Mary Ellen and Ray Kramer considered putting solar photovoltaic panels on the roof of their 2,800-square-foot home two years ago. But the price tag of $30,000 to $40,000 was cost-prohibitive, Mary Ellen said.
The retired Pantego couple felt that they might not "be here long enough" to recoup such a large investment through savings on their electric bill, she said.
But that was before TXU Energy announced in February that it is pairing up with a California-based company, SolarCity, to launch a groundbreaking residential solar energy program that doesn't require homeowners to put up any money in advance. There is no upfront cost for installation, and homeowners can instead make monthly lease payments on the solar panels. The savings on electric bills generally can be expected to exceed the monthly lease cost, TXU Energy and SolarCity officials say.
The Kramers quickly signed up and expect to have their new rooftop panels within two to three months. But the overwhelming consumer response to the program has left numerous North Texans waiting in a long queue to see whether they will be accepted.
TXU spokesman Michael Patterson said the company has received more than 4,500 inquiries about the program, but might do only 200 to 300 residential solar installations this year, beginning in May.
Because the program already is "full for 2010 ... we are not encouraging new applications," but "are offering to place folks on a waiting list for future programs," Patterson said. To do so, go to www.txu.com/solar or call 877-TXU-SOLAR.
Oncor rebate factor
The program has been somewhat in limbo because of concerns regarding a financially critical component: the availability of solar rebates from Oncor Electric Delivery, the main transmission and distribution company in North Texas. But Oncor recently announced that it is contributing another $6.9 million for rebates for installation of solar panels for homes and businesses.
That new funding "should help provide rebates to some of the applications currently in the pipeline" for the new TXU-SolarCity program, Patterson said. The number of homes that benefit from the program is "very contingent on how the rebates are distributed," he said. But TXU and SolarCity are still hopeful of installing solar panels on 200 to 300 homes this year, he said.
A homeowner might have to wait three to four months from program signup to connection of panels to the power grid. For SolarCity, the process requires securing a rebate, auditing the home site, custom-designing panels, getting a building permit, installing the panels and undergoing inspections.
The program is being offered in the most populated area of North Texas, roughly bounded by Waxahachie and Cleburne to the south, Weatherford to the west, Denton to the north and Terrell to the east.
Patterson said the consumer response has been "incredible," given "the current solar footprint in North Texas," which TXU believes to be less than 200 already existing residential solar installations.
"There has been a pent-up demand for this," he said. "Until now, solar power has been a difficult choice for most Texas consumers because of the high upfront costs. It just didn't make sense when you look at the numbers.
"Our solar program solves that problem through a lease option that costs nothing upfront and will help customers save on their monthly electric bill."
Customers can choose the "zero-down" lease option, put some money down and have a lower monthly lease payment, or fully prepay the lease, Patterson said.
The solar panels are installed at no charge and insured by SolarCity for the full lease term, so the homeowner's insurance should not be negatively affected, he said. SolarCity "will provide all necessary repairs and maintenance," according to TXU. The panels are considered largely hail-resistant.
Here's a typical lease: A 4-kilowatt array of 20 solar panels, sufficient for a three- or four-bedroom home, would have an initial leasing cost of $35 per month. A homeowner paying 12 cents per kilowatt-hour for electricity might reduce a monthly electric bill by $50 with the solar system, producing a net savings of $15 after the leasing fee, according to TXU.
The solar arrays range from 2.3 to 10 kilowatts, with initial leasing costs running $20 to $100 monthly. The cost rises 2.5 percent annually, meaning an initial $35 monthly lease payment would grow to $50.69 after 15 years.
Participants will make lease payments to SolarCity, separate from their electric bill. The program is made economically feasible by federal tax incentives and rebates, which lower the cost of a 4-kilowatt system from about $26,000 to $11,000.
TXU, which said it will receive small commissions from SolarCity for signing up participants, does not require homeowners to be its electricity customers to benefit from the solar program. But they must have a respectable credit score of 700 or more, have ample south-facing roof space and minimal shade, and be participants in the deregulated retail electric market.
A lease will run for 15 years, "within the sweet spot" of the useful life of about 20 to 25 years for solar panels, according to John Geary, TXU vice president for innovation. A homeowner who sells a residence before the lease expires could "pre-pay the balance of the lease and transfer it to the home buyer," with the panels likely boosting the selling price, he said. A homeowner who sold a home with leased solar panels on it and bought another residence in the area could have the panels moved to the new home, he said.
Ray and Mary Ellen Kramer, the retired Pantego couple, opted to lease a large system rated at about 9.7 kilowatts. Their lease payments will be $76.99 (not including sales tax, which brings it to $83.15). With the 2.5 percent annual increase in lease costs, their monthly payment will be $111.50 (plus sales tax) by the final year of the lease. Their total payments during the 15 years, not including sales tax, will be $16,563.
With a sizable 2,800-square-foot home and swimming pool, the Kramers use about 2,400 kilowatt-hours of electricity per month, said Ray, who worked as a research scientist for a major oil company.
He estimates that the solar panels will result in a net savings of $25 to $35 a month on their electric bill, after allowing for the cost of the monthly lease payment and sales tax.
But the Kramers see another benefit. Mary Ellen said embracing renewable energy sets an earth-friendly example for their four grandchildren.
"We're really looking forward to getting the solar panels, and our 10-year-old grandson, Austin, is so excited about it," she said. "He's in the science mode like his grandfather."
JACK Z. SMITH, 817-390-7724