Last week, I talked about how we got a free dinner for a home solar consultation. Today, I’ll talk about what actually happened with the consult.
Our home assessment
The rep was about 2 hours late, but that was due to a coworker’s family emergency. When he showed up, he checked the direction our house was facing – you want to be facing South ideally; if not, S to SW. Luckily our roof was facing directly at 180 degrees. He then used Google Earth to get a satellite photo of our roof (ingenious.) Again, luckily our back roof was all surface; there wasn’t a fan vent, chimney, or anything like that. The rep then climbed into the attic and measured the pitch of the roof. Ideally you want a 20 degree pitch; ours turned out to be 39 degrees. Taking all of that into consideration (no tree cover either,) we were actually a great candidate for solar panels.
Insulation upsell
While he was in our attic, he measured the amount of insulation in our attic. I told him the house was only 3 years old, and so we didn’t need to be upsold on extra insulation or insulation wrap. We then proceeded to the kitchen to talk business. He pulled out a binder of some of the solar panel installations. However, 75% of the binder was of attic insulation. It was clear their margins were in the insulation upsell. He mentioned that he’d have to give me the insulation wrap for free since we’d never recoup our cost for it.
Electricity Usage
I showed the rep our electricity bill. We learned that we used 700 kilowatts last month. Our utility, Puget Sound Energy, charges 9c per kilowatt up to 600 kilowatts. They then charge 12c per kilowatt after that. I know some states charge X during the day and dirt cheap rates at night, but that’s not how it’s done here. I think it makes more sense to move to that pricing model (especially if you charge an electric car at night.)
16 or 20 panels?
Due to the surface area of our roof, we could either choose 16 panels or 20 panels. The more panels, the more expensive the upfront cost, but you’ll also produce more power. Each panel produces 275 watts; thus 16 panels = 4.4 kW. The 20 panels would produce 5.5 kW.
PVWatts Calculator
If you want to know how much energy your solar panels will product in your area, you can visit this govt site – http://pvwatts.nrel.gov/. The site tracks how much sun your area would produce. Here is what we put in and the results:
This means per year, our 16 panel (4.4 kW) system would generate 5,000 kW per year. We would sell that back to the utility company for 5,000 * .43 = $2000 per year. We would also save 5000 * .09 = $450 since we wouldn’t pay for that usage (this is a specific to Washington state.)
The full math on 16 panels
- Production per year – 5,019 kW
- Buy price – $0.42
- Total annual rebate – $2,108
- Usage savings price – $.09
- Total annual usage savings – $452
- Total annual savings – $2,560
- 4 year total – $10,239 (too lazy to do present value of money calculation)
The cost of the panels were about $1,100 each, so that meant $17,600 out of pocket. One time federal 30% tax credit of $5,280. Thus the full 4 year math is then $17,600 – $5,280 – $10,239 = $2,081. That means I’d be paying about $2K for the solar panels after 4 years. Then from year 5 on (assuming the utility company won’t buy from us anymore,) I’d save $450 per year. That then means I’d break even at around 4.6 years for a total breakeven point at 8.6 years.
Conclusion
At first, we seriously were thinking of doing that, but after thinking about it some more, due to not knowing what the utility will buy back in years 2-4, if they dropped it by half, that meant our breakeven point would be extended 6+ more years. Thus, we decided to pass. Sure, some will say our home equity will increase, but in today’s seller’s market, I don’t think people will pay that much of a premium for a solar panel house.
You said that your last bill was 700kWh, that is just a snapshot. The average monthly usage is WA is 1,037kWh which further speeds up the payback. If you have multiple years of data, you can more accurately project your actual average monthly usage.
The utility incentive from the State seems to have caps by utility, that throws a monkey wrench as well.
Net metering means the meter counts what you use and subtracts what you produce. That is what you will get billed for, but apparently you can only earn credits for overproduction and these disappear once a year if unused. In your case, it won’t matter, but for larger installations it might. In Maryland, we get an annual check for unused credits. The utility incentive comes through SREC at about 10 cents per kWh with property tax credit and $1,000 check from the state.
My system is projected to pay back is roughly 8 years here in Maryland and we are delighted with that. Not many investments with a return that high out there!
I did look at my annual usage; however, we had a Nissan Leaf for the past 2 years, so that screws up the numbers. Our house is already new and so that’s why we’re using less than the average WA home. To us, the unpredictable utility payback wasn’t worth the risk.
I assume the $.43/KWH is some sort of program where the utility must generate so much renewable energy and they pay you to do it ? Your $.09 usage savings is wrong though isn’t it ? If you are using an amount over 600KWH shouldn’t the solar cause it to net meter such that your final bill gets under the 600KWH ceiling, and thus the first 100KWH/mo are actually a usage savings of $.12/KWH ? Thats another $36/year. Still agreed your payback is heavily dependent on the utility payments for renewable energy or whatever.
there’s no way he’s gonna get the $.43 AND $.09 (or $.12) for the same kWh. in fact, i’d guess even the $.43 is suspect and unsustainable. without a contractual guarantee of that payment i wouldn’t factor it into the calcs.
