Manoa homeowners Sarah and Duane Preble may be in the vanguard when it comes to home-generated electricity.

Photovoltaic cells on their roof have provided for part of their 2,400-square-foot home's electrical needs over the past two years. Now they're taking steps to get 24 more panels, so almost all of the wattage coming in to their home is from the sun. Only a minimal part will come from Hawaiian Electric Co.

"We're just convinced it will pay for itself," said Sarah Preble, who writes textbooks along with her husband, a former professor of art at the University of Hawai'i. She said that when done, the $25,000 project will almost eliminate the $125 a month they paid for utilities before getting the system.

The Prebles and others are among those taking advantage of new state and federal tax credits that will pay up to $7,000 of the cost of an installation.The credits help bring down the cost of the systems at a time when utility customers are looking for ways to cope with the nation's highest electricity rates. Companies involved in photovoltaics say there's been a boom in installations.

Nationally, Solarbuzz LLC, a San Francisco-based solar research and consulting company, projects the annual U.S. photovoltaic electricity installation rate will surge to 290 megawatts in 2010, from 80 megawatts last year.

Use of more photovoltaics in Hawai'i is in keeping with a state goal of having 20 percent of energy coming from renewable sources by 2020. Hawai'i currently relies on fuel or oil to generate 89 percent of its energy, more than any other state.

"We're expecting to see this (photovoltaics) grow from year to year," said Peter Rosegg, a HECO spokesman. "It's coming."

Home installations primarily have fallen into one of three categories: rural homeowners who faced prohibitively high costs to tap into existing power lines; people who are environmentally conscious; and those who were enamored with the technology. The new incentives — a state tax credit of up to $5,000 for each installation and $2,000 for a federal tax credit — are designed to provide broader appeal for systems, which can run into the tens of thousands of dollars.

NEED FOR INCENTIVES

Marco Mangelsdorf, president of ProVision Technologies Inc. in Hilo, said he believes more government incentives are needed to get widespread adoption of photovoltaics because the systems remain too pricey for many people, even if the symptoms can pay for themselves in as little as eight years, depending how you estimate electricity rate hikes.

"We're certainly not there at this point," said Mangelsdorf, who said the state should adopt some sort of reimbursement program for homeowners if it wants to see the renewable energy source take off. Photovoltaics "doesn't have a 'gotta-have-it' allure to it at this point for homeowners."

While there hasn't been a stampede into photovoltaic showrooms, the new state tax credits have been reason enough for some homeowners to take the plunge. Rolf Christ, owner of R&R Services, a wholesaler of solar water heating equipment and some photovoltaic supplies, has been in the solar business for 25 years but only now is getting a photovoltaic system installed on his house.

"The climate is right, right now," he said. "Electricity costs are high enough and the tax credits are high enough."

He'll get one half of the system installed around the end of the year, qualifying for the $7,000 tax credit. Christ will expand the system next year, earning another credit next year. He said systems may pay for themselves in 10 years or so, depending on electricity rates.

"After that the money pours in," Christ said. "It's not a bad deal for someone who has the cash."

Hawaiian Electric Co. already is seeing a more than a doubling of O'ahu homes with photovoltaics this year from what has been a tiny base. Continued increases are expected on the Neighbor Islands, where electricity rates are higher.

"We're on the verge of moving away from the early adopters," said Ron Richmond, a HECO photovoltaic expert.

Last year developer Actus Lend Lease began building almost 3,000 military homes on O'ahu that will incorporate photovoltaic roofs into their designs. The developer says it will be the largest solar-powered residential community in the world when finished, generating 7 megawatts of energy for the U.S. Army's grid.

Richmond said he's had informal talks with another major Honolulu home developer about building homes incorporating photovoltaic systems, and that the number of homeowners installing systems appears to be more than double last year's total. In the future, it may be that homes with photovoltaics command a premium, Richmond said.

PHOTOVOLTAIC HOTBED

He estimates greater activity on the Neighbor Islands, which are a hotbed because of higher electricity rates and more homes farther from the grid. The Big Island, he said, probably has more than 5,000 homes with photovoltaic systems hooked into storage batteries because they aren't tied into Hawaii Electric Light Co.'s power lines.

Richmond said he is aware of at least 559 kilowatts of photovoltaic generating capacity on O'ahu, Maui and the Big Island that are planned or pending installations. Those are systems that tie into power lines and receive a credit for power they provide to HECO against what they draw from the utility.

"It's getting much closer with all the incentives," said Richmond. "I just see this trend increasing."

Hawaiian Electric may also install its own system, even though it doesn't qualify for the tax credits as a utility. Rosegg said the company has been exploring projects and expects to announce something soon.

Christ said he's seen a 40- to 50-percent increase in photovoltaic orders since the state's tax credit of 35 percent up to $5,000 of a system's cost went into effect in July. Besides making systems more attractive to homeowners, the credit, which has no legislative sunset date, is spurring more solar and electrical contractors to get into the business.

Mangelsdorf said his sales began rising about a year ago, and this year his sales will more than double as he installs residential and commercial systems.

The huge up-front costs for photovoltaic will probably keep it from growing as rapidly as solar water-heater systems, which can cost less than $1,500 after tax credits and can pay for themselves in less than three years. Lately prices for photovoltaic cells have risen because of worldwide demand for them.

Some experts predict photo-voltaic cells will become more efficient, and prices will decline from their current level. As prices of installed systems fall, the number of homes with systems will rise.

But for Sarah Preble, the time is now.

"For people who live in the tropics, it is irresponsible not to maximize whatever the sun can do for us," she said.

NEIGHBOR ISLE ADVANTAGE

Photovoltaic installations are receiving a jolt statewide because of new state and federal tax credits. Besides bringing down costs, the credits lower the amount of time it takes for systems to pay for themselves.

Marco Mangelsdorf, president of Hilo-based ProVision Technologies Inc., said Neighbor Island projects pay off faster because their electricity rates are higher. Here's a breakdown of costs for a Big Island residential project. It assumes electricity rates will increase 4 percent a year.

Businesses are starting to examine photovoltaic systems in greater numbers because they can pay for themselves in as little as three years.

New tax credits combined with depreciation rates applying to business equipment means companies may only have to pay for 16 percent of the cost, according to Ron Richmond, a Hawaiian Electric Co. photovoltaic expert.

"I think that's where we're going to see significant activity," Richmond said.

A Hawai'i Kai self-storage facility just installed a 45-kilowatt system. Hilo's ProVision Technologies Inc. has done installations for car dealerships in Lihu'e, Kona and Hilo this year along with a Kahului-based linen supply company and a grocery store in Pahoa. The ProVision installations total 185 kilowatts.

The payback period will depend on location because of different electricity rates on each island and whether the business finances the installation.

"They're able to essentially get a hedge on the likelihood of higher electricity costs over time and take advantage of the newly enacted tax credits," said ProVision President Marco Mangelsdorf. "We will do a record year here."

Reach Greg Wiles at gwiles@honoluluadvertiser.com.