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New Tax Credits Approved For Homes with Solar Power Nov 17, 2005, 9:00 pm PST New Tax Credits Approved For Homes with Solar Power By Eric Bontrager Rising energy prices are prompting more people to look into "zero-energy homes," highly energy-efficient houses designed and equipped to produce as much electricity as they use. New federal tax incentives that take ef fect in January could help these dwellings, now just a green niche in th e home-building industry, draw even more interest. The concept has been around for years: Draw electricity from the power gr id when needed and harness solar energy to produce electricity when cond itions permit, sending any excess into the power grid to earn financial credit. In an ideal scenario, the result would be zero net electric cost s during the course of a year. Achieving this balance takes a home equipped with a combination of photov oltaic cells and special construction features, like proper site plannin g, improved insulation and energy-efficient appliances and lighting. Som e homeowners have gone further, incorporating structurally insulated pan els to form walls, ceilings and floors that greatly reduce the thermal l eakage experienced in conventional homes. So far, though, zero-energy technology isn't very cost-effective. Solar p anels and the inverters that transform the sunlight into usable energy c an raise construction costs by $8,000 to $20,000, depending on the amoun t of power they produce -- which means it can take years to recoup the e xpense. Few home buyers have been willing to pay the costs and, consequently, few builders have been willing to build such homes. No accurate statistics exist on how many have been built, but estimates range only in the low t housands, with most found in the Southwest and West, where ample sunshin e and other factors stoke consumer interest. Builders and photovoltaic-equipment makers say one way to help lower cost s is to continue and expand various tax incentives available for alterna tive-energy technology. All 50 states offer tax credits of various amoun ts to builders using solar technology. Under the wide-ranging federal En ergy Policy Act passed this summer, which takes effect Jan. Whil e that would only partially offset the cost of such equipment, the homeo wner would also benefit from the recurring energy savings. Similar credits have existed in the past at the federal level, but most w ere aimed at encouraging the use of solar technology in commercial const ruction. The new credit, which is temporary and comes up for renewal in 2008, is part of a national initiative to reduce home energy consumption by 70% by 2020. The Department of Energy estimates the average US household pays about $1,500 a year for electricity. That is expected to climb to $1,640 durin g the next five years, experts say. Since most of that expense is for he ating and cooling, supporters say adopting zero-energy technology could substantially reduce energy consumption and its effect on the environmen t Renewable energies, including solar, only account for 23% of all US .
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