The benefits of solar energy are obvious. I don’t think anyone can argue that it’s not amazing to generate your electricity from the power of the sun, but the biggest question is often cost. Will the savings you gain from solar really pay for the cost of installing the system in the first place? And even more secondary questions come up like, are they difficult or expensive to maintain? How long do they last? Will they work where I live? Those are all questions I hear a lot, so let’s dive into this.
I started looking into solar about five years ago, but two things were holding me up: cost and shade. Those two are tightly intertwined when deciding if a solar system in is right for you. You need to be able to generate enough solar energy to help offset the cost of the system. The ideal setup for solar panels in the Boston area is a southern facing roof at an angle of 42°.1 My house faces east to west, but with the latest panels it’s still works just fine. On top of that my house is wedged into a sea of tall, old trees that cast a lot of shade in the afternoon. Not a good recipe for solar. Well, 3 or 4 years ago we had to remove some trees because they were dying, and then in two separate storms we had a couple of trees fall, so our roof ended up getting much more sun. That meant solar became a viable option.
This one is a little tough to answer because it really depends on where you live. There are different state and federal tax rebates or credits that may be available to you, as well as special solar loans and incentive programs. These can have a profound impact on the overall cost and payback period of any system you’re looking into, As well as your kWh energy costs in your area. I used a free service called EnergySage to help me calculate the rough cost of a system in my area along with those rebates, as well as helping me to find a good solar installer. I was so happy with my EnergySage experience that I’ve joined their partnership program and have an Undecided portal that you can visit to research cost and installers. They’re a vendor-neutral resource that was partly funded by the Department of Energy to improve the customer experience when reasearching and shopping for solar; and they run the most visited solar website in the country. Their marketplace gets you online quotes from pre-screened installers in your area at 10-20% lower prices. I’ll include a link in the description. To be completely transparent, this is an affiliate program for my channel, so if you research and find an installer using EnergySage, it helps to support the channel. It’s a completely free service, which I’ve used myself and can vouch for how much it helped me through the process. Whether or not you use my EnergySage portal doesn’t matter, I strongly recommend EnergySage for your research and questions.
Let’s break down the exact costs of my system. I had 26 LG panels with micro-inverters installed for a 9.49 kW DC system at a cost of $29,609. Yeah. It’s pricey. My system is eligible for the Federal solar tax credit that will reimburse up to 30% of that cost. A quick note on the Federal solar tax credit: starting in 2020 the residential credit will drop to 26%, 22% in 2021, and by 2022 will be gone, so if you want to take advantage of the program, you only have a couple of years left.
In addition to the $8,883 we’ll get back from the tax credit, we’re also benefiting form the SREC program (solar renewable energy certificates), which is paid out by the energy market for how much our solar system puts back into the grid. For that we opted for a fixed monthly price vs a variable quarterly price because it made more sense for our situation. In the end it’s $126/month for 10 years, or a grand total of $15,146. SRECs aren’t available in all states, but many states offer other types of rebates and incentives.
And then there’s still the straight up savings in energy usage. When you have a solar system installed, you should also be getting a net meter that replaces your standard electric meter. It’s basically a meter that can roll forwards or backwards depending on if you’re pulling energy from the grid or adding to it. When your system is producing more energy than you’re currently using, the surplus is going to the grid. That means your meter is running backwards, essentially banking that energy for you to pull from later. On my system, it’s projected to generate about 6,600 kWh per year, or roughly 60% of my yearly usage. That’s an estimated $1,400 a year in savings on my electric bill.
One quick side note: any reputable solar installer should provide you an accurate estimate on energy production over the course of 10 – 20 years, which will also take into account the degradation of the panel efficiency. They should also provide you with some kind of energy guarantee. My installer guaranteed at least 95% of the estimated production or they’ll cover the difference.
