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Moving Forward With Solar Energy (Part 2)

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Earlier this week, I wrote about how I am investigating a move to solar energy. I highly recommend reading that article first. There's a lot to learn about solar energy in general and this article builds on the information in that article. In addition, the decision to go with solar is highly dependent on one's specific situation and a lot of that information on my situation is there.

When I left you on Monday, I had just received a packet of information from a local solar vendor. The estimate was to put 24 panels on my garage, which would supply 83% of electricity we use each year (assuming that the last year was "typical"). Our electric bill would go from $1,522 to $309 in the first year. According to the company, we will keep 4.82 tons of CO2 out of the air each year, equal to 144 trees processing CO2 or avoiding burning 497 gallons of gas.

In short, we'll save a lot of money and do a lot of good for the environment. If I can't plant 3600 trees over 25 years, this seems like the next best thing, right?

The vendor wanted to meet and talk over the proposal. I was eager to the same. We met for an hour and a half and I got every question I had answered.

My biggest question was, why put the panels on the garage and not the main part of the house?

The answer came from measuring the solar efficiency of the roof. In order to measure a roof's potential they take four measurements from all the corners with a sophisticated device and average them together. In order to receive state grants the roof must be 80% efficient. In looking at the numbers from my house, I have two corners that were north of 95% efficient and one that was 79% efficient. The last corner was 47% efficient... a killer.

I had known that I had a tree potentially blocking part of the roof, but I didn't think it would be a big deal. I was wrong. As the sun gets lower in the horizon, it blocks more and more of the roof. The vendor and I went out to look at the tree and it actually looks a little dangerous, leaning towards the house. In a storm, the could hit our house and do some damage. Even if I didn't go with solar, it would be wise to have some tree people check out the situation.

I asked the vendor if I cut that down, would we be able to use the main roof for additional capacity? He said we definitely could and that it would probably be more efficient than the garage we were planning on.

We went from putting 24 panels on the garage (in a 6x4 arrangement) producing 83% of our energy needs to putting 28 total panels on both roofs producing 101% of our projected energy needs. The plan would be to put 16 panels (8x2 arrangement) on our more efficient main roof and an additional 12 (6x2 arrangement) on the garage. This would reduce our bill to $44 a year. It would be the equivalent of 175 trees processing CO2 and not burning 606 gallons of gas.

The solar panels get less efficient every year... on average 0.7% less efficient. After 25 years, the panels will be "only" 82.5% effective. That's still very good. Considering that projections are for 25 years, everything after that is gravy. It's kind of hard to think 15 or 20 years in the future, but we'll have half the space on the garage to build further capacity. Who knows what they'll sell then, but hopefully they are a standard size. Then I could buy 6 more and put them in the most efficient part of the main house and shift the older ones to the space on the garage. That kind of boost could extend the life of the whole system producing 100% of our power to 35-40 years.

The Cost of the Panels/Installation

As previously mentioned, there are two vastly different prices when it comes to solar: the actual price and the price after state and federal subsidies. In the case of the 24 panels, my original cost would be $28,380, but after state grants it would be $20,130. The solar company applies for the grants in our name and takes that money off the cost right away. (Let's pause to celebrate a big Lazy win!) That $20,130 is eligible for a 30% federal tax credit making the final price $14,091. The price is inclusive of labor, permits, wiring, etc.

The 28 panel that we are looking to go with would cost $33,110, but state grants bring it down to $23,485. The federal tax credit brings it to $16,440. The timing of the federal tax credit, is of course after filing taxes, so there's an area in there where about $7,000 is due to come back to us, but we have to foot the initial money. It's not ideal, but these credits come amazingly close to cutting the price exactly in half for us.

This all begs the question of "how do finance this move to solar?" It is far from a trivial question and is worth it's own article. So stay tuned for that.

Last updated on October 8, 2014.

