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Tim Klco practically salivated when he first saw the large, south-facing expanse of roof on our modest house. Whipping out his tape measure, he made a bunch of measurements, had a look at the wiring in the attic and the garage, and then sat down to give us the news. “You guys have the perfect exposure for a photovoltaic array,” said Klco, of Peak Solar Designs in Salida, Colorado. “You can easily generate all the electricity you need year-round, and the incentives from the power company will make the system affordable.”

Enough solar energy reaches the earth’s surface every minute to meet the world’s energy demands for a year, according to the U.S. Department of Energy. Until recently, though, the technology for harvesting that energy—photovoltaic panels (also known as modules), inverters, and battery storage—was too expensive for homeowners like my husband, Richard, and me. Now a combination of falling prices due to economies of scale in manufacturing, utility subsidies, leasing programs, and tax benefits have brought it within reach. The Solar Energy Industries Association reports that residential photovoltaic systems with a combined capacity of some 264 megawatts of electricity at peak (about equivalent to the output of a small coal-fired generating plant) were installed in 2010. That’s a 59 percent increase from 2009, when homeowners installed 157 megawatts, and 220 percent more than the 58 megawatts installed in 2007, before the recession.

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I prepared for our decision by reading up on how photovoltaic systems generate electricity. It’s pretty simple: The panels contain a layer of semiconductor material—usually silicon crystals—that sheds electrons when bombarded by the energy in sunlight.

Once loose from their atoms, those electrons flow in an orderly fashion into the wires connected to the panels, at which point they’re called electricity. This lovely green power is direct current. Therefore it can’t make your Cuisinart hum until an inverter—a large purring box mounted next to your breaker panel—makes it into alternating current. When Klco came back with a proposed configuration, we considered the options, and crunched the numbers, including the generous rebates offered by our local electric utility. Then we decided to increase the size of the system to also power Richard’s detached sculpture studio.

The total cost of this larger photovoltaic system to power our 2,400-square-foot house/guest cottage and his 1,660-square-foot studio came to about $39,000, including a connection to the existing power grid. Our electric utility would rebate some $24,000, meaning our out-of-pocket cost would be roughly $15,000—still a hefty chunk of money. But we could use the federal tax credit to help repay that, and we’d continue to benefit in coming years with savings on our electric bills—how quickly that payoff would come would depend on the future price of electricity, which is not going down.

Many utilities are also offering substantive rebates, says Pam Newell, Solar Rewards program manager for the Colorado program of Xcel Energy, an electricity supplier to the Midwest and western states. Still, those rebates won’t last, as more and more photovoltaic systems come on line and utilities meet their quotas for generating green power.

There are also tax incentives. More than half of U.S. states offer some sort of incentive, says Jim Welch, CEO of Bella Energy and former president of the Colorado Solar Energy Industry Association. Plus there’s the Federal Investment Tax Credit, which currently provides a 30 percent credit for the installation of solar energy systems. (State incentives fluctuate with state budgets and the political climate. See “Hot Tips,” right.)

Within the next few years, Welch says, solar-generated electricity will be cost-competitive with the conventional kind in places where rates are high. “It’s already competitive in places like Hawaii, and close in California,” he notes.

Once we signed a contract, Klco began the paperwork for the utility’s incentive program. Several weeks later we ran into him on the street in our small downtown and found out he’d gotten our rebate confirmed just hours before the utility drastically reduced the incentive rates—our application had barely made it under the wire.

By the time our rebate application was confirmed, though, it was too late to install�� our system before winter. Klco promised that they would make time for us first thing the following spring, and that the installation wouldn’t be too disruptive for Richard and me while we were working at home. “You’ll hardly know we’re here except when we’re putting in the racks that hold the modules on the roof,” he said. “And then you’ll just hear some drilling noise overhead.”

Sure enough, one day the following March, a truck appeared to deliver the 24 shiny black modules and the lengths of aluminum racking, plus the inverter and the other parts of our rooftop power plant. The next week Klco and his head installer, Edric Graf, hauled in ladders and tools and set to work putting the lightweight aluminum channels on the roof.

I headed outside, and there was Graf balancing on the slender aluminum racks now protruding from our steep metal roof, doing what looked like aerial ballet—or advanced rock climbing—as he wrestled a 40-pound module into position. Two days later the modules were all in place.

