Although the global warming trends are hard to deny, this post is NOT about curing global warming or the politics of if global warming even exists. This post is about the arguments for solar power and the economics behind it. Whether or not you agree that the world is heating up due to our carbon output, there is an easier, more local way to think about going solar – actual savings.
Economic Argument for Going Solar
Using the sun to power your home is gentler on the earth than using traditional hydrocarbon power. That is NOT enough to get most people to act. The one thing that is hard to deny is that solar ultimately is cheaper than using standard electricity. It is pound smart and penny foolish – and for those of you who know me, I am all about saving the Benjamins.
As far as I know, there are many programs to get homeowners started on solar. One popular method is that solar companies will install solar Free of Charge. The way this works, is that the solar company will do an energy audit of your electricity bills, and will charge you roughly 60% of your current electricity bill. They will pay for the cost of the solar equipment and installation. The solar company will take all of the credits and rebates offered by the Federal/state/local government, but you ultimately get energy cheaper than your current utility company charges you. The reason that solar companies will do this, is that the energy they are generating is free for them. Over time, they will make back their investment of the solar installation in these utility charges.
There is another popular method that homeowners use to install solar and the one I opted for. I paid the upfront costs of doing a solar installation and keeping the governmental credits and rebates and also not getting charged for electricity that I am producing.
Costs of Our Solar Installation – It Ain’t Free
Okay, so lets get down to brass tacks. My solar installation was for a 7.56 kWp system. This is twenty-seven 280 watt panels. This means that in full sun, each panel generates a minimum 280 watts of power per hour. In terms of light bulbs, each panel can generate enough energy to power almost five 60 watt light bulbs per hour. The way that the solar company determines the number of panels is through your past electricity bills as well as sun efficiency of your roof. In a nutshell, the way my state determines the number of panels is that it does NOT want you to be able to generate too much excess energy, otherwise, your installation will cost too much, and your Return on Investment (ROI – more on this later) will take too long.
Cost of my solar installation: $33,800
CT State Rebate (discounted up front): $6,800
Total Upfront Cost: $27,000
Federal Rebate (estimate): $8,000
Total Cost of Installation: $19,000
Actual Energy Output of Our Solar System
This section will get a bit technical, but bear with me, and you will see how it makes sense. You will see from the above diagram, that my system went online in the middle of March. On average, I am generating just over 800 kilowatt hours per month (not counting the partial month in March). That’s 22 kilowatt hours per day, which is the usage of the average American. However, we are not the average American family and use roughly double the American average – an explanation would be putting the blame squarely on wifey who likes it warm and uses a 1500 watt heater 24 hours a day in the colder months.
Actual Savings of Solar Installation
One of the benefits of going solar is that, depending on your inverter, you can get multiple graphs at your energy production. That along with graphs from my utility company, United Illuminated, you can compare electricity usage on a daily, weekly, monthly, quarterly or annual basis. To simply things, let’s calculate the energy savings. Basically, my utility company charges 0.23 cents per kilowatt hour (yeah, I know, expensive, CT has one of the highest utility costs in the country). Since I’m generating 800 kilowatt hours per month, Using solar we are saving over $185 per month. For one year, I expect to be saving over $2,200 per year. That’s over an 11% return! Find me an investment that will generate a definite and guaranteed 11% return, and I’ll find you a bridge for sale! The time frame for ROI is just over 8 years. This assumes that my utility company does not raise their rates (something that it seems to always do every other year). Any increases will serve to accelerate my ROI.
After this time frame, the panels have paid for themselves and the savings begin. I should add that solar panels are guaranteed for 30 years and are expected to last even longer that that. Furthermore, a fully paid off solar system increases the resale value of your home. Again, pound smart, penny foolish!
These numbers are subject to things like good sun and best operating temperature of the panels. Ironically, I have discovered that solar panels operate more efficiently when cool or cold during the winter, but of course during the winter, we have much more limited sun exposure.
Solar saves $$$
Even if you poo poo the global warming argument, it is hard to deny the economic argument of going solar. Solar energy saves money. Each month, I am saving just under $200 per month. Yes, it cost a lot to install a solar system, but the savings should pay off in the long run, and the resale value of our home has increased.
If you are on the fence about installing solar, do it. Yes solar technology keeps improving, panels keep getting more efficient, but the longer you wait on the sidelines, the more it will cost you in the long run, not to mention that you’re killing the planet we call home. If you comment below, I will write a post about how to select a great solar installer and my experience with my solar installer.