When the sun shines, Al Schultz makes money. Specifically, the 32 photovoltaic panels on his roof turn the sun's rays into electricity that powers his home in Ebner Coulee. If he doesn't need the power, he sells it to Xcel Energy.

"There is a certain peace of mind," said the self-employed contractor. "It's kind of a nice thought to think all your power is paid for."

Schultz is one of a small but growing number of area homeowners who've taken advantage of new, cheaper solar technology, which coupled with state and federal incentives have brought residential solar electric systems within reach of more regular folks looking to lessen their dependence on fossil fuels, lower their utility bills and even make some money.

But changes on the horizon have cast a shadow over the solar industry's future in Wisconsin.

The U.S. grid-connected photovoltaic market grew by nearly 50 percent from 2006 to 2007, according to the Interstate Renewable Energy Council, and by more than 60 percent the following year. Residential systems account for only about a third of the electric capacity, but they made up 84 percent of the systems.

The growth has been fueled partly by falling prices of solar panels.

Prices for residential solar systems have dropped more than 8 percent in the past year, according to the renewable energy market research firm Solarbuzz, which attributes the decline to improvements in manufacturing technology and increased efficiency of solar cells. That's despite an average

30 percent annual increase in demand in the past 20 years.

But the popularity has also benefited from incentives, such as a federal credit that allows people to deduct 30 percent of the purchase price from their tax bill and state or utility rebates.

Focus on Energy, an energy efficiency and renewable energy program funded by Wisconsin's utilities, funded 212 residential solar electric projects in 2010 with nearly $1.9 million in incentive rebates. That was an increase of more than 22 percent from the previous year.

As of October, Focus had given out 194 rebates worth some $1.5 million in 2011.

Mike Dearing installed his first solar system in 1979. But when federal incentives dried up in the 1980s, he worked as an electrical engineering consultant.

The Spring Green-based contractor got back into solar in 2009 and says he stays busy with installing systems around western Wisconsin, including more than half a dozen in the La Crosse area. He's one of at least 18 solar electric contractors working in La Crosse County, according to Focus on Energy.

Tim Gulden has been fascinated by renewable energy since he was a kid, and in 2008 when the 51-year-old electronic technician was laid off from Watlow Controls in Winona he decided it was time to turn his hobby into a business.

"For many years you heard solar is around the corner, but every year it comes and goes and never is cost-effective," Gulden said. "At the end of 2009 when I was looking at the incentives - I can't believe it, solar's here."

Now, as co-owner of Winona Renewable Energy, he's seeing solar panel prices at about half what they were a year ago.

Minnesota no longer offers a state incentive, but Gulden points out that Xcel Energy customers there benefit from a direct $2.25 per watt rebate that results in systems that pay themselves off in five to six years for homeowners and as few as three for businesses, which get additional savings through depreciation write offs.

Multiple motivations

Those who've installed home solar systems cite a variety of reasons - from concern about the environment to cost savings.

Concern for the environment was the primary motivator for those surveyed by the Solar Electric Power Association, followed by a desire to reduce dependence on foreign oil and energy self-sufficiency. The study predicted reducing energy bills would become more important as the economy sags.

Dearing says about a third of his customers are driven by environmental concerns, a third don't like paying energy bills and another third - mostly farmers - look at solar panels as an investment.

"It's the only thing you can do to your house that generates revenue," Dearing said. "Everything else just gets older."

Schultz said his primary motivation was environmental. He sees reliance on fossil fuels as "theft from the future."

"It's not going to save the world, but it's a step," he said of his 6KW system. "What are you going to do, keep burning oil and natural gas forever?"

Other homeowners say with interest rates at all-time lows and the stock market shaky, solar power's return on investment seems even sweeter.

Solar advocates note that systems aren't just a hedge against rising energy costs - they can add value to a home.

"If you decide to redo your kitchen, the payback might be 50 cents on resale," Gulden said. "Solar is dollar for dollar."

Still out of reach

Mike O'Brien had 22 photovoltaic panels installed at his town of Shelby home in 2009 and recently added another two while having his roof replaced because of hail damage.

"It's like paying ahead on your electric bill," O'Brien said. "I don't have to worry about the stock market. If rates go up, my payoff happens sooner."

O'Brien, a physician with Mayo Clinic Health System in La Crosse, sees his solar panels as a safe investment - but also "the right thing to do" for environmental reasons.

Tax credits and rebates cut the cost of O'Brien's $35,000 system by about half. But the costs keep solar out of reach for many consumers.

A 2009 survey by the Solar Electric Power Association found the majority of residential solar energy adopters had household incomes of more than $50,000, and 44 percent earned more than $100,000.

"Right now it's out of reach for 90 percent of the home-owning population," said Michael Vickerman, executive director of RENEW Wisconsin, a nonprofit that promotes economically and environmentally sustainable energy in Wisconsin.

Harry and Jean Hindson last year installed a six-panel system on their Ferry Street garage. It's not as big as they'd prefer, but their roof lacks a south-facing pitch and the garage setup was all they could afford with Jean's associate professor salary and Harry's earnings as an adjunct music teacher.

"We're middle class," Harry said. "What I would really like to do is become a contributor to the grid."

He hasn't calculated the payoff, saying the decision was more in line with their ethos to lessen their impact on the earth. Still, it's cut the family's utility bills by about a third.

"They're out of sight, out of mind," Harry said of his panels. "It works any time the sun's up."

Vickerman says state laws must change for solar to thrive.

Specifically, Vickerman wants the monopolies granted to utility companies loosened so that third-party companies could build solar panels on roofs of businesses and homes. That would allow a factory or homeowner to contract for cheaper, cleaner electricity generated on site without a big capital investment.

Future in the balance

Money from Focus on Energy is still available this year, but rebates will be frozen in January as FOE implements new formulas used to evaluate cost effectiveness and rebalances its portfolio of energy savings and renewables.

Program administrator William Haas said next year's renewable incentives won't be decided until early spring.

Solar advocates like Vickerman say the energy policy hierarchy, which values efficiency - use reduction - over renewables in terms of cost effectiveness, is misguided.

"However much efficiency is injected, it doesn't have any change in the resource mix," he said. "Diversifying resource mix has value."

Solar panels may reduce dependence on fossil fuels, but dollar for dollar, Haas said, high-efficiency lighting delivers better savings.

Dearing points out that his customers have already weatherized and bought high-efficiency appliances.

"Our customers call us after they've done the low-hanging fruit," he said. "We're expensive. This is big dollar stuff. This is the future."

Vickerman says the future of the solar industry depends on policy.

"If we proceed without any policy changes there won't be much happening," he said. "You'll see a number of solar installers go out of business."

On the other hand, Dearing says a favorable policy climate would foster the kind of manufacturing job growth seen in states like California, New Jersey and Colorado.

"It builds jobs," he said. "If Wisconsin doesn't spend money to create the market then the industry that supports the market won't move in."

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