Using fewer fossil fuels is a goal that is increasingly popular. And it certainly helps if it is a financial benefit as well.
We have mostly weaned ourselves off of oil for transportation – We have an EV that is fueled largely from hydroelectric and other renewable sources. Our electric cargo bike has reduced car mileage even further.
Next up is optimization of our home. We now have some shiny new solar panels on our roof.
Going Solar
In December 2021 our new solar system was connected to the grid. It consists of twenty 380 Watt panels (7.6 kW), an inverter, and a 2nd power meter to track excess production pushed into the grid.
Energy production isn’t so great around the equinox but our March bill will be negative for the first time. (Total usage of 688 kWH with production of 863 kWH, so excess production of 165 kWH.) We shall see if it stays negative as air conditioner usage begins in May or thereabouts.
There is an app that we can use to track energy production throughout the day. It is kinda cool. This graph shows a day where the panels produced 30 kWH – you can even see where a cloud got in the way of the sun in the early afternoon.
Net Metering
Our electric company uses something called net metering – they pay us for any kWH we push onto the grid. Currently they pay us the retail rate.
This varies by season and time of day. Now that daylight saving time has sprung ahead our panels will have an extra hour of production during Peak times.
May – August we will get a full 3 hours of production during Peak times. For the rest of March and all of April/September we will get ~2.5 hours of Peak sunshine (sun sets at 7:30-ish.)
Cost
I got quotes from 3 different solar companies / general contractors. The most expensive by far was those guys at Costco.
I paid $21,000 inclusive for the permits, install, materials, and addition of a 240V 60A line and circuit breaker for EV charging. The IRS pays 26% of this ($5,460) in the form of a tax credit on our 2021 tax return (Form 5695.) This comes with a 25 year warranty on materials AND labor.
There are options to lease or finance the panels but I just paid cash (or paid for it out of our mortgage which would add a 2.75% interest expense.)
According to the solar company, we should generate ~10,600 kWH/year. This would put us at a break even point of about 4.8 years (~$2.8k/year savings) after which we get another 20 years of free-ish electricity (25 year panel life, estimated.) The nice thing with net metering is how much energy we use is irrelevant for the cost analysis – any excess production gets a dollar for dollar credit. We are actually ahead of the break-even projections (165 kWH excess production in March vs projected 111 kWH.)
It’s important to take these solar company projections with a grain of salt. They didn’t have old energy bills to work with so everything is an educated guesstimate. Our actual electric usage has been above the pre-solar consumption estimates, for example. I also did my own projections before committing and think our breakeven point will be closer to 6 years, but it really does depend on how much summer peak kWH we generate (those 35…. still, a 6 year break even is a nice ~17% return.)
What about storage?
Adding storage (a big battery) to the solution was going to add $10,000+ and has questionable value for non-emergency use.
A Tesla Powerwall 2 holds 13.5 kWH. If we were to charge if from 0 to 100% at our discounted EV rate at midnight and then discharge is 100% during summer peak hours ($0.3215/kWH benefit) it would provide a daily benefit of $2.76. If it was always summer the breakeven point would be 3,627 days or ~10 years, which is not so bad. 10% ROI, etc… But it isn’t summer rates all the time so the break even date comes to 20 years.
At $5k or less installed it would be interesting. That could come as a result of cost efficiency or subsidies (or both.) Until then… no.
Summary
We put some solar panels on our roof. After tax benefits we should break even on the cost of install in 5-6 years, after which we will get another 20 years of low-carbon energy production.
The benefits and ROI seem worth it.
My guess is about a tax free 7% return after rebates.
You think the numbers are half?
La of solar x 1000 = watts
Watts x ( 3hr/ day x 365) = watts / year
Watts per year / 1000 = kWh / year
KWh / year x .15 ( 15 cents / kWh a guess ) = avoided cost / year
Avoided cost / system cost = % annual return on investment.
What does your math work out to be ?
Half of what ?
I did math in the post with a projected 16% return. Your projection was about half.
Let’s look at July as a more detailed example – projected to produce ~45 kWH/day.
I form fitted the production curve over time and it looks something like this:
(conservatively has peak output at 5kW but I’ve seen almost 6 on some days already)
7 am to 12: 8.7 kWH * $0.1323
12 – 5: 25 kWH * $0.1827
5 – 8: 10 kWH * $0.3215
8 – 12: 1 kWH * $0.1827
Total savings: ~$9.12 * 31 days = $283
Panels have been doing about 40% more production than projected probably due to lots of sun / little rain. TBD if that continues.
I didn’t see your projection when I first read your article except for the average of 3 full sun hours / day ( same as me ).
