Lazy Man and Money

Leasing Solar Panels Revisited

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Today over at Planting Money Seeds, there’s a very good article about leasing solar power panels to save money on your electric bill.

This is a very smart thing to do in quite a few states with high electricity prices… BUT… we’ll let’s leave the big “BUT” for later.

The idea is this. You let another company put their solar panels on your roof and you pay less money for electricity. In a lot of ways, it’s as if someone just offered to cut your electric bill in half. At least this is what happened in writer Rachel Gates’ case.

It’s a win-win, because you don’t have to put down money upfront… and solar panels can cost tens of thousands of dollars. Even with subsidies my panels cost around $25,000. It’s a win for the company leasing the panels, because they charge enough on the electricity they generate to make very good money on them.

When I first explored adding solar power to my house, I looked into leasing solar panels. This was based on an article by Evan from My Journey to Millions who looked into leasing solar panels as well. He reviewed the same company, Vivint, and decided against going for it. His reasoning was that saving $40 a month wasn’t worth some of the thorny issues that come up if you decide to try to sell your home.

I think it’s great to get both sides of the story, from someone who went for it and someone who didn’t. In Evan’s case, it was going to cost him 15 cents per kilowatt hour. In Rachel’s case it was going to cost 11.5 cents per kilowatt hour. That’s a big difference, and perhaps that’s why it makes sense for Rachel and not Evan. I’m not sure how they figure out the pricing. It could vary by state or even based on the estimate of how much power they think your home will generate.

When I did my research into buying panels, the cost would be about 7 cents per kilowatt hour accoding to this awesome solar calculator. That’s half of the average of Rachel and Evan’s prices. Perhaps more importantly, that 7 cents stays that way for 20 years… while Vivint can raise the price 2.9% a year. Near the end of Rachel’s contract, she could be spending nearly 20 cents/kWh. And while that will still likely be a bargain to what the power company is charging, it is certainly no match for paying 7 cents/kWh.

The “gravy” in owning panels comes in after 20 years. I don’t know what happens with the Vivint panels after that time. I presume the agreement is over and they haul off the panels unless you want to extend it somehow. Even then, I bet they’d want you to enter into another agreement with the latest technology, which will surely be much, much then (solar power is advancing exponentially fast). My panels could provide power for 30 years. They may be less efficient giving me a price equivalent of 10 cents kWh, but that’s still very, very good.

Perfect is the enemy of good. If leasing solar panels saves you good money, then go for it. However, I strongly urge you to look for the money to buy them outright, even if you have to finance them. It looks like the reason why Vivint is happy to lease panels is that they can do it at a price that makes them good money. If you have the means, why not keep the money for yourself?

My Gift to Mother Earth: Solar Power Completed

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Fifteen months ago, a little after my second son was born, I was doing a routine exercise of reviewing my necessary expenses. I like to go through and see where we are with spending and if there’s any place we can save money. It’s hard to save money on car and house payments. Short of a refinance those payments are going to be set by the choices you make at the time of purchase.

I got to our utility bill and I realized there might be some room there. We’ve switched to high-efficiency light bulb and have so much insulation that it amazes home inspectors. We picked all the low-lying fruit. I knew there was Earth Day article to write in a couple of months, so I thought, “What if I looked into solar power?”

Then I got busy. Funny how that happens when a new child is born. It got to Earth Day and I hadn’t made any progress in calling any solar companies. I wrote an article about exploring the savings of solar power which represented everything I could learn in a few hours of internet research.

Unfortunately, what I learned is that it is really difficult to give people advice on solar power. Each state has its own cost of energy. If you pay a lot, solar makes more sense than if it is cheap. Each state has it’s own aid programs for those choosing to go with solar power. Great aid from your state goes a long way to making the math work. Details about your home positioning and roof condition matter greatly. There’s just so much that goes into it.

I ended the article with the following:

“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.”

As regular readers know, I followed up with a number of articles. I broke down how it works, and found a calculator helping me with when I’ll break even (around 7 years). I went through projections with my solar installation company.

On Saturday of this past week, my solar system got turned on.

I write this on Tuesday and we’ve generated 72.5 kWh of electricity in a few days… one of which was just pouring rain. Last month we used 598 kWh of electricity in total. I’m hopeful, we’ll generate more than we use and earn a credit. That’s always the plan for the spring months when electric use is low and the generation is high. In summer, when the air conditioners kick in, we’ll end up using more than we generate and use those credits.

The solar power company estimates that we’ll save the equivalent to hundreds of trees every year. If that’s accurate, it will have been one of the best things I could ever have done for the environment. Not a bad way to save money, is it?

Odds and Ends – 12/4/2014

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I thought I’d try something new today. It’s an article of a few things I’ve been thinking lately. Each of these are a little too long for Twitter, but not long enough to be their own article. So let’s dig in:

Money Magazine’s December 2014

I love Money magazine and it is often inspires my articles. The latest issue almost seemed to have our roles reversed.

