall process was great. It’s hands free, you aren’t worrying about a thing,” Austin said.
The fixed monthly leasing fee is $72.90 a month, or $874.8 a year. There is a 2.9 percent annual increase for inflation, according to NRG spokesperson Erik Linden. Factoring in the annual increase, the lease payments would total more than $23,000 over 20 years.
In the meantime, however, Austin is gaining some credit on his monthly electric bill for the energy produced on his roof. In the event the solar system falls short of a minimum production amount, it will be guaranteed by NRG Home Solar. Citing company policy, Linden would not specify the amount of energy Austin’s lease payments guarantee.
According to Linden, upon the conclusion of a solar lease the customer can renew the lease, purchase the system, or have it removed free of charge. In the event a homeowner needs to sell the house before the lease is up, the lease can be transferred to the new homeowner, or the balance of the lease needs to be paid off.
Austin, who admits his primary motivation was not to save money but rather to use more renewable energy and less fossil fuel, said he is unsure what amount of energy is produced by the panels on his roof and whether or not he is saving money.
Growing up in a rural area in New Hampshire, Austin says he was used to a self-sustaining lifestyle. His father teaches in Florida, having previously worked in construction. His mother recently relocated to a residence five minutes away from Rick. He met his wife, Sarah, at Temple. After they graduated in 2007 Sarah found an actuary position in Princeton. Austin majored in marketing and economics and until last year worked at a healthcare company. He has since left to pursue acting and writing.
Bobbie Marlowe, a real estate broker with Callaway Henderson Sotheby’s, says the appearance of an installed rooftop solar system usually determines a potential buyer’s receptiveness. “It depends on how they fit on the roof,” says Marlowe, who currently has a listing of a house and barn both equipped with solar panels (see above). “How much it affects the value of the house, that depends on the SRECs.”
SRECs, or solar renewable energy credits, are tradable credits that can be sold by the solar system owner for income. Property owners are also exempt from property tax on the value added after a solar system has been installed.
Princeton resident Michael Paluszek is not only an early adopter of home solar, having owned a solar system for more than ten years. He may also be an example of the kind of consumer NRG’s David Crane had in mind when he forecast the demise of the power grid.
An engineer by training, Paluszek first installed a 3.6 kilowatt (kW) solar panel system on his roof in 2002. This past May he had additional solar panels installed, doubling his home system’s energy generation capacity. The new system also serves as a demonstrative installation of Sunstation, a backup solar system by Princeton Satellite Systems, an aerospace, software, and energy company founded by Paluszek (U.S. 1, August 20, 2014).
His father was a mechanical engineer who worked in the oil industry, and his mother was a secretary at IBM. As an undergraduate at MIT he studied electrical engineering, and his graduate work, also at MIT, was in energy conversion. When Paluszek finished grad school in 1979, there were few jobs in energy. He ended up at GE Astro Space in East Windsor, which manufactured satellites. He started Princeton Satellite six years later in 1992.
Marilyn Ham, his wife, works as the manager of Princeton University’s music department. They have one son, a senior at Princeton High School.
“You make the most money when you buy a solar system directly,” Paluszek says. While acknowledging that his company recently entered the business of selling them, he draws this conclusion from his own experience as a homeowner generating solar energy.
The original 3.6 kW system was installed more than 10 years ago by Jersey Solar at a total cost of $39,000. Back then a government subsidy directly paid the installer 70 percent of the cost, and after additional incentives Paluszek ultimately paid $9,000 for his first system. That system produced around $790 in yearly electricity savings.
In addition to the monthly savings, every 1,000 kWh of electricity produced by a solar system generates one SREC for the owner of the system. Homeowners usually sell their earned SRECs to brokers, and Paluszek says without SRECs his first system’s payback time would have been ten years instead of five.
Along the way Paluszek almost had to pay $3,000 to replace the system’s inverter, which converts the direct current generated by the panels to alternating current, and this also occurred five years in. Luckily the failure occurred just within the warranty period.
Nothing else required out-of-pocket expenses until his upgrade to a 7.2 kW Sunstation system. The cost was $50,000, which after a 30 percent federal tax credit amounted to a total of $35,000. That high cost included a combiner box ($4,000) that provides voltage arc protection, a 14 kWh rechargeable battery backup system ($10,000), and a new inverter with transfer switches that safely disconnects the house if the power grid goes down.