I just guessed at an electric rate ( avoided cost )
I am reading on a phone so really can’t read your numbers in the article.
If you get the return you figure that is great. Even what I figure is a good tax free return and electric rates will only go up until fusion becomes ” too cheap to meter “
Which company did you use for the package (panels and installation)?
Nationwide sun.
I have solar, ironically my system has 22 panels @ 340 watts, with batteries, and we have only 1600 sq ft of living space. One of the most important parts of a solar power system is knowing that it is operating as expected with the mobile app most home owners can use for monitoring performance. It took about 9 months and quite a number of visits after the battery installation was complete, to get my system operating as expected.
What kind of problems were you having in the first few months?
The mobile monitoring app showed the batteries were having constant errors, and the manufacturer stated several times that a component called a CT (current transformer) was not producing the correct data. The manufacturer finally had their representative come on site and show the installer for my system how to connect the CT properly. Now I produce far more than we use in a day, and the special feature that Enphase uses allows my batteries to power our entire house from 4pm to 6am every morning. Before this repair, the batteries would discharge to the reserve level in about 2-1/2 hours.
You mentioned Tesla in the comment, I have looked at their solar roofs, did you go with them?
No, all standard stuff
Great article, I have a question… what happens if you need to change the roof in the next few years? My roof needs to be replaced in the next 2-3 years and I was thinking should I wait to replace the roof and then install the solar panels or maybe there is a recommended product out there that will give me both in one?
Do the roof first. Else you have to take the panels off and reinstall when you do get around to it.
Tesla has a product that is both tile and solar panel in one.
We had to get our roof replaced after we installed solar panels due to a hailstorm the year or so prior. INsurance paid for the deracking-reinstall process for the solar as part of the roof replacement, though it did go against the deductible. You should plan on derack/reinstall running about $3k to $5k. Related, one of our neighbors had a panel damaged in that same hailstorm. It turned out that getting the whole system replaced by insurance was cheaper than replacing one panel.
I’ve read about some concern over the EMF exposure to people in houses wearing solar panels. Did you look into this and decide it isn’t significant enough exposure to warrant concern?
Nothing really credible or data driven comes up on google.
If you really want to look at something interesting check out what burning natural gas in a home does to the indoor air quality and child asthma
Yep, definitely aware of that issue. An HRV/ERV unit to keep air exchanged is practically mandatory these days.
I don’t know enough to have a position but every breath you take shortens your life. But it beats the alternative.
What I do know is that the panels will NEVER be the problem. Then panels are DC
I run my whole ” house” on 12 volt dc so no EMT from that till I fire up cell phone, computer, or TV ( which all run on 12 volt or charged with it. I use 12 volt dc lighting.
So it is smart meters ( for some reason picked on ) , 120 V AC, inverters, etc
If you are really concerned you should wire your house with BX cable instead of Romex.
Are you referring to a gas cooktop/oven
or a current gas furnace ?
For cooking
The furnace presumably vents outdoors.
What about EMF from the 200+ amp service
coming from the electric company into their
“smart meter”.
EMF from an electric cook top.
Seems like cell phone in your pocket and WiFi across the room would be more of an
EMF concern than solar panels
Yep, all of those things are items of concern as well, including the smart meter itself, I hear. Supposedly induction cooktops put off a higher EMF than non-induction electric cooktop.
Laptops are surprisingly high as well, especially when charging. Distance is the easiest way to gain protection.
Cell phones are fairly high…high enough to make one wonder why so many people think it’s ok to keep it in a pants or shirt pocket all day. Time and distance away is probably the best we can do these days when the tinfoil suit and beanie are at the cleaners. If I get solar, it would work best on my detached garage since the house is a small hip roof. The garage would be a pretty big panel and a good distance from the living quarters. But then, the US Dept of Energy supposedly says that the PNW is one of, if not the worst place, for solar panels.
Thanks for the details, Jeremy– the retail prices have really dropped in the last decade!
You also picked a great time to uncouple your transportation from gasoline. At this rate we’re saving at least $100/month in Hawaii with our EVs.
If it’s any consolation, we got more than 25 years out of PV panels from the late 1980s/early 1990s. Our oldest panels are now from 2007 and still going strong, but we expect to get at least 25-30 years out of them.
Thanks Doug!
The price curves on solar have been crazy the past 10 years. I hear they are going up again though due to supply issues
This is the first car I’ve owned since 2008. I wasn’t completely sure I wanted to go EV yet but glad now that it costs us $0 – $6 to “fill the tank”
@Doug, do you mind sharing who you used in Hawaii? We’ve been looking, and it’s quite expensive.