So that’s $19,726 for the whole system after the 30% tax rebate. And factoring in around $2,915 a year through electrical savings and SRECs, that means the system will pay for itself in about 6 years 8 months. That’s assuming I paid for the system upfront in total, which I didn’t. We went with a private 10 year solar loan through Avidia Bank, which has an interest rate of 5.99%. Taking that interest into account and the system will have paid for itself in 9-10 years. That’s on a system that’s warrantied for 20 years and can be expected to last 25 years or more. Depending on your annual household income, there may also be special low or no interest solar loans available to you. For me, so far on a monthly basis it’s about the same out of pocket costs as I had before solar. A $150 loan payment, offset by $126 SREC check and lower energy costs from the grid. In the summer time I’ll see that get even better, and once the loan is paid off it starts to turn a major savings. That means I’ll be saving about $120 per month, or around $1,400 a year, from around year 9 onwards. But it will most likely be more than that because energy prices have been rising about 2-3% each year in my area.
And I can already hear the comments, “you’ll never get that back if you move out before you recoup the cost of the system.” To that, you’d be right if I was leaving my house in a year or two. However, if you finance and pay for the system yourself and don’t lease it, adding solar to your home actually increases your home’s value by 3-4%.2 You’ll often see about $4 per watt of the installed solar system added to your home’s value. While I’m not counting on that for my system, it’s nice to know that I should be seeing some sizable increase on my home’s value when I go to sell.
From start to finish it took about 3 1/2 months to get solar installed on my house. That sounds kind of bad, and it needs to get faster than that, but was a fairly straightforward and painless process. Most of the time in the beginning was talking to different solar installers, selecting one, hammering out the details on the size and type of system, and signing a lot of contracts and agreements. Once we had a contract signed, it took about two months before our installer had an opening to install the system.
The actual install took 1 1/2 days and we were extremely happy with the professionalism and workmanship of the team. All photovoltaic systems are generating DC current, which has to get converted into AC. There are three methods to do this: string inverters, micro-inverters, or power optimizers. The most common are one of the last two. String inverters operate like old fashioned Christmas tree lights. If one panel stops producing electricity, then all panels in that string stop producing electricity. Micro-inverters and power optimizers don’t suffer from that and can keep generating electricity from other panels.
If you’re on a string or power optimizer setup, you’ll typically have a centralized inverter located somewhere on the outside of the house. This is where the change from DC to AC occurs before moving into your electrical meter and panel. For mine there isn’t a centralized inverter because there are micro-inverters on each panel, but there’s a central cutoff for the system. If anyone from the electric company or emergency services need to shut off the system for any reason, it’s as simple as flipping one switch on the outside of the house.
The flow continues from the meter into the electrical panel on a dedicated circuit, which means there’s a second place I can discount the system. The outside switch cuts off the system from everything. The inside switch cuts off the solar system from the house only.
After the install, it was a waiting game for the electrical and structural inspections, and for the energy company to approve the system and switch us out for a net meter. The solar installer took care of all paperwork and permits, so all we had to do was wait. In the very beginning of October we got the call that the system was approved to be turned on. I actually got word as I was on my first big Tesla road trip, which I made a video on if you’re interested. As excited as I was to turn the system on, it was a gray and rainy day … so in the end it was kind of anticlimactic.
This is where I’m going to have to do a follow up video at the 6 month or 1 year mark. The system has only been up and running for a little over 3 months, and it’s during the time of year where production is the lowest. We’re in the middle of winter with the least amount of sun, and even when the sun is up it’s very low in the sky.
In the very beginning of October I was seeing days between 10 kWh – 17 kWh, but in December it’s been bouncing around 1.5 kWh to 6 kWh. It’s important to look at the total production on a monthly and yearly basis and not get bogged down in the day to day. So looking at the monthly totals I have so far:
October 2018 – 239.85 kWh November 2018 – 114.27 kWh December 2018 – 90.52 kWh
That works out to about $100 in electricity savings in 3 months. Nothing to write home about, but those numbers will look radically different when we get into spring and summer. If anyone is interested, I can do a follow up later in the year.
Future of Solar
As I mentioned earlier, I started looking into solar about 5 years ago and it’s surprising how much the prices have improved in a matter of a few years. One of the first quotes I got about 3 years ago was for the same price as the system I had installed now, but it was only a 5.8 kW system. Virtually the same price, but the new system has a 40% increase in energy production due to the higher efficiency panels available now.
The price per watt for solar systems has been dropping dramatically over the past 8 years due to more efficient panels, cheaper inverter costs, installation costs, and various other factors.3 EnergySage is seeing about $3.00 per Watt right now for residential installations. If you look at utility scale energy plants and factor the cost to generate one megawatt-hour of electricity, solar is now cheaper than gas, coal, and nuclear.4 Coal costs around $102 per megawatt hour, while solar is around $45.
