Tuesday, April 21, 2015

Rethinking solar

It's been a little over a year since I last crunched the numbers on the possibility of installing solar panels at our house. What I found at that time was a pleasant surprise: based on my back-of-the-digital-envelope calculations, it looked like a solar array on our roof would, in fact, pay for itself eventually. However, it'd cost between $5,000 and $10,000 to install, and it would take anywhere from 9 to 13 years for us to make that money back in energy savings. Given that we're already powering our house with renewable energy through New Jersey's Clean Power Choice Program, it didn't seem worth the hassle of getting set up for solar if the payback time was going to be that long—especially with the prices of solar panels still dropping. It made more sense to wait until we needed to replace our roof, and then look at what it would cost to add solar panels at the same time.

Last weekend, however, I suddenly found myself bombarded on all sides by promotions for solar energy. Saturday brought an e-mail from Green America, urging me to get quotes on the cost of a solar installation. Then InboxDollars, one of my survey sites, sent me an e-mail on Sunday morning, offering a free quote on a solar system from SolarJoy. And then on Sunday afternoon, my Morris dance team performed at an Earth Day fair, and a friend of mine was there, staffing a table for a company called Solar City, which leases solar panels to homeowners. With the message "Go Solar!" coming at me from every direction, I started wondering whether maybe the universe was trying to tell me something. So I figured, well, maybe it couldn't hurt to look into the question one more time and just find out how the numbers looked for us at this point.

I clicked on over to the Green America site, which offered the option of an "instant estimate" to see how much I could save with solar. I figured it made most sense to do that before getting actual quotes, since there was no point in going through the process if it didn't look like a solar system would be cost-effective. And, unlike most other solar cost estimators I've tried, with this one the "instant" claim was pretty accurate. I only had to answer two questions. First, it asked for my address and pulled up a map so I could pinpoint the location of my roof. Second, it asked me how much I spend on electricity "in an average month." My electric usage actually fluctuates quite a bit from month to month, but since I keep track of it in a handy little Excel spreadsheet, it was quite easy to average together the numbers from the last twelve months. (The total I gave it, $42, includes the few bucks a month I pay as a surcharge for green energy from the Clean Power Choice Program. I knew that might make my electric use look a little higher than it really is, but I figured that's what I pay for green power right now, so I might as well try to get an apples-to-apples comparison.)

The site crunched the numbers for a minute and came back with some intriguing and surprising results:
  1. Our house has 180 square feet of sunny roof space. That's enough room for a 2.6-kilowatt system, which would be enough to meet 100 percent of our energy needs (on average). This estimate is roughly in line with the one I got from Affordable Solar last year.
  2. We could buy such a system outright for a net cost of only $5,400. That's after rebates and tax credits, which the site says could cover 30 percent or more of the cost. Presumably the up-front cost would be around $7,700, and we'd be able to get about $2,300 back.
  3. The site claims this system would pay for itself in only 5.8 years. However, I'm not clear on how they came up with this number, since when I divide a net cost of $5,400 by our $507 per year in energy bills, I get a payback time of nearly 11 years (10 years and 8 months, to be exact.) Maybe the site is assuming that the price of energy will be rising every year, while my solar panels, once paid for, will stay paid for. Given how volatile energy prices are, though, that assumption seems a little iffy to me.
  4. The site claims that, over 20 years (presumably the lifetime of the solar array), this system would net us about $13,000 in total savings. Once again, I'm not sure where these numbers come from. According to my calculations, over the course of the next 20 years, we should expect to spend about $10,100 in electricity bills; deduct the net cost of the solar system, and that cuts our savings down to $4,740. Even if you assume that our electric bills will gradually double over that 20-year period, our total savings still wouldn't hit $10,000.
  5. According to the site, buying the system outright is actually the most cost-effective option. Buying the solar panels with a loan at 0 percent down would only save us $9,900 over 20 years, because the interest payments would eat into our savings. And renting the system, though it would cost us nothing up front, would yield only $4,200 in savings over 20 years—about a third of what we'd save by buying.
If these numbers can be trusted, it looks like buying a solar system is definitely our best option, and the up-front cost isn't actually that bad at all. However, given that the site's numbers are way out of line with mine, I'm still skeptical.

So perhaps the best way to do a reality check on these figures is to go ahead and get some real quotes. It'll be a lot more work, since I may need to spend a lot of time on the phone with the different companies giving them all the same details about our property, or possibly even having installers out to look at the site in person. But in the end, I should have a more accurate idea of just how much we could actually save with solar panels, and over what time period. And, even if it doesn't turn out to be cost-effective at this time, it seems like an appropriate way to commemorate Earth Day.

Of course, there's also the possibility that we'll sign up to get quotes and won't actually receive any, because our energy needs are so low that no company would want to bother with the piddly little system we'd require. But hey, that's useful information too.
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