I just read some great news: Nanci Pelosi just met with the mayor of San Francisco to announce her support for the Securing America’s Energy Independence Act It is a similar bill to the one I wrote about last year.

So what’s the details of the new bill? It…

…would extend the residential and commercial ITC for eight years, modify the residential and commercial tax credit for photovoltaic systems to $1,500 per half kilowatt, remove the 30% cap for commercial installations and the $2,000 cap on residential installations and provide three-year accelerated depreciation for commercial solar and fuel cell projects.

It also changes the solar water heating credit from a maximum of 30% to an absolute credit of up to $2000 (which is awesome!). As you may be expecting, I’ve done the math…

Solar Water Heater: Assuming it costs about ~$3500 to have a professional install a solar water heater on your roof, that means you’ll have spent $1500 after taxes. If you add on the incentive from our local utility company ($800), that leaves the price for an INSTALLED solar hot water heater at $700! That means if you’re currently heating your water with electricity you’ll make up the cost in 1.46 years. You’d be crazy not to invest in one!

Solar Electricity: Right now solar panels cost about $4.5/watt. Under normal circumstances you can get about 6 full-sun hours a day. If you bought $18,000 worth of solar panels (4 kilowatts) you could generate about 24 kilowatts/day which translates to approximately $2.4/day in “free” energy. For now I’ll ignore the cost of installation, wiring, and other equipment (inverter) so it would take 26.7 years to make up the cost in an ideal world (assuming 30% losses in the system which is typical).

Now lets add in this new incentive… The bill allows us to get a tax credit of $1500/half-kilowatt. That is $12,000 of free money! This leaves us with a total price of $6,000 for the solar panels or 6.84 years to make up the cost. Since it costs about $5,000 for the extra equipment plus installation the real figure is more like 12.55 years. In other words: It still isn’t worth it financially… but if you finance it you can increase your monthly electricity payment by a small amount while doing good for the environment.

Note: This doesn’t take into account the increasing cost of energy or inflation. Realistically, you could probably get the payback time under 9-10 years. The real key is for the cost of solar panels to come down… If we can get the price/watt down to about $2.50 then you’d be stupid not to invest in solar electricity. At that price you’d make up the cost in 3.4 years! I’m still holding out hope that Nanosolar can keep their promise of $0.50/watt by 2009.