The Argument for Solar

In Energy, Farm, Uncategorized by Alastair Ong7 Comments

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

My uninstalled solar panels

280 watt solar panel label

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
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Total Upfront Cost:                                          $27,000
Federal Rebate (estimate):                          $8,000
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Total Cost of Installation:                            $19,000

Actual Energy Output of Our Solar System

Monthly energy output graphs

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

Solar generation by panel

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.

Comments

  1. David Kozirovsky

    Thanks for this detailed article! It’s quite in line with what I would’ve expected actually.

    The logic behind such an investment is perfectly there and such calculations are roughly made by those who offer solar and suggest how it would be saving in the long run. There are two things however which stand in the way for most people, irrespective of calculation which sounds good if done in a vacuum, not to suggest that this article is intended that way.

    So, one is, most people are scared thinking 8 years ahead because they’re not sure of what can happen along the way and fear they might need the money for something else. That’s talking upper-mid income families. I mean, this is obviously a fear which just needs to be overcome since, as you put it, practically, it is a sensible investment. However, speaking of the economics of it, second is, most Americans are living pay check to pay check, making this transition hard to impossible without full subsidy or a total economic paradigm shift. The point is very simply to say, since a car would in almost all cases come first, the investment cost of a second car just isn’t doable for most or otherwise just stops being sensible.

    In any case, this article is useful as known real-world example. There was a time not too long ago where I in fact was trying to convince people with the means to make this investment. Relative to their circumstances, the projected savings were expected to be even bigger! There’s even a company, Blue Raven Solar, that made a business from the potential profits here by taking on the cost of all panels and installation, simply taking a percentage from each bill, so it would virtually cost you nothing for a person to start saving, and with strategic selection of houses/property, the company would be able as a whole to maximize the total savings they could make.

    1. Author
      Alastair Ong

      Great points David. What Blue Raven solar does, almost all solar companies do. That is mentioned in my post where the cost of implementing solar can be free and you would save money on your utility bill. As for thinking 8 years in advance, it takes the same future thinking to buy insurance of any sort. Most folks do not want to think about death, so do not buy life insurance, however, life insurance is a great way to transfer wealth. I wanted my post to encourage people to think about the future. After all, as far as we know, the probability that the sun will come out tomorrow is very high.

      As for your point on folks living paycheck-to-paycheck, yeah that was something that I hadn’t considered in my post. If you are living paycheck-to-paycheck, I would still encourage folks to get solar under the previously mentioned option where you let the solar company install the panels for you for free and you save money on your utility bill. After five years or so, you can decide to buy the system from them at a reduced cost.

  2. Alden

    Are you hooked up to the grid or off the grid completely? Having the grid backup is probably the best way to go for most people… my mom went totally off the grid in 1999 – with solar panels, batteries and a generator for those times when the panels don’t generate enough power – the system has worked well over all but she has had to replace certain components of her system over the years – batteries had to be replaced, she has gone through a few generators and had a couple of inverters fried by lightening!

    1. Author
      Alastair Ong

      Alden,

      Excellent question. To answer briefly, no, I am not independent of the grid. In a nutshell, Connecticut has a statute that prevents homeowners from going completely off-grid. Even installing a backup battery is very difficult (I’m still researching how to get a battery backup). This is a shame, because I originally wanted solar to: 1. save money and 2. provide power in the harsh N.E. winters where we lose power. Currently I have to hook up the house to a generator and run it on diesel, and even then, it does not power my entire home.

  3. Gerard Devlin

    Dude I wanted solar and the salesman was at Home Depot and they did a GPS of my house and I have too many trees on a hill on southwest side of my property
    No Solar For Me due to insufficient sun rays-
    However I did retool my house with hot water on demand – a wall mounted water boiler that heats up water immediately and my hot water savings are huge.
    I also installed baseboard heating using a similar wall mounted hot water on demand furnace – it runs at a very high efficiency rating and works great…
    I rarely pay over 100 per month for heating in the winter months…

    I am all about leaving the water for the native trout in the river that runs thru my town and I refuse to use lawn chemicals initially for fear of my kids ingesting them, and I think crabgrass is green and I like it, I also am frugal as taught by Ben Franklin himself !

    1. Author
      Alastair Ong

      Gerard,

      I thought the same thing about my house. My entire southern half of my house has large maple trees that the original owner planted to provide shade to the house. When the installer originally came, he GPS it using Google Maps and did not think that a solar system would work on my home. However, he came out anyways and took some readings using a solar tool. The tool said what a map could not – that I would be able to generate power regardless of the trees.

      Keep a lookout on a future post, where I’ll describe the solar company that did my installation and what to look for in a solar installer.

  4. David Kozirovsky

    Hey Alastair. Yeah, we’re certainly in agreement, and yes, it was a good post. I wish more people said this rather than simply discussing the politics of it in terms of their attraction or aversion.

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