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On a windy April afternoon just a few days before Earth Day, the power company flipped the switch to connect our “plant” to the grid, and our indoor wireless monitor began tracking electricity production. By the end of its first full month in operation, our system had produced more than 800 kilowatt-hours of electricity, about twice what we used in that period, according to our meter. Unlike the installation, our solar electric system works silently, except for maybe the occasional “creak” when the modules and their racks expand or contract in changing temperatures. It also works without emitting carbon dioxide, sulfur, mercury, or other pollutants into the atmosphere.

The electricity our panels produce flows into the existing power grid through a net meter, which is counterintuitive: The meter advances when we use more than we create and reverses when we make more than we use, resulting in “net” electricity production. If we had an off-grid system, the excess power would be stored in banks of batteries. Because our photovoltaic system generates electricity only when the sun is out, there’s a need for either a connection to the existing grid or battery storage for nighttime and cloudy days.

The industry got its start with off-grid applications, says Bella Energy’s Welch, who began with vacation cabins and ski huts back in the early 1980s. But he says systems like mine, called grid-tie, are far more popular today, mostly because they don’t use batteries, which can boost the dollar cost of the system by as much as a quarter.

Batteries also increase the environmental cost: They contain lead and other heavy metals, and they must be replaced every 10 years or so. Welch points out that the photovoltaic modules, on the other hand, pay back the energy inputs of manufacturing in only about two years of electricity production. And the modules last for decades. “We have systems we put on roofs 30 years ago,” he says, “and they’re still working today.”

“We think grid-tie is the way to ‘green’ the existing power grid,” says solar pioneer Leigh Seddon, vice president for engineering at Alteris Renewables, the largest solar electric system installer in the Northeast, “to reduce reliance on nuclear and fossil-fuel power plants.” Off-grid systems, he says, make the most sense in remote locations, where the cost of getting electricity to the site can soar to as much as $75,000 a mile.

What if you don’t live in a sunny climate? Even in Vermont, which, according to Seddon, is the second-cloudiest state in the nation (only Washington State has more overcast days), the average south-facing roof receives 100,000 kilowatt-hours of energy in a year. “If you tap that at 15 percent efficiency, the average for photovoltaic modules,” he says, “you end up with 15,000 kilowatt-hours per year, or nearly twice what the average Vermont family uses.” (Washington State isn’t out of the photovoltaic picture entirely; the sunny climate east of the Cascade Mountains is ideal for generating solar electricity, and even western Washington, where the rain falls and most of the state’s people live, has potential.)

If you have sticker shock but still want long-term financial and environmental benefits, look for a lease-purchase program. For a small down payment, you lease a system from a company that contracts for installation and maintenance. “You save money almost from the first month,” says Seddon, “and it removes the risk of finding a good installer.” In most cases, you have the option to buy the system at a lower price over time; the leasing company takes the tax credits and depreciation.

“This is the biggest revolution in the residential portion of the industry,” Seddon says, noting that this year residential sales are on track to increase because of leasing systems and higher electricity costs. Another trend to watch, he says, is that towns and public utility districts are beginning to offer low-cost loans for energy improvements like photovoltaic systems.

For less than $6,000 you can simply consider heating about two-thirds of your household water with a solar hot water system (also known as solar thermal). Solar thermal systems absorb the sun’s heat energy to use directly for heating water, and they are about 40 percent efficient, says Seddon. What’s more, they can attach to your existing hot-water heater tank, which, depending on the water heater’s size and your consumption, can account for as much as 20 percent of your power bill.

Cheaper “thin film” technology, made from microlayers of silicon, holds promise for lowering the price of overall photovoltaic systems even further, says Welch, and can be used in products like roof shingles and paint. But they are only half to two-thirds as efficient as current technology at converting the sun’s energy into electricity, and thus require one and a half to two times as much space to produce the same amount of electricity.

Richard and I invested in generating our power from the sun because it made financial sense and it aligns with our environmental values. What we weren’t expecting was for our investment to come with a membership in a fraternity of green gearheads. As soon as the panels went up on our roof, strangers knocked at the door to ask how we liked our system and to share tips from theirs. We felt like Harley riders acknowledging one another with a secret hand wave as they roar down the highway.

We also didn’t realize how good it would feel to tally the amount of CO2 we’ve prevented from entering the atmosphere (171 tons in just two years—the equivalent of taking 31 cars off the road). We watch the wireless monitor in the living room that shows our current power output and daily total the way some people keep an eye on CNN, and when we’re away from home we check the website to see our numbers.

“People get really excited,” says Welch. “All of a sudden, they’re watching how many kilowatt-hours they’re producing and comparing it to their usage. It’s like a challenge. That’s the empowering part,” he adds, laughing at his own pun. “It’s not a status symbol, it’s a statement of living what you preach.”