The high cost of building permits to install a solar photovoltaic (PV) system that can generate all of a home's electrical needs, is turning off home owners to perhaps the brightest idea in renewable, clean energy.

Roof-top photovoltaic technology has become more efficient as costs have dropped to less than half what they were 10 years ago. During the same period, federal and state rebates and tax incentives have grown to help make sun power even more affordable.

California gets more sunshine days than any other state except Arizona, according to the National Weather Service, but some Northern California cities are blocking home owners from the rays of solar energy by making the relatively easy-to-install home improvement more expensive with high permit fees.

"If you are in a city where permit costs are high, it is an impediment. You have to consider that (permit fee) as part of the cost," said Tom McCalmont, chief engineer at REGrid Power in San Jose, CA.

A survey by the Sierra Club-Loma Prieta Chapter examined the PV system permit fees for 40 cities in San Benito, San Mateo and Santa Clara County (Silicon Valley) and found costs ranging from $50 in Portola Valley to $1,620 in Millbrae.

The findings come at a time when home heating and related power costs are soaring.

Fortunately, pressure generated by the local media and the survey caused three cities to lower or plan to lower their permit fees -- Los Altos from $340 to zero; San Mateo city from $1,224 to $300 and Morgan Hill from $1,188 to $397.

Just about half the towns surveyed charge solar permit fees higher than the three-county area's average $652 per permit, half charge less. Two of the eight towns that charged more than $1,000 have since dropped their rates substantially.

"Recent federal and state incentives, such as the Federal Energy Policy Act of 2005 and California's Emerging Renewables Program, are credited with making photovoltaic (PV) energy systems affordable to more middle-income homeowners. It is less well known that PV permit fees at the local level can also make a critical difference," according to the Sierra Club's Solar Electric Permit Fees In Silicon Valley.

Permits are required for most home improvements to cover the cost of building inspectors giving the work the once over to make sure it adheres to building codes that provide engineering and safety standards.

"Some cities charge permit fees at amounts beyond the cost to inspect the design and installation. Solar contractors include this fee in the installation cost they charge homeowners," the report said.

The report examined the permit costs to have a licensed solar contractor install a $27,000 flush-mounted, roof-top, 320-square-foot PV system designed to generate 3kW(3 kilowatts).

That's enough power for all the electrical needs of a single family home of up to 2,500 square feet, according to McCalmont.

"It nets out to a zero (grid-supplied energy requirement). You run positive in the summer as the meter runs backward and negative in the winter (when there's less sun), but it nets out to zero," said McCalmont.

Home owners' balking at the cost of a permit puts a damper on incentives created by federal and state programs to help generate demand for PV and other renewable power systems. Demand helps lower true market costs.

Along with tax credits to home owners and builders for energy efficient design, retrofits and appliances, the new "Energy Policy Act of 2005 (EPACT)", effective in 2006, allows homeowners who install solar energy systems to claim a tax credit of up to $2,000 for qualifying solar systems and other alternative energy sources. The federal tax credit, which reduces the amount of tax owed, replaces or adds to those available in California and other states.

California and some other states and jurisdictions also offer rebate deals that help pay for the cost of alternative energy systems.

California's Emerging Renewables Program, for example, offers incentives and rebates that amount to nearly 33 percent of the cost of the 3kW system used in the Sierra Club's permit cost survey. The rebates are higher for affordable housing developments.

The California program and others also offer financing assistance.

Still more incentives are available from so-called "energy-efficient mortgages" or EEMs which help buyers qualify for a larger home, or a home for which they might not otherwise qualify, based on money saved on the utility bill due to energy-efficient improvements or a home's existing energy-efficient features.

Also, while some experts say energy efficient improvements increase the value of a home, they don't always also increase property taxes as conventional home improvements can.

"Another incentive is subtle but important. The state (California) doesn't assess property taxes on solar systems and that's been extended to 2009. It (a PV system add-on) doesn't increase the basis," said McCalmont.

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