I looked at solar for central Florida, but everything about it screamed “go away” – net metering at wholesale rates, insane spike-usage costs. The power companies in the sunshine state do not want this, unfortunately. And our legislature loves them some power companies.
There are similar efforts in California, probably funded by the same people… pay homeowners at wholesale rate vs retail, monthly fee based on total panel wattage to “fund grid maintenance”, etc… I think more likely to pass in Florida. Usually there is some kind of grandfathering clause, e.g. for Florida: “The bill was amended to say that anyone who is using rooftop solar prior to January of 2023 can keep the current rate structure for 20 years.”
Curious what the ROI looks like after factoring in opportunity cost vs investing that amount in whatever your current AA is.
Investment portfolio is down about 7% since panels went up
It is not really fair to compare to stock returns but to bonds makes sense.
Considering that electric rates are likely to go up over time, what tax free bond can you buy has a return that increases over time.
If you have money sitting in the bank earning .01% it is certainly better than that.
I don’t thing of years to payback. At 5% that would be 20 years. I look at it as a tax free 5 % return on investment ( or whatever it works out to be ) that can only increase with time ( rising electric rates )
If you are REALLY concerned with return, solar should be the LAST thing you should do. There should be a lot you should do first to reduce your heating and cooling load and then your electric usage through efficiency ( do you really NEED a 60 inch tv ? )
A 200 watt solar system has been powering my ” house ” ( small cabin ) since 1992 ( off grid ). That is 1/5 of a kw
Conservation is cheaper than return on investment.
Our 4.44 kW system went online at the end of April 2021; this system was sized to cover roughly 66% of our annual use. We live in a rural area in the high desert of CA and use electricity for all loads including the water heater and clothes dryer. Heating is provided by a wood pellet stove that has an electric igniter and blowers.
Our climate is not as temperate as yours with below-freezing nights even now and highs above 100 degrees in the summer. Your total annual electrical usage appears to be roughly the same as ours but we have an older 1500 sf house and one child still at home.
The installed cost was approximately $2.81/W after the 26% Federal tax credit. There is not much local competition and our installer actually came from out of the area. I paid for the system outright and used the credit to offset a Roth conversion. Payback for this system will probably be closer to 8 or 9 years.
We pay a minimum grid connection fee of $10/month when generating a surplus and higher access fees the rest of the year. Also, credit for the NEM bank is received at lower tier rates regardless of when power is generated (i.e., $0.18 versus $0.25/kWh).
Smoke from wildfires impacted production last summer and fall. Of course, that pales in comparison to the destruction of the forests.
There were times that massive billows of smoke held on the western side of the Sierra Nevada and times when our entire area was swallowed in smoke. I noticed a decline in solar production during the latter periods but didn’t quantify the reduction.
Let’s hope that conditions are better this year but, unfortunately, it is very dry now and the prospects for the rest of the rain/snow season appear dim.
Last year’s burn season was bad where we are – fires just 15-20 miles up the road and forced closure of my target ski area for the season.
Things looked promising in December but we haven’t really seen any rain since. At least the lake level is well above last year so we should get a boating season.
We still use gas for heat but the HVAC system on this house is old and will need replacement soon – I talked with a heat pump installer today… probably going to be $16k range and will save ~$600/year over using natural gas. I can also do a heat pump water heater for ~$0 after tax credit. This will all bump our electricity usage so might add some extra panels at that time (have room for up to 4 more without much issue.)
What about Passive solar to heat? If I rebuild my house, I want a green house on the south facing side, we have lots of windows and upgraded 3 years ago, but I know I could collect a lot more and save money. In Taiwan they have passive solar water heaters on the roof tops, really cool tech, it uses tubes filled with some kind of black oil.
There are a few houses near here that have solar water heaters. There are also a lot of rooftop solar pool heaters (just uses the pool pump to run water through some black mesh.)
Don’t forget though that SMUD will change the rate at which net-metering will be charged back to them in 2030.
Yes it drops to $0.07x/kWH all day at that point. Storage is probably cheaper by that point.
Great to hear it’s working out well for you! I would LOVE to go solar. The back of our house faces south so aesthetically it’d be perfect, and we’ve got a Cape Cod so the roof tilt and exposure are ideal…
But our entire home is 1100 sq ft (so we could only fit maaaaaybe 10-12 panels up there). And somehow there are six big mature willow oaks crammed in our 3000 sq ft backyard, so between the shade and the risk of falling limbs it’s entirely out of the question.
Autumn must be great at your place. Lots of leaves to jump in!