I couldn’t help, but notice that their X-Ray stock was Yahoo. It makes the point that Yahoo’s ownership of Alibaba accounts for 90% of its value… meaning that Yahoo’s core business is worth very little. They make the point that it is 2% of Google’s value. If this sounds familiar, it may be because I wrote pretty much the same thing back in September. Since I wrote that article the company is up 27%. Not a bad gain for a few months, right?

On page 76, Money Magazine says that cheap home solar is going to be a big trend because the cost of panels have fallen 7% per year since 2000. With the Yahoo mention above, I feel so far ahead of the curve with my own move to solar. Of particular interest to me was the mention that homes with solar could sell for almost $25,000 than comparable non-solar homes.

(I won’t mention the page where they say you should trim down on Russian stocks. I clearly got that wrong when I wrote “Invest in Russian ETFs Now?” On the positive side, the Russian ETFs are even cheaper now.)

Getting Back to the Topic of Solar…

I got a letter from my energy company stating that customers will see a significant increase in electric bills due to higher power supply costs. Specifically they say that the bill this January will be 23.6% higher than last January for the same amount of electricity. I ran some numbers throught the excellent calculator on Mr. Electricity’s website and found that the time to break even will be cut by 1.5 years, going from 7.9 years to 6.4 years. I’ll be paying roughly 6 cents for a kWh instead of 21 cents (my estimate of what the costs will be with this notice).

“Never Got to be a Banker”

The other day, I was watching this bit on Seinfeld about Kramer wanting to be a banker:

It always seemed to me like Kramer had plenty of time on his hands since always transforming his apartment. If he devoted some of that time to education he’d been able to get some these sweet banking jobs. If they weren’t mostly in New York, I’d consider them myself. It certainly beats dealing with the bottom rung of the social ladder that promote MLM scams.

Finding the Best Reward Cards on Your Mobile Phone

I’ve been toying with a new app for finding credit cards from Silver Money Services called, well Silver (Google Play | Apple Store). I was curious how comparing credit cards would work on a mobile device. One suggestion I’d make to the company (and I’ll send them this feedback) is that it would be useful to have details on the rewards before you click into a card. For example, if it is a 5% reward on gas, I care. If it’s 1% rewards on everything you buy, which are a dime a dozen, I don’t particularly care.

Personally, I can’t understand the need to apply for a credit card while on a cell phone, but I guess someone had to do it.

Got Gift Guide Suggestions?

I’m working on my annual gift guide. It is very sparse right now. Are there any hot gifts this year that you are looking for. After watching Charlie Brown’s Christmas the other day, I’m thinking of Lucy’s had it right:

Unfortunately it’s hard to put that in gift guide, right? So I’m looking for ideas that are more “wrappable”

Energy Assessments: Free Stuff and One Secret, Sneaky Tip

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When was the last time someone showed up at your home to save you money… and gave you over a hundred dollars worth of free stuff? This happened to me recently… and I want to share the experience with you.

A few weeks ago I wrote abour our journey to solar power I like to think that I covered it in excruciating detail at that link.

As a condition of getting the state grants to subsidize our solar panels, our energy company has to review our home. At first it seems kind of strange, but when I thought it further it made more sense. The state shouldn’t subsidize solar panels for me unless I can show that I’m focused on effectively using energy in my home. After all, if I have a refrigerator from 1970, they should tell me to buy a new refrigerator, right?

Fortunately, the energy assessment is free*! That “*” means that it isn’t really free, but comes at no additional cost to me. Every month we pay a little money for these services… similar to paying E911 on your cell-phone bill. The difference is that you can get the benefits from the energy assessment right away… and without there being an emergency.

There were three major financial benefits to getting this energy assessment… and in no particular order…

1) The solar panels that I mentioned earlier… It looks like they’ll save us tens of thousands of dollars over time.

2) I had my house scoured in detail for anything that might help me save money on electricity bill. You’d think that you might pay third party $300 for this service. And if you did, it still would likely save you money. It wasn’t looked at from just an electricity point-of-view, but also from an heating efficiency one.

As far as this assessment went, our home aced everything in flying colors. I’d love to take credit, but the previous owner did most everything. The only thing I did was go crazy with LED and LCD light-bulbs.

3) Free stuff!!! Who loves free stuff? This guy! Here’s what we got:

* Two smart power strips that are very useful for entertainment centers. The explanation is a little long for this place, but it keeps your DVR plugged in and running while your TV isn’t using “vampire power.” You want your DVR plugged in to record your shows. You don’t care about your TV using energy until you are watching it, right?

* LED Light Bulbs – Here is the secret, sneaky tip… I had a lot of LED light bulbs in the house – I wrote about it recently: Digging into LED Light Bulb Savings. I also had some Compact Fluorescent Lightbulbs (CFLs). I found that in the areas that I didn’t those light-bulbs – such as a bathroom using G25 LEDs (something that I learned afterwards), they will replace them for you! It is almost worth buying in-efficient lightbulbs just to get all the best bulbs, right?

