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Bloomberg News Names Solar Power the Next Must Have Home Improvement

Solar panels are the next granite countertops: an amenity for new homes that’s becoming a standard option for buyers in U.S. markets.

At least six of 10 largest U.S. homebuilders led by KB Home include the photovoltaic (solar power) devices in new construction, according to supplier SunPower Corp. (SPWR) Two California towns are mandating installations, and demand for the systems that generate electricity at home will jump 56 percent nationwide this year, according to the Solar Energy Industries Association.

“In the next six months, homebuilders in California and the expensive-energy states will be going solar as a standard, and just incorporating it into the cost of the house like any other feature,” Jim Petersen, chief executive officer of the PetersenDean Inc., the largest closely held U.S. roofing and solar contractor, said in an interview.

Installing panels to roofs during construction is about 20 percent cheaper than after a house is built. Homeowners who can afford the extra $10,000 to $20,000 cost in return for free power threaten the business of traditional utilities such as Edison International of California or Kansas’ Westar Energy Inc.

Power companies are losing business because they can’t cut their rates in line with the tumbling prices of residential solar systems. Those cost about $4.93 a watt in the first quarter, down 16 percent from a year earlier, according to the Washington-based solar association. That was sparked by the 18 percent slump in prices for solar panels and related hardware in the same period.

Mortgage Embed

A 3-kilowatt system, enough to power a typical mid-size home, costs less than $15,000 and can be rolled into a mortgage, said Tom Werner, CEO of San Jose, California-based SunPower.
“You embed it into your home mortgage, you’re cashflow positive month one,” he said.

That’s similar to how some buyers decided to pay $5,000 or $10,000 for a kitchen countertop that would be from natural materials and would outlast a Formica-style top.
“You’re going to see a transition from novelty, to granite countertops, to mainstream option,” Werner said in an interview. “We’re rapidly passing the equivalent of a ‘countertops decision’ to a ‘no-brainer.’ You just do it.”

As more homes generate their own power, typically with the help of state or federal subsidies, they’re buying less electricity from traditional utilities.

Now is the time to switch to Solar while incentives are at their highest rate in St. Louis, $2.00 a watt adds up to big savings.

Source: Bloomberg.com