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10 Responses to “Moving Forward With Solar Energy (Part 2)”

  1. I’ve spoken to few people in the past who have made the move to solar and they all seem to feel that it is worth the big initial outlay, especially if you are able to get paid for any extra energy you are producing. I think you mentioned your panels would just about cover your own energy usage so I guess that isn’t your plan at the moment, but it still sounds like a good investment and as you say, great for the environment. I also have a few friends who are creating their own wind energy which they again swear is well worth the investment. Hope you get things sorted :-)

    • Lazy Man says:

      Instead of getting paid for the energy we are producing, we earn a credit. The difference is that we can’t build up credits and tell the energy company to just cut us a check. So you want to get it as close to zero as you can. If you make too much, you paid for more capacity on the initial outlay than you need to. Then you get credits that you might be able to use for a long time.

      Interesting that you brought up wind. I looked into that briefly as well. In fact, I think most locals would think that wind would be a better fit than solar. However, I saw very little for residential use and nothing that seemed nearly as efficient as solar.

      After I go through the financing, I’ve got a plan to write about the payback of the investment.

  2. Traciatim says:

    It really is amazing how cheap things get when you can pay for a huge chunk of it with money from other people.

    • Lazy Man says:

      @Traciatim,

      I agree. Going down that road a bit, I was expecting a bunch of comments from people saying that I’m soaking off the system.

      Maybe if the other people read my blog, they’d put themselves in the same position to benefit.

  3. Big-D says:

    I don’t know your financial situation, but I would do the bigger one. The overall expense is not that more (assuming everything goes well with the tax credits) and you will be independent quicker. Even if the panels get less efficient, you still have most of your power over a large amount of time. I would not rely on possibly or maybes in this kind of scenario (in terms of adding more panels). You never know what is going to happen 3 years from now (all the federal and state backing might disappear) and you will be left with full price panels to put in.

    Just random un-caffeinated thoughts from me.

    • Lazy Man says:

      I’m going with the 28 panel one. And more than 29 panels wouldn’t be subsidized by the state. So I could get that extra panel, but it would be odd aesthetically to arrange 13 panels on the garage vs. two rows of six.

      So it’s almost the maximum I can do now, which is fine because it is estimated to cover 101% of what we use. My thinking with the future is that more tax credits could be available or panels will be more efficient. In fact Ray Kurzweil recently said that essentially solar is going to cover all our energy needs within the next 20 years. It’s nice to know that there’s physical space for expansion for that.

      At the same time, it begs the question of whether making this outlay is simply buying technology that will be really obsolete. Imagine buying a long-distance phone plan in 1995 that gave you free long-distance for life, but cost a lot of money up-front. Today, that is not very valuable since it is practically included in every cell phone plan or VOIP option.

  4. JustThoughts says:

    Investing $16,440 with 8% return would cover $1,315 of you $1,522 electric bill.

    Would property taxes go up? House value would go up, but that’s not useful unless you sell.

    Removeal for roof replacement?

    Removing the shade tree would put more heat into your house (increase electric usage).

    How much would you have with a new more efficient AC/heater?

    More attic insulation?

    Just thoughts.

    • Lazy Man says:

      Property taxes would not go up. It’s one of the incentives in place to encourage use.

      Yes, roof replacement is a big deal. It is an additional $2500-$3000 expense to bring them down and re-install. Fortunately, my roof has been assessed as nearly new and the panels will actually help protect the roof.

      The shade tree is a birch, kind of long with few limbs with leaves until you get to the top. I highly doubt it lowers the temperature on the house.

      The AC was installed this past winter… not sure many advancements have been made since then. We have gas heat and we’ve heard that it is old, but it still looks new. We are looking into a new system once we get a free energy assessment from our energy company to confirm what vendors have said. However, that’s a separate, independent discussion from a switch to solar.

      We have an obscene amount of attic insulation.

      Stay tune for more analysis on investing $16,440 to cover an electric bill. Spoiler: See the rule of 4% that retirement experts use.

      The $1522 electric bill now would be $2750 in 20 years at 3% annual inflation and my $16,440 wouldn’t be able to grow, because I had pulled 8% each year to cover most of the electric bill. And that might be a very conservative inflation estimate.

  5. Matt says:

    Its amazing that the technology is getting to the point where its becoming realistic for the average homeowner to consider putting the panels on the roof. Given time I think this will only improve in time.

    Question for you: what about the difference in output in the winter? Is that were the credits come in?

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