Last summer, when the cost of electricity in Hawai'i went through the roof, Andy Keith had to smile at what was happening on the top of his Kahalu'u home. That's where his residential solar farm — 60 photovoltaic panels facing due south — quietly paid much of his electric bill every time the sun was up.

Keith's system, part of a growing trend of home-grown power production spreading across Hawai'i, is wired into the Hawaiian Electric Co. grid. It generates enough electricity to cut his monthly bill to about $20.

A senior environmental scientist for HECO, Keith, 49, began installing his system in 1995. He did the work himself, and the job took six years. There were only five systems wired into grids statewide when he first flipped the switch in 2001. Today, photovoltaic systems are working on the roofs of more than 800 residential and commercial locations.

"When I first put it up, my neighbors had opinions," Keith said. "They thought I was crazy or that this is cool stuff. Very few people understood what it was all about. Now very few people think I am crazy."

RISING INTEREST

Although fuel costs have dropped since last summer — the cost of electricity on O'ahu peaked in September — the demand for photovoltaic systems has grown steadily, according to HECO and the Hawaii Solar Energy Association.

Nearly 500 residential and commercial customers installed solar systems statewide last year, said HECO spokesman Peter Rosegg. The number of systems put in place in the last 18 months is greater than in the previous seven years combined, he said.

But most are on commercial rooftops. Fewer than 1 percent of residential customers have turned to photovoltaic systems, largely because of cost, said Mark Duda, president of the Hawaii Solar Energy Association.

"The reality of this market is that the demand is substantial," Duda said. "The constraint is the up-front cost. What is missing is a way to finance the up-front cost. I think that will be coming sometime this year."

Consumers looking to PV, as industry insiders refer to their technology, have never had a better time. The number of companies promoting PV has grown "exponentially" since last summer, and competition has helped drop prices, said Cully Judd, owner of Inter-Island Solar Supply, which supplies equipment for installers.

"A residential PV system that may have cost $50,000 is now about $35,000, and there is a bunch of icing on the cake, too," said Judd, who is also a customer service rep at the company.

By icing, Judd means tax credits. Recent revisions to state and federal tax credits can bring the cost down to about $20,000. Consumers can apply a 30 percent federal tax credit without any limit on the system's cost, and a 35 percent state tax credit that can only be applied to $5,000 of the system's cost.

TO 'GET US OFF OIL'

Photovoltaic systems could be key to reducing the state's dependency on oil. The statewide average cost of electricity is almost three times the national average because local utilities rely on oil. When rates peaked last year, the average O'ahu customer's monthly bill was $202.13.

"It's a great and absolute necessary thing that has to happen to get us off oil," Judd said. "It's one of the few things a homeowner can do."

However, Judd and other solar industry experts stress that consumers must first install solar water-heating systems and then look for ways to reduce their consumption through energy-saving appliances and lightbulbs.

Only after that should they consider a PV system.

"It's clear that oil isn't the answer," said Keith Cronin, a solar technology consultant and an electrician. "I think it's home-grown energy. We can farm our own roofs."

Jeff Mikulina, executive director of Blue Planet Foundation, said loan packages need to be created that allow consumers to "pay as you save."

In Berkeley, Calif., the city handles the loan and the homeowner pays it back through property taxes, Mikulina said. But the loan could also be handled through the homeowner's monthly electric bill, he said.

"Unlike any other purchases, this pays for itself," Mikulina said. "We know it, as sure as the sun rises every day. Why can't we find a way to make it cost nothing and you pay for it over time?"

Over in Kahalu'u, Andy Keith figures his system is finally starting to break even. But he never viewed this as an investment. He was just fascinated by the technology, which has no moving parts, makes no noise and produces no emissions.

"For me, it's pretty magical stuff," Keith said. "It requires virtually no maintenance. It is very simple to operate. There is pretty much nothing to do unless you live in a dusty area, and then you have to wash it off. It's a piece of cake. You just connect it, and away you go."

Keith makes more electricity each year than he uses. But through an arrangement called "net metering," he can bank the excess and use it to pay for the electricity he needs at night and at the times of the year when sunny days are less common.

HECO comes out ahead, but Keith believes the patient homeowner will be rewarded by a single fact: "You could effectively have an electric bill that is fixed for life," he said.