Homeowners join forces to save on solar panels

Green energy can save you money over time, but solar panels and other options often require a huge upfront investment. You might choose to convert just to boost your green credentials. That can have its own value. But how long until that initial cost begins to translate to real savings – to that other kind of green?

This tricky equation scared Ed Lortz away at first. The retired maritime engineer investigated putting solar panels on his San Francisco house for months before eventually giving up. The cost was too high. And among the six contractors that he compared in 2008, none seemed to offer the very latest technology.

"I liked the idea of solar," says Mr. Lortz. "I was thinking about the future, thinking about where electric rates are going. It was another area where I could reduce my utility cost and be green." But until this summer, those two goals simply wouldn't merge.

The breakthrough came in June, when Lortz attended a seminar for One Block Off the Grid. To help average people ease into a greener future, this San Francisco start-up brings together groups of homeowners interested in solar panels. Once 1BOG hits a critical mass within a certain city, it negotiates a discounted bulk rate with contractors.

"We want people to know that there are pockets of the United States where solar isn't just for rich environmentalists," says Dave Llorens, chief executive officer and founder of 1BOG. "We want to create a rocket booster for communities" that can help people pool together and satisfy their conscience while also saving money.

So far, 1BOG has overseen 1,000 installations in eight states, and 40,000 people have signed up for information on the group's website, 1bog.org.

The arrangement allows everyone within a community to get a better deal on the systems – usually 15 to 20 percent off – and the peace of mind that comes with a team of solar experts scrutinizing local options.

"There are these giant trust issues with home contracting," says Mr. Llorens. Because it's still an emerging technology, "solar can be much more complex and confusing than other home improvements."

For one thing, it's hard to pin down what's an appropriate price. Costs vary dramatically from area to area, driven by utility rates, regional penetration, and state rebates.

This makes some cities, such as Seattle, a tough sell, says Llorens. The problem is not that Seattle endures gray skies for more than half of the year. Solar panels can soak up sunlight even when the sky is overcast. Germany produces about seven times more megawatts of solar electricity than the US, despite being notoriously cloudy and considerably smaller.

Instead, energy economics gets in the way. Seattle enjoys cheap power, in part because of hydroelectricity, another clean option. Expensive solar panels don't make much sense for the average homeowner when utility bills remain so low.

On the other hand, Llorens says, solar installations are good investments in New Jersey, California, and other states with relatively expensive energy costs – especially when you factor in government incentives.

When Lortz installed nine panels on his roof in San Francisco, he wound up only paying 25 percent of the system's original cost. He still paid several thousand dollars, but the 1BOG discount, local rebates, and the 30 percent federal tax credit ensure that it'll take much less time for his investment to turn profitable.

In some cases, Llorens says, group bargaining can actually create reasonable markets where none existed before. He points to New Orleans. 1BOG had initially written off the city. Too many hurdles; too many easier markets for the young company to focus on first. But enough residents rallied behind the group that the prospects changed.

"I wouldn't have thought it was possible," says Llorens. "But pretty soon we realized: we'll have to go there."

Once 1BOG is ready to dig in, they survey the solar contractors in an area and draft a shortlist. Llorens and his crew look at each company's history, technology, prices, its willingness to apply government incentives immediately instead of during tax season, and the likelihood that the company will still be around in a decade to repair aging solar panels. They then approach the top contenders and ask them to compete to be the group's official provider in that metro area.

This is where 1BOG makes its money. The final contractor agrees to pay a finder's fee for gathering the group of homeowners.

To help get as large a crowd as possible, 1BOG attracts members with walkthroughs, seminars, and some fancy online tools.

By entering his address into the company's website, member Chris Varner could see a bird's-eye image of his house in Arvada, Colo., just outside Denver. The 1BOG website then let him select a segment of his roof – to see how many panels would fit – and include information about his current energy diet – to estimate how much money he could save by going solar.

"There's also a monitoring system which tracks how [the solar panels] are doing throughout the day," says Mr. Varner, an electrical engineer who does contract work for NASA. This online tool works from any Web browser, allowing you to check in from the office or by some cellphones.

Varner installed his 20-odd panels shortly after Christmas last year. Approaching the anniversary, he reports that there have been no real hiccups along the way. Eight to 10 inches of snow covered his roof last winter, blocking any sunlight. But as the snow melted to around four inches, the solar panels came back to life and eventually resumed full efficacy.

"I worried that a hailstorm might break [the panels] – we get those around here," says Varner. "But the [installation company] said that the glass is so hardened that it's rare for hail to do any damage."

Both Varner and Lortz still receive utility bills each month – it's smart to keep a grid connection as a backup.

Varner says he will likely end the year producing slightly less than he used. Lortz expects his panels will regularly overproduce, but his power company has not yet set up a way to pay him for the extra electricity he feeds into the grid.

While 1BOG likes to evoke the image of homeowners banding together as a community, most of the interactions at this point are just between the member and the contractor, with 1BOG as an intermediary. Most members never meet one another.

Llorens says he's experimenting with more formal meet-ups, beyond the occasional information sessions. But for now, he's happy leaving the community aspect as a money-saving business model instead of a potluck organizing committee.

"It's the idea that first attracted me – coming together, you know, pooling, getting a large base of potential users," says Varner, who does actually know another member: "My next-door neighbors. I recommended it to them."

[Editor's note: The original version of this article misspelled Chris Varner's name.]