Escalating energy costs are driving the development of new solar technologies, and the Vista Montana apartment complex in Watsonville, Calif., is testing just how far the sun will go.

The $16.8 million, 132-unit project by Palo Alto, Calif.-based Clarum Homes features the largest array of solar panels on a multifamily project in the U.S.

Situated about 20 miles south of Silicon Valley, Vista Montana boasts a new style of solar technology that is incorporated into the structure, rather than the traditional method of being attached on top of the roof's surface. The panels actually serve as roofing material and are a seamless part of the structure.

According to Clarum, the panels will help power all common areas, including the community center, gym, kitchen, computer lab, and all parking lot lighting.

The $400,000 building-integrated solar roof tiles help reduce electricity costs by 40%, says Dave Nyberg, builder and sales manager of GE Energy in San Jose, Calif., who helped install the system for Vista Montana.

Light passes through the solar tiles on the roof and creates energy to produce heat, light, ventilation and surplus power that is exported back to a power grid for later use. “The apartment complex is designed to offset the price of oil, and the cost of electricity is tied to that,” explains Nyberg. “It's financially and environmentally sound for developers to look at this technology to create value for real estate,” he adds. “A typical commercial system will pay for itself in five to eight years.”

Clarum's goal is to reduce energy costs by 70% and increase on-site power generation by 30% by 2020. While these goals are ambitious and may be on the forefront of an emerging trend, the multifamily industry has been slow to adopt solar technology.

Nationwide, less than 2% of all power production is derived from solar energy, according to the Energy Information Administration. “There's been interest in the multifamily market, but no business,” says David Lee, the residential branch manager of Energy Star, a government-backed program to improve energy efficiency.

Lee says residential projects make up only 10% of their market, but that Energy Star plans to target the multifamily industry soon with a variety of energy efficiency programs, due to the industry's rising need for power savings and an apartment complex's natural use of roof space to fit more solar panels.

Lee explains that the return on investment for solar panels has been historically lackluster, and only in the last several years have the prices and energy production efficiency improved to make the photovoltaic systems more productive.

“We're helping to redefine affordability as we know it in apartment living,” says Ronnie Thielen, executive vice president of Related Capital Co., one of the Vista Montana project's lendors. By “conserving energy and paying less in energy costs,” she says their goals are being realized.

Trying to be at the forefront of an emerging trend, Related Capital is financing another multifamily unit called Hovley Gardens near Palm Springs, Calif. The $23.3 million, 163-unit complex will use fuel cell technology to harness the chemical energy of hydrogen.

According to Thielen, solar power and other energy efficiency technologies can now ensure energy production that is environmentally sound and financially advantageous for multifamily units.