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Akamai Money | Business

Assess energy use before investing in photovoltaic


QUESTION: What’s a good starting point for a homeowner thinking about installing a photovoltaic electricity generating system?

ANSWER: First assess your energy use. Take a close look at your electric bill and check your chart of average daily kilowatt-hours of use. This will give you an idea of how much energy you would have to produce if you wanted to become a “net zero energy” home or business. This is an idea that is a great goal and means that you are producing as much energy as you use. By comparison, the average daily energy use per home on Oahu is 20 kilowatt-hours. How do you compare with this? Are there things you can do to reduce energy use?

Q: What are the economic factors involved in deciding whether to install a PV system?

A: Buying PV is an investment in a clean energy future, and it’s an investment in your energy supply that will last for the next 30 years and more. It means that you are locking in your energy cost now, and your installation will continue to provide value to you for your future. Once you invest in any renewable system, it increases in value whenever the price of oil goes up. The incentives that are offered for investing in PV here in Hawaii include a 35 percent state tax credit and a 30 percent federal tax credit. That’s 65 percent of the cost of a system that you save the day you turn on the system, provided that you have a tax liability. There are also grant payments that can be taken instead of tax credits. Businesses that invest in PV can also do an accelerated depreciation (see Always remember that the main reason to invest in renewable energy is for the good of the community and the aina.

Q: What about solar water heating?

A: Water heating usually accounts for 30 percent to 40 percent of your electric bill. If there are more than two people in the home, it is more economical to do solar water first, then photovoltaic. There are many other activities, such as buying energy-efficient appliances, that would be more cost-effective to do first. There are two sayings that we have in the renewable energy industry. The first is, “The cheapest, cleanest, greenest energy is the energy you don’t use.” The second is, “For every dollar you spend on energy efficiency, you save $5 on renewable energy systems.”

Q: Is the lowest price always the best deal?

A: No! I have been designing and installing systems since 1980. I have also had to go back and fix my systems and those installed by others. The vast majority of the repairs were related to the installer’s skills and quality of knowledge, and equipment selection issues — not equipment failure. Reliability that comes from experience and integrity of installation is the true cost of a system. Malfunctioning systems cost more in lost energy production. PV modules are extremely reliable with no moving parts and excellent quality control in manufacturing. System design and installation are the biggest variables affecting reliability and productivity.

Q: Is there any rule of thumb for how fast a PV system will pay for itself?

A: No. It really depends mostly on what solar resources are available and the cost of electricity, which is based on the cost of oil. Electricity cost has been going up at about 10 percent a year on average over the last 10 years. Plus the cost of PV has gone down about 25 percent in the last two years. Also, it depends on your ability to take advantage of the incentives that are available. For example, a commercial business can take greater advantage of the tax credits (residential systems are limited to $5,000 per system in state tax credits) and can do an accelerated depreciation on the equipment. To give you some approximations, commercial systems have a payback — where all costs are returned in incentives and energy savings — in less than three years. Residential systems, by comparison, have a payback of about seven years. If you look at this investment in terms of return on investment, then you are net positive from day one. Some of my customers are taking funds out of their stock portfolios and putting them into their own PV systems. They see a greater ROI. Plus they get the positive feedback of knowing that they have locked in their energy costs and done the right thing for their community.

Q: How should a homeowner go about choosing a solar installer?

A: The best way to pick a solar installer is by reputation. A recommendation from a friend or neighbor is best. It is unwise to base it on a sales presentation or price. It does not reflect the quality, knowledge and dedication to service that comes from caring and competent installers. Over the years, experienced installers learn tricks of the trade, which make a huge difference in the reliability of the systems.


Interviewed by Alan Yonan Jr.,

Editor’s note: “Akamai Money” seeks out local experts to answer questions about business in Hawaii. If you have an issue you would like us to tackle, please email it to and put “Akamai Money” in the subject line. 

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