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Residential Rooftop Solar Power for Minnesota: A Rich Source of Renewable Energy

September 20, 2010 By Salman Mitha, PhD

By Salman Mitha, PhD
Special to Minnesota 2020

In Minnesota our primary source of green electricity is wind power, but Minnesota also has a historical connection with solar energy. Minnesota was home to the founder of modern solar energy usage, Dr. Farrington Daniels. If he were alive today, Dr. Daniels would have encouraged the use solar energy because Minnesota is endowed plenty of sunlight. Calculations done by the National Renewable Energy Laboratory show that Minneapolis has more available rooftop solar energy potential than New York, Seattle, Portland and even Houston. Despite our cold winters we have many sunny days and our summer days are very long.

What is Rooftop Solar Power Generation?
Residential scale electric power is generated by photovoltaic (PV) cells, commonly known as solar cells. Solar cells are semiconductor devices that directly convert sunlight into electricity. They are manufactured using the same basic semiconductor technology used in manufacturing of electronics and computer chips. Silicon-based solar cells are commercially available for residential rooftop implementations. Advanced solar cells with newer types of semiconductors are also being introduced for small scale retail applications. 

The solar energy industry has recognized the potential market for home based solar power. Manufacturers are making specialized solar cells panels that are designed for residential rooftops. These power grid connected systems allow the homeowner to use whatever electricity they need and the surplus is distributed into the electric grid system. Residential systems are also sturdy enough withstand high winds short of a tornado and up to one inch hail. Many companies all over Minnesota provide turnkey services to install and setup a residential rooftop solar electric power system. In short, residential solar power is a mature technology backed by a full service industry.

Minnesota also runs a rebate program for residential solar power. Some of the utilities provide additional rebates along with federal and state tax credits. A critical piece is the energy buy-back provision. The state requires that all utilities operating in Minnesota must buy-back any surplus residential power at retail rates. In practice the electric meter runs backwards when the house is generating more power that it is consuming. This means that all the power generated by the system counts.

The Financials of Rooftop Solar
With all the concern about global warming, why are rooftop solar panels still so rare in Minnesota? Unfortunately solar cells have been one of the more expensive ways to generate electricity. But the good news is that the costs have come down and are expected to continue going down. The industry is just about to hit the tipping point.

At today's prices installed solar cell systems range from $15,000 to $40,000 after rebates and tax credits. These systems provide 40% to 60% of the electricity used by the home. After adjusting for the immediate home appreciation a solar panel will generate a 2% to 3% per annum return. These financial returns are already comparable to putting money into a CD. And these numbers do not include long term appreciation and additional savings from the rising cost of electricity. Homeowners with ready cash can already go green without any financial downside.

Benefits to Minnesotans
Widespread adoption of solar power will greatly benefit Minnesotans in achieving our targets for renewable electricity. If 25% of Minnesota's single family houses get rooftop solar power it would represent 10% of Minnesota's installed electric power generation capacity. In particular this power will be available when people need it the most, running air conditioning during summer.   

There are other advantages of residential solar power as opposed to large centralized power stations. Distributed power generated close to consumption saves transmission costs and reduces the load on infrastructure. The economic benefits are also distributed widely as contractors, small businesses and home owners directly see the benefit of the economic activity. 25% of homes getting rooftop solar panes represents over $5 billion of economic activity. 

What can State and Local Governments Do?
There are many people who place a very high value in going green. Over the last few years, sales of hybrid cars have taken off despite the fact that there are no purely financial benefits unless gas prices go over $6 a gallon. State and local government should support this enormous reservoir of political will in the public for going green. Residential rooftop solar energy represents another way to channel this political will towards the greening of the economy. Minnesota already has the basic regulatory framework and incentive packages in place. As the solar energy industry grows, Minnesota has the potential to become a leader in rooftop solar power generation. 

Financial Incentives: As the industry grows, the state needs to ensure that the current rebate program is capable of handling the growth while remaining fiscally responsible. The state also should ensure rebate and tax credits are consistent through out Minnesota and are easily accessible to all. One key point is to ensure that incentives remain in place if the homeowner chooses to use alternative financing or joint-ownership to pay for the systems. There are companies in California that provide co-ownership or rental type arrangements to provide homeowners with solar panels without any up-front cash.

Regulatory Framework: Minnesota should be ready for newer solar cell technologies and different types of solar panels as they come into the market place. The rebate structure and energy buy-back provisions needs to be flexible and technology agnostic. The requisite monitoring of the system should be simplified and automated. Finally state and local government should clarify the sun access rights in residential neighborhoods. Once a $20,000 solar array is in place, a neighbor's new tree can be much more than a nuisance. 

Solar power has many advantages and it should be part the repertoire that society uses to combat global warming. Many states and local governments are taking the lead. The Governor of California announced California's Million Solar Roofs initiative in 2006. Recently the City of San Francisco developed its own rebate program for rooftop solar panels. In its most recent budget, the State of Pennsylvania also introduced rebates for rooftop solar panels. The State of Minnesota should continue to be a leader as the rooftop solar revolution truly gets under way.

Salman Mitha is an entrepreneur, businessman and scientist with over 20 years of experience in technology business and applied research. He has conducted research at Harvard University, run business operations in Silicon Valley and launched a startup in Minnesota

Salman earned his B.S. in Physics from the California Institute of Technology (Caltech) and his Ph.D. in Applied Physics from Harvard University. He lives with his wife and three children in Eagan.

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