How resistant are solar panels to hail? Are Tesla tiles/solar panels durable and cost effective?
I have heard they are very resident to hail.
Check if homeowners policy would cover damage.
Your net metering rate is nice. Where I am, it’s a flat $0.040 /kWh, which if I calculated correctly, is an unattractive return.
Not worth it at that rate
Huzzah! Electrify everything. Glad the ROI is there to do it.
We have an older solar system, probably 13-14 years old. IIRC it was 27K (minus whatever the tax benefit was) for 5000 KW? per year. The details are sketchy in my mind and I’m too lazy to look up.
For a number of years we came out even for the year even considering the $5 a month they charged to be attached to the grid. Then grid privilege went up to $10 and we got a Tesla…and then a second one. Now they want to raise the base fee for being attached to the grid up to $40 or $50 a month. I think we are again (still?) the most expensive electricity rates in the country so I guess it’s worth it.
I’d really like to expand the system now that we have the Teslas, but no one wants to touch an existing system that they didn’t build originally. I get it – profit from adding a few panels < possible liability if it blows up.
Usually the cost of charging at our closest Supercharger at Happy Hour (24 cents) is the same or less than charging at home.
Love the idea of this…just don’t know that it’s practical for Michigan. 😒
Why is that?
So.many.cloudy.days….
https://www.mlive.com/weather/2019/12/the-numbers-on-michigans-gloomy-skies-are-enlightening.html
I’m going solar too! In San Jose, waited until the NEM proposal in CA was delayed, looking to get grandfathered in.
I didn’t go with storage – couldn’t justify the price.
Did you have to sign up for NEM? PG&E is not clear on that, or maybe I’m missing something.
Another part of my cost calculation that I didn’t see in yours is this counts as a home improvement, so it will reduce your capital tax burden if you sell your house. It’s part of my calculation as we plan on moving once our kids leave the nest.
Thanks for the great write up!
What company did you use? Are you happy with them? We are in Campbell, and currently looking into going solar!
Thanks!
@Elise we went with Tesla/Solar City. $13k for $4.8Kw system, which was supposed to cover 122% of our electricity (yearly). Getting an electric car at some point so that will absorb the balance.
Purchase to install is going to be a month, then just inspection and power on sometime before it starts getting too hot. Experience so far has been super easy.
I did not get a power wall, while interesting as an emergency stand by, does not make sense financially.
Adding that part of my decision was based on the ability of the provider to cover the warranty period. I have no doubt that Tesla will be around in 25 years.
Would appreciate your explaining why fully installed solar in California costs $USA 2 / W but in Australia $A 1 / W (~$USA 0.75 / W) (verified by recent quote)
https://www.energysage.com/local-data/solar-panel-cost/ca/
https://www.canstarblue.com.au/solar/solar-installation-cost/
I have not been able to conceptualise why it would cost ~2.5 time more in California.
Labor costs ? Subsidies ?
Electrician salary (employee):
Ca $USA 61,443 / y
https://www.indeed.com/career/electrician/salaries/CA
Aus $A 82,875 / y (~$USA 61,328)
https://au.talent.com/salary?job=electrician
Also not explained by import tariffs on PV panels:
https://www.solarpowerworldonline.com/2021/03/the-legal-status-of-the-section-201-tariffs-on-solar-panels-which-expire-in-2022/
With an interest free 10 year loan from Territory Government, assumed forever $A0.05 / kWh feed-in and $A0.19 consumption tariffs from utility, the pay-back is immediate (savings always exceed capital repayments) but the pay-off is 10 years for 6.7 kWh PV system compared to a simple financial investment such as money in a bank account or something with similar risk to a the PV system such as high yield bonds.
Delaying purchase 1 year, assuming 7% installed price depreciation persists, reduces pay-off to 7 years – when cumulative PV savings exceed comparative cumulative financial savings.
However, our greatest electricity usage is for heating using reversible cycle heat pumps – in winter at night – when the PV system produces little to no energy. To be more useful, the PV system requires an energy storage system, the added cost making such a system uneconomic.
Do you mind me asking what type of panels you chose to install (e.g. Sunpower, Panasonic etc)? We live locally (in Davis) and are going to get a quote from this provider. I’m trying to figure out if Sunpower is worth the extra cost. Hopefully we can get our system up and running before the summer!
Hanwha Q-cells
There are obviously some hassles and some upfront costs but I think this will be a great investment long-term.
Surprised at how high your electric bill was pre-solar. What in your house runs on electric. What is your thermastat set to in summer and winter. Reducing bills with great insulation might be more cost effective for some.
“It’s important to take these solar company projections with a grain of salt.”