Exploring the Savings of Solar Power

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A couple of months ago, when I was reviewing my necessary expenses, I thought to myself, how can bring these down? There are personal finance tips on how to save money on almost anything, including utilities. However, they all see to amount to sacrifice and conservation. These are noble things, but I love my technology... and I use a lot of technology. I can only lower my electricity bill so much...

... or maybe I lower it to zero? I remember a personal finance blogger from years ago, Boston Gal's Open Wallet, had solar panels on her home. She would talk about how the decision had paid off for her. I remember thinking that it didn't make in Boston, with the harsh winters. It's not exactly Florida, right? However, she was very smart and if thought it paid off for her in 2007, certainly I should look into it in 2014, right?

It turns out that adding solar energy to your home is a PROJECT. I just thought you slapped some panels on your roof and you were good to go. This belief may have stemmed from my father saying he was going to heat our pool with solar panels back in 1988. (He got terminally ill before that idea ever got off the ground.) I figured the most difficult thing would be to choose the most efficient solar panels.

Turns out there's a lot more to it. The panels themselves are typically somewhere between 40% and 60% of the cost. The labor is the other large cost.

So all you really have to do is pick out your panels and double the price and you've got yourself an estimate, right? Sure... but what size and how many panels do I need to buy again? Those are going to be central to the price of panels. Of course the size and number of panels depends on your location (Seattle is different than Florida when it comes to sun), home orientation (facing the sun at certain times can be beneficial), whether you have trees that cover your roof, and how much electricity you are actually looking to create.

My wife and I call this problem The House that Jack Built, though I prefer the The Old Woman Who Swallowed The Fly. Neither of them really get to the core of what we want to express which is that everything seems to have a dependency on the thing before it.

Unfortunately all those things that the estimate was dependent were complete unknowns. It's not like the information isn't available, but I don't have the expertise to process all this information and make any kind of reasonable estimate.

In cases like this, I find it best to go to Angie's List and find three highly rated contractors and have them give me estimates. I find that I learn a little from each of them and when two (or more) contractors agree on something, it gives me conviction that it probably the right way to go.

I'd love to say that I've done this and have the results for you. I've gotten busy with the new baby and the installation of solar power probably isn't in the budget for this year anyway.

More important to the point I'm trying to make: It is a very individualized decision that rely a number of factors that will vary greatly across my audience. So instead, I'm going to give a little general information from what I've learned in my research. Hopefully it serves as a starting point for you.

Solar Power is Getting Much Cheaper Every Year

There are some amazing charts at The Cost of Solar. Essentially they make the point that solar panels are a hundred times cheaper (based on cost/efficiency ratio) than they were 1977. They are half the price they were in 2000. This makes it tempting to wait, but you might as well explore the costs now, see if they make sense, and if it doesn't revisit in a few years.

Another thing to factor in is while the panels may get much cheaper, the labor to install them doesn't.

Your State Matters, Not So Much Your Geography

When I was thinking about whether New England would be a good for solar energy, I was thinking climate and weather patterns. Turns out, I should have been thinking about tax credits, cost of electricity in the state, and other things. The website Solar Power Rocks does this on a state-by-state basis. As you may guess from their site-name, they might be a little biased towards giving out favorable analysis, so take that into account.

For a sampling, I looked at three states: California, Massachusetts, and Rhode Island. Two years ago, I had lived in California, so it is still fresh in my mind. We own property in both Massachusetts and Rhode Island.

A look at California and it gets an A- rating suggesting that the average person could save $64 a month on their electric bill. The analysis is long and detailed. In fact, it is over 3800 words which is 3000 more than this article to this point. However, that's the kind of information you are looking for in making such a big decision.

Solar Power Rocks gives Massachusetts an A+ saying that it would save people $58 a month. (Just don't ask me how saving less money than CA earns it a better grade.) The site goes a step further and breaks down Boston, one of the few cities it does. It seems that Boston has even more advantageous.

Lastly, in stark contrast to CA and MA, there's Rhode Island. It is graded only C, but still can save people $43 a month.

To Lease or Not To Lease

It seems like these solar pricing websites push you to lease your solar panels. While this is a good way to start saving money without a big initial outlay, you'll never pay off the panels and be getting that sweet, free, energy. From what I gather it's essentially the same as leasing a car. If you are frugal and want to drive it a long time, you are better off owning.

Other factors

There are probably numerous things that my research didn't even touch upon. One calculator I found asked about the age of my roof. That made me think, "Wait, if I have to replace my roof, do I have to pay for the installation costs of the panels all over again?" The calculator didn't explain why it needed the age of my roof.

This lead me to do a search and find this article about whether your roof is ready for solar energy. Turns out I was right, reroofing does make reinstalling the panels more expensive. On the bright side the page says that one may be able to recoup 30% of the cost of the roof with tax credits.

As I follow the rabbit down the hole, I hope to have updates on how to save money with solar power. Right now, it's time for me and my dog to enjoy a little of this Earth Day. As usual, hit the comments and pass me any good questions or information that you have on going with solar.

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Posted on April 22, 2014.

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