It’s strange. I’m trying to very conscious of our energy usage and we found a ton benefits.

And sometimes you can bring your tricks to the party. I showed the energy assessment expert my HDHomeRun Prime: End Cable Box Rental Fees!. I also mentioned how it is a crazy power hog. The cable companies won’t work to make it better so consumers have to cobble a situation to make it better… and that’s what I did.

Do you have any tricks to save money on energy? If so please let me know in the comments.

18 Lessons and Thoughts about Buying Solar Panels

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Over the last few weeks, I’ve written a lot of articles about our move to solar power. While you can read them all here, I feel like I need some kind of summary.

In each step of the process, I learned something new. Very often I learned it from commenters, who really stepped to the plate. So let’s dig right in.

Is Solar Right for Me?

That’s usually the first question people ask. Writing this to a national audience, there’s no easy answer. I can only break it down into small questions, which may be easier to answer.

1. Does your home have a roof that faces south? There’s a commercial building down the street that faces east-west, but it does have a roof that faces south. And if your front door faces north, the back of your house might have a roof that faces south.

2. Is your roof obscured by trees? Trees are difficult, but you may be able to trim them or take them down. If they are a neighbor’s tree it can’t hurt to ask. If they are environmentalists, point out that by going solar, the CO2 saved is the equivalent of planting 150 each year. The tree trimmed or taken down is going to be a hero. You’ll probably have to pay for the service and maybe even have to give a little extra to neighbor, but it is worth it.

3. Geography isn’t important as you think. If solar is viable in New England it should be viable in almost every part of the United States (maybe not Alaska).

4. What makes solar viable is a combination of many things:

5. Federal tax credits play a big role. Getting a big chunk of money back on your taxes can go directly towards paying down the loan

6. State grants also play a big role. A lot of that is what makes solar viable in places that don’t seem to have the best sun.

7. Solar Renewable Energy Certificates (SRECs) may also play a big role. Simply by producing solar power, you can earn credits. You can sell these credits on the open market and make money. It works a little like carbon credits if you are familiar with that concept.

8. Net Metering plays a huge role as well. We can sell the energy we produce back to the grid at the same price we pay. Thus during the day our meter spins backwards as we sell our solar energy. At night it spins forward as we use it, while we are not producing it.

9. Net Metering isn’t perfect everywhere. Some electric companies only pay a fraction of what you produce. In that scenario you might have to deal with batteries and other expenses that make solar less viable.

10. Mr. Electricity’s solar calculator is spot on…

11. … but it doesn’t replace having a local solar expert come do an assessment for you. You’ll learn the ins and outs of your local market and usually it is free.

12. If possible buy your solar panels don’t lease them. The companies that lease panels are going put you in a contract that my restrict your ability to sell the house. Also, the leasing companies are probably getting a very good rate of return by showing customers that they will still save money. (It’s just that their cut will be bigger than if you bought them yourself.) This is more of an educated hunch than mathematical analysis.

13. Finance the panels with a home equity line of credit if you can. Yes, it is a secured loan, essentially a second mortgage, but the rates are very good right now. Plus, it’s one of the few home improvements that I can thinking of which will actually not only pay you back, but save you money in the long haul.

The Future of Electricity

Thinking about the future of solar and electricity is like Louis Armstrong singing What a Wonderful World in my head. Typically, I try not to think about much what the future will be like. I want to hang onto every moment of the present. Nonetheless, personal finance is very much about thinking in the future, whether it’s getting debt-free, building an emergency, or crafting an annual $200,000 in retirement income.

Part of that is future planning is managing expenses. One of the best ways to manage them is to eliminate them. With that in mind, here are a few thoughts about the future of solar:

14. Technology continues its march and solar panels will get more and more efficient just like computer chips get faster and more energy efficient.

15. Even if your home isn’t suitable for solar now, you’ll be able to buy from a solar farm at a very competitive price.

16. I can imagine a time maybe 30, 50, or 60 years in the future when electricity essentially costs nothing… almost like how my Ooma Telo made my landline cost nothing other than taxes and fees for E911 service.

17. The implications of free electricity will be outstanding. Simple home renovations will mean free heat and hot water.

18. Improvements to plugin hybrids will enable them to go more than 100 miles on a single charge from the nearly free electricity provided by solar panels. If you need to go further, you’ll get well over 80 miles to gallon in gas.

I’m sad to end this series on solar, but I don’t expect to have anything to new to report for more than 6 months. The installation won’t be until next Spring/Summer because they don’t do them in the winter (snow gets in the way).

On the bright side, I’m extremely energized about the next series I am planning. I almost couldn’t tear myself away from the keyboard this past weekend. Look for it Monday of next week. In the meantime, I’ve got a few other articles planned for this week.