Apparently some kind of incentive, not related to the actual net metering. http://solarwa.org/current-incentives How exactly their proposal gets to $.43 I am not sure, it seems to mean that some of the equipment must be made in WA state ? I am more familiar with SREC which are in some east coast states that are market priced, but are also in addition to the power cost reduction. (http://www.dcsun.org/srecs/)
Billy, I do actually sell at $.43 AND save at $.09; they call it net metering. Since we have no state income tax, the state is giving the money to the utility company to give to consumers. The state will stop this in at least 4 years, until we get 1% of people on renewable energy. The state is in a deficit as is already, so I don’t see it going past 4 years. Plus all the people here are pro-green, so I’m sure we’ll be over 1% in 4 years.
TJ, since I only use 700Kwh a month, I’m paying $.09 for the first 600 and paying $.12 for the 100. I would be producing about 400 a month and so I’d be saving something blended like $.095 or so since I’m barely reaching into the $.12 tier. Like you said, it’s a very small number in the grand scheme of things.
9ct per kWh? In Germany ist 30ct!
This is why Germany is the #1 solar user in the world right now.
hang on, a couple things don’t add up.
1. (and most important) Why would the utility pay you $.43 per kWh for something they can sell for $.09? I get that there can be all sorts of subsidies and nonsense going on here, but that just seems outrageous. I don’t think it could persist.
2. How can you sell the 5,000 kwh back to the utility, AND save $.09 per kWh by not paying them for it? The energy doesn’t get used twice. Either you’re saving $.09 because you’re not buying from the utility, or you’re making something by selling it. The same kWh doesn’t go both places.
Thanks for posting the info. I’ve looked into this before. It’s interesting.
1. State incentive that won’t last.
2. It’s called net metering and it is indeed a fact. This will vary by state
I was considering solar, but instead I bought a new refrigerator, replaced 1 of 2 HVAC’s, and re-did the ducting and insulation in both HVAC zones. My energy bill went from $400-$600 to $100-$200. Now, if I wanted to get solar, it wouldn’t make any sense since there isn’t that much to save. I’m sure I could continue to do home upgrades that will continue to increase the value of the house (i.e. windows, doors, install a couple of NESTs, more energy efficient appliances and lights, etc.), whereas solar depends on a few assumptions that I can’t wrap my head around – 1) Will the company that you lease or buy from be in business (a big “if”), 2) what will the local utility charge for the privilege of being on the grid? In California, the utilities are trying to screw the solar industry since the utilities are hemorrhaging money, 3) will the solar panels break your roof? My understanding is that the warranty extends a few inches from every post installed, and 4) will there be a major breakthrough in solar panel technology or a major cost decrease in a year or so? If so, you’re stuck with your panels for a long time. Due to rebates and HERO financing, my total out of pocket was only a few thousand…
The panels are installed on a rack mount system, which has 4-6 bolts into your roof. The company should warranty both the panels, rack, and your wife if the damage was caused by the shoddy installation. Like you, there were too many unknowns for me to invest in.
$1,100 per panel?!?! Is that an installed price including all wiring, inverters, etc? You can buy a 260w panel for $275 and a 310w panel for $310. Or there’s always something temporary like Legion Solar on KickStarter. The company backing it has been developing car electronics for a while now, and they are always the first to innovate.
https://www.kickstarter.com/projects/plxdevices/legion-solar-a-better-way-to-energy-independence
We’re in CO which is nearly perfect for solar, but we rent a townhouse so that’s out. It would be nice to generate some power instead of the sun heating up the house. The sun is intense here, upstairs is regularly 10-15 degrees warmer than downstairs. Crappy insulation and no window tint kills this place.
Yeah, $1100 per panel installed. I didn’t know you could buy your own panels and install yourself; that’s a bit too much DYI for me.
Oh yeah, there’s big market in doing solar DIY. There are tons of companies in Phoenix and around AZ that sell panels and equipment direct to customers. I’d love to have a battery backup system in place too, but batteries are where the big money is spent after expensive, efficient panels. Qualify inverters and charge controllers can get really pricey too.
I wonder how much of a PIA it would be if you needed to re-shingle your roof with them on there too. You would need a newer roof in order to do this imo…which you have with a 3 year old house. So that could be an added cost for someone that has a roof 10-15 years old.
Most of these companies also work on roofs as well, so if you have an old roof, they can install a new one while installing the new solar panels.
Another upsell! Seems like the technology is still a little too expensive for me. Needs to have a 2-3 year payoff to interest me.
Agreed. 8 years was too long for me.