The biggest challenge with solar is energy storage. Our energy grids generate the exact amount of energy needed at any given moment. That means they constantly have to ramp up and down how much energy they’re generating over the course of day to match demand. They don’t produce a surplus because there hasn’t been good solution to mass energy storage. Mismanage the production vs. demand and you could end up with blackouts.5 The obvious benefit to coal, gas, and nuclear plants is that they can operate 24 hours a day, while a solar array is only generating during daylight hours. But during those daylight hours, PV systems can generate an incredible amount of energy for a low cost.
That’s where energy storage comes in, which not only helps with renewable energy production sources like solar, but also help to manage peak load. Some energy companies have been using dammed hydroelectricity to store energy production. They use surplus energy to pump water into a reservoir at a higher elevation. When they need to release the stored energy, they open a dam to let the water flow back down to a lower reservoir to generate power. Other systems are doing similar things with rail cars being moved up and down an 8-mile section of inclined track.6 But the most promising system of storage is battery packs because they’re highly efficient in storing and releasing the energy. If there’s a sudden peak in energy demand, battery packs can respond to that increase in power requirements in milliseconds. The end result from systems like this is a more responsive and adaptable grid, which helps to create more stable pricing.
Tesla has shown how well these battery power stations can perform in Australia. They installed a $66 million battery pack system, that is designed to replace peaker plants, and has reportedly saved 90% in grid service cost.7 In the first 6 months of operation it made up about $17 million in savings. Systems like this, dams, and hauling weights to store power, are opening the door to better managing our electrical systems. And they open the door to more reliance on renewable energy sources like solar, wind, and hydro. We can store the massive surpluses they create and use storage to release that energy when we need it.
For your home there are similar battery pack options you can get. There are products like Tesla’s Powerwall, LG Chem’s RESU battery, Mercedes, Nissan, BMW, and more are also getting in on the action.8 Whether or not a whole home battery makes sense for you is another tricky calculation. For me, my solar system isn’t producing enough energy to truly take advantage of a battery system, and if I went onto a battery I’d lose the financial benefits of the SREC monthly payback. If you live in an area that doesn’t have SRECs, and also has time of use energy rates (cheaper at night, more expensive during the day), you’re probably a great candidate for a battery system.
Getting a solar system installed on your roof or as an array in your yard is definitely an expensive proposition. There’s a lot to factor, like how long you expect to stay in your home, do you have enough space on your roof or yard for an array, and will the energy generation help the system pay for itself? It’s a very personal decision with a lot of variables, but I was surprised by how much energy we’re able to generate off of such a small roof in a less than ideal location. My system will pay for itself in less than 10 years, adds to my home’s value, and helps to offset charging my EV. For me, it was a no-brainer.
Now if you’re someone interested in going green, but don’t own your home or aren’t a good candidate for solar, there are still ways you might be able to make changes. Some areas allow you to select your energy source.9 Here in Massachusetts you can select an energy supplier, so you could choose a company that’s 100% green.10 Some areas also have programs to do an energy audit of your home and help you make changes to improve its energy efficiency. Again, here in Massachusetts we have a program called Mass Save11, which will do just that and even offer rebates to help pay for it. You might have to do some digging, but your local governments and agencies may be able to help.
And finally, be sure to check out my EnergySage portal for researching solar, calculating the costs, payback periods, and any other questions you have. They’re a tremendous resource and completely free. You can plug in your information and request quotes from solar installers, which all get funneled into your EnergySage account. You don’t have to worry about getting flooded with phone calls. It makes it easy to compare installers, cost estimates and energy production quotes in one place. And installers also have customer rankings and feedback, so you can find a reputable and good quality installer.
While I didn’t go with Tesla Solar, if you’re looking at Tesla, you can use someone’s referral code to get a 5 year extended warranty. If you’d like to support the channel, you can use my referral code, which I’ll include in description.
If you liked the video, be sure to give it a thumbs up and comment below if you have have solar and how it’s been working out, or if you’re still thinking about it and have questions that I didn’t cover. I’m sure there a lot of people out there that can provide some good details and suggestions from their experiences too.
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