His home’s rooftop system generates more than 900 kWh a month, which at 16 cents per kWh results in monthly household savings of around $150. This just about covers his household’s electricity usage.
“I don’t think we are a net generator, it’s kind of a wash,” Paluszek says. A big usage is the daily recharging of a Nissan Leaf electric car and a Toyota Prius plug-in hybrid, which require a combined 18 kWh a day. If a homeowner’s system produces more power than is used, under state law the utility credits the excess amount to the owner’s account, and any year-end balance is paid to the homeowner at the wholesale electricity price.
Paluszek estimates the new system will pay itself off in roughly 12 years. Last month his total energy bill was under $45, mostly from natural gas for his heat and hot water. In addition to his energy bill savings, Paluszek says he collects around $1,200 a year through his SRECs.
“It’s a fairly complicated calculation to get a true return on investment. I could get my accountant to do it,” Paluszek says, noting the family’s plug-in cars also save them gas money.
Paluszek’s most recent installation covered the rest of his roof with additional solar panels, done to achieve maximum power generating utility, but just as important to Paluszek were the features that allow the system to continue providing electricity in the event the power grid goes down.
“We had these huge outages,” Paluszek said, recalling Hurricanes Irene and Sandy. “My system went down, this is a real pain. I couldn’t use my system.”
Most home solar systems now in place are connected to the power grid and are disabled in conjunction with a downed power grid. With his Sunstation upgrade, the disconnect feature kicks in during an outage, resulting in a stand alone solar system that generates electricity during the day.
The battery package stores electricity for night usage, recharging the next day, sun permitting. Living in a part of town where a lot of the power lines are above ground, Paluszek’s system insulates his family from future outages.
“What’s the value to me of not having my power out?” Paluszek says. “I would not install a system without batteries. Yeah I sell them, but why would you do that?”
Princeton Satellite’s involvement in energy first started with the ongoing development of nuclear fusion propulsion systems for spacecraft, a project that literally aims for the moon and beyond (U.S. 1, August 12, 2009). The company’s extraterrestrial ambitions also translated to terrestrial systems. The technology on spacecraft — batteries, solar panels, power conversion equipment — are the same as that in home solar generation.
“It’s all fundamentally related,” Paluszek says. “A lot of technology is converging. We are transferring technology from the space area to the home power area.” With a full-time team of four people, Paluszek’s company first started thinking about electric vehicle charging via stand alone solar arrays. After seeing the demand, the company entered the home solar business area as well.
Batteries have long been a natural back-up solution, and following the power outage caused by Hurricane Irene, Paluszek thought it would make sense to have batteries back up his home’s solar system. However, this would be done with rechargeable lithium batteries instead of acid battery systems.
The other key technical development was hardware that had the ability to disconnect from the grid. Paluszek’s home solar system had been operating for nearly a decade when big grid outages began occurring with more frequency.
“I assumed this is the way it is, you have to be tied to the grid,” Paluszek says. “But transfer switches were allowed to break the connection safely.” Currently Paluszek’s home is the only one with an operational SunStation.
The majority of houses and commercial properties in the U.S. are not suitable for solar panels. Paluszek says it is important to go through an evaluation, even a second opinion. Roofs that face the south receive sun light all day and are the most optimal orientation. In addition, homeowners need to make sure panels are installed properly, and they should request a good estimate of the expected power generation.
An analysis of the roof structure is needed to ensure it can handle the additional weight. The panels themselves are not heavy and they will not wear out your roof, Paluszek says, but older roofs that have never been replaced can prove troublesome when it is time to replace the roof and there are rows of solar panels already installed.
Arc protection, in the form of a combiner box, is an important safeguard against fires. Arcing can occur over high voltage DC wires, which could cause fires. After installation, Paluszek says homeowners need to pay attention to the inverter, which are typically warranted for five years. Other than that, rooftop solar panels just sit there and take in the sun.
Austin, the Robbinsville resident leasing a system from NRG Home Solar, barely notices his system. “I remember they are there sometimes when I look up,” Austin says.