THE FUTURE, AS SEEN FROM the rise at Bay Point heading into suburban Pittsburg, California, appears to have arrived early. Sleek trains beckon car-bound commuters. In the distance, scores of large wind turbines spin lazily in the Sacramento River delta. And on the roof of Jonathan Peacock's large new tract home, solar panels bloom.

With summer coming on, that bloom is not a moment too soon. Peacock, a 32-year-old computer technician, lives with his wife, Shannon, two roommates, and two dogs. They have two refrigerators, a freezer, a wine fridge, lots of computers, an enormous television, and air-conditioning. "It's the AC that kills me," he says. Last summer, with daytime temperatures spiking, Peacock paid a $460 electric bill; his average is $250. But once his 32 solar panels get wired into the grid, he'll pay $160 monthly to lease his panels and next to nothing to his utility. And installing the panels didn't cost him a penny up front.

"I do want to cut down on my footprint on the planet," Peacock says, "but I won't do that at a major expense to myself. This saves me money, so it accomplishes two goals. It's wonderful."

Until recently, home solar power has been sustained by well-heeled (or self-sacrificing) early adopters who were willing to lay out $15,000 to $50,000 for a rooftop array. In 1999, according to John Farrell, a senior researcher with the Institute for Local Self-Reliance in Minneapolis, only about 500 California homes had rooftop solar. Today, more than 50,000 do. What changed? Statewide programs like the California Solar Initiative and Million Solar Roofs provided crucial rebates and incentives. And the new field of solar leasing opened the door to nearly everyone—even those in less-proactive states. "It really is a great way to expand the market for solar to people who have the inclination but don't have the money up front," Farrell says.

It works like this: Homeowners sign on with one of the many solar leasing companies springing up across the country. The company installs an appropriately sized array on its own dime, which the homeowner then leases for (typically) 15 years. The leasing firm reaps any available tax benefits and rebates (federal tax credits alone are good for 30 percent of the installation cost) and collects payments from the homeowner. Some payments increase incrementally each year, but remain generally lower than what the local utility would charge for its dirty energy. (Remember: More than half of the nation's electricity is still produced by burning coal.) At the end of the lease, the homeowner can either extend it, purchase the system outright, or ask the company to remove the panels at no charge.

"This isn't your father's solar company," says Danny Kennedy, a former campaign manager for Greenpeace Australia Pacific. In 2007 he founded Sungevity, a solar-leasing company that runs operations in eight states out of its bustling waterfront headquarters in Oakland, California. "We're a low-overhead, highly scalable model," boasts Kennedy, whose company has raised more than $27 million in venture capital in the past few years. Other solar-leasing companies are also expanding rapidly—SunRun, for example, another California-based solar-leasing firm, pulled in $55 million from investors last year, and this June Google plunked down $280 million to help SolarCity finance rooftop installations. Since 2008, Sungevity has installed 1,500 rooftop systems. "Solar is not tomorrow's energy; it's today's," Kennedy says. "We're going to displace coal."

Initially, Peacock thought that it all sounded too good to be true. So he and his accountant-trained wife sat down with their calculators. "We crunched the numbers every which way we possibly could," he says—even factoring out last year's sky-high AC bills. "I was so skeptical. At some point in time, I figured, this is going to cost me. But it adds up."

The economics of solar leasing favor homeowners, like Peacock, who use large amounts of electricity. (California's relatively high energy prices also make solar more competitive.) But you don't need two refrigerators and a flat-screen to play. Dan Rademacher lives only 30 miles away from Peacock in a century-old wood-frame house in cool, leafy North Oakland. His house is half the size of Peacock's, doesn't have (or need) AC, and has a kitchen full of Energy Star appliances and LED lights. "We tried to get all the low-hanging fruit," Rademacher says. Still, when he learned he could save 18 tons of carbon dioxide over 10 years, he decided to go solar. Sungevity gave him a bid based on aerial photographs of his property, recommending its smallest system. Rademacher signed on, even though it will cost him about $30 a month more than his current utility bill. "So I go out one less time per month," he says. "It's a trivial expense."

Rademacher's attitude, however laudable, is the exception. "For the most part," says energy expert Farrell, "people don't install solar just because they like the idea of clean electricity. They do it because they can make money."

THE PRIMARY WAY PEOPLE IN THIS COUNTRY currently make money from rooftop solar power is through the 30 percent federal tax credit. But commercial operators can also take advantage of a 20 percent depreciation allowance (generally not available to homeowners). "Our policy is favoring Big Solar—or Big Anything, really—at the expense of the small stuff," Farrell says. That's how companies like Sungevity and SunRun can thrive. Their ability to fully exploit government incentives (while making solar power affordable to their customers) makes them an attractive investment.

Our present system came about, Farrell explains, not because it's the most efficient incentive, but because it's politically easy for Congress to cut people's taxes. Rather than pursue policies to encourage the widest possible adoption of rooftop solar (a must if climate chaos is to be avoided), we're basically waiting for declining prices for solar panels to intersect with rising prices for fossil fuels, at which point sun power will be competitive on its own.

The basic system at present is what's called "net metering." That is, when the sun is shining, Peacock's and Rademacher's electric meters run backward. Sounds cool, but even if they produce more energy than they use, Pacific Gas & Electric Company isn't going to pay them for it. Any extra power produced is a freebie for the utility—and a valuable one at that, given that it's generated at midday, when demand is highest. "It's a hidden cost of our policy in the United States," Farrell notes. "We look at it from an individual level, so people optimize their system for their own consumption. The Germans, on the other hand, build as much solar as will fit on their roofs, knowing that they'll get a good return on their investment and at the same time make solar cheaper for everyone." [CORRECTION: As of January 1, 2011, California law began requiring utilities to compensate customers who produce more energy than they consume.]

Despite having worse solar resources ("insolation" is the technical term) than Maine or Seattle, Germany produces half of the world's solar energy, and at the world's cheapest price. The Teutonic secret is what they call stromeinspeisungsgesetz, or feed-in tariff, "a wildly successful but terribly named policy," sighs Farrell. What it means is that your utility agrees to buy electricity from you on a long-term basis at a price that guarantees you a decent return on investment. The German rate of 6 to 8 percent has meant that millions of people there use it as an alternative to savings accounts. The resulting efficiencies of scale drive down costs; while the price for installed residential solar in the United States hovers around $5 per watt, the price in Germany is closer to $3.40.

Some states, including California and Vermont, are experimenting with limited programs to let homeowners sell their rooftop power to local utilities, but it's unclear whether that model will take root. (The utilities are not wild about diminishing their own sales and revenue.) Meanwhile, an option for putting excess solar capacity to good use is available in showrooms now: the electric car. Plug-in vehicles take 1.5 to 3 kilowatts to charge, easily achievable by rooftop systems. The economics are enticing: Powering a vehicle with sunlight costs about a quarter as much as filling it up with gas (not factoring in the higher cost of the vehicle or the panels). It's good for the wider grid too: Rooftop-solar owners pump extra juice into the grid during the day, when the wattage is most needed, and recharge their cars at night, when power companies have plenty of excess capacity.

That would seem to be an ideal option for someone like Rademacher, whose current electric needs are too paltry to make his panels pay. Ideal, except for one thing: "I thought about getting an electric car," he says, "but I'd rather ride my bike."