Is Solar worth it for us?

[MrGreen]

We just bought a new house and one side has excellent south-facing exposure for a rooftop solar system. A new roof means we'll have 20 years or so before the panels would have to come off for a roof replacement. I've started digging into the specifics though and I'm not sure if it is economically efficient so I was hoping to run some of this past more solar-experienced Mustachians.

We are served by a non-profit electric co-op. One nice thing about this is that electric rates don't change often. The current rates have been in place since January 2015. In the summer we pay 10.18 cents per kWh. In the winter we pay that same rate for the first 1,000 kWh and then 9.15 cents for any usage over that. A state tax of 7% is added. Our total cost per kWh during our last bill was 10.72 cents for 1,188 kW of energy. That does not include the facilities charge because we would continue to pay that even with a solar system.

We've had a couple solar installers come out and give us quotes. Our well-known regional installer, Cape Fear Solar Systems, is transitioning to a Swedish solar panel company now that LG is ceasing its production of panels. The panel they're recommending is the REC 400AA solar panel. For a 15 panel grid (6 kW total) and no battery, we were given a quote of $21,575 ($15,966 after tax credits) if paying cash. Financed, the amount is $27,515 ($20,362 after tax credits). That's a price of $2.61 per watt (after tax credits) if paying cash or $3.39 per watt if financed.

The model presented to us shows the solar array generating 9,483 kWh of energy each year. That same energy would cost us $1,015.63 based on last month's bill, an average of $84.64 per month. If we financed the solar installation through Sunlight Financial, a 20-year loan @ 0.99% would yield a monthly payment of $90.88, assuming we dumped the tax credit into the loan.

Where the math gets a bit trickier is in how our co-op handles net metering. Unfortunately, they do not give us a 1 for 1 credit for every kWh of energy we push back to the grid. They only credit us for their energy cost. I'm still waiting on a call back from them to verify what that number is but the sales rep from Cape Fear Solar Systems says it's 3-4 cents per kWh. This will make our solar system somewhat financially inefficient in the winter when our peak power consumption is during the time of day our solar panels produce no energy. The sales rep did say that we could consider sizing the system a bit smaller, essentially capturing all of our base usage. He said the panels will produce a little less in the winter anyway, and we'll still be heating some during the day so it might not be as off-balance as I think.

I'm also concerned about the shoulder months. Here on the coast of North Carolina, it's pretty common for us to have 3-5 months in the spring and fall where little heat or A/C is needed so energy usage is drastically lower than in summer and winter. It's definitely aggravating to think about generating an energy surplus for all those months at only a credited rate of 3-4 cents per kWh when I know we'll be charged ~10.71 cents for that same energy during peak months.

This makes me think that I can't just compare the financed cost of the system against the cost we would otherwise pay our electric company because that isn't how the math will actually work. For every surplus kWh that we produce but then later use during peak times, we'll only be reducing our energy cost by a third or so.

Does this make the system so financially inefficient that it's not worth pursuing?

[nereo]

You mentioned your annual energy use and the predicted solar production of the system but not the monthly use or production. 

You should be able to get monthly estimates, which you can use to compare to your monthly needs to determine just how out of sync they may be, particularly in those “shoulder months”.

Overall it appears that on-net you will be paying a small amount more each month than your total electricity bill (exactly how much more depends on above). In return you get a high degree of immunity from rate increases and the satisfaction of knowing your footprint will be smaller. To me that would make it worth it, but from an economic standpoint it’s probably going to be a bit less.

On a related note - how weather tight and insulated have you made your home? Just plugging air leaks with caulk and great stuff, plus insulating rim joists and the attic will have -by far- the greatest ROI when it comes to energy usage.  That and making sure you are using LEDs.
Pick those low-hanging fruit first, before solar. 

[MrGreen]

@nereo the house was just built so it's as tight as all the current building codes would require. R15 in the walls, R38 in the ceilings. All the lights in the house are LED and there are some smart components like the thermostat which I have programmed to heat and cool less in the middle of the day and at night while we sleep. There probably isn't any low hanging fruit to be had in that regard.

I kinda thought the solar would make us immune to energy increases as well, but that would be somewhat limited for all the energy we still need to buy from the grid since we're not going to get  a 1-to-1 credit for any energy we push back to the grid. It could still be worth it. I just need to do some better modeling. We also need to live in the house for a few more months to see how our energy usage changes in the shoulder and summer months. The deadline we would ultimately be looking to beat is the end of the year when the tax credits are going to be reduced.

[AnotherEngineer]

Mr. Green,

Did you end up pursuing solar? We moved to Wilmington from out of state last year and are making this same decision. Leaning towards no because of low electric costs and likely only staying 5 years. Our 1949 house does have some low hanging fruit as well!

Ps. I've searched this for um for all your comments referencing Wilmington while we were making our moving decision. Thanks for sharing!

[MrGreen]

@AnotherEngineer we did not. The cost was not worth it since we knew there was a decent chance we would not be in the home long term. As it turns out we except to move in a few months. I will say the projections of our solar usage used by companies looking to do the install we're significantly higher than our actual usage. Now that our home is almost a year old we know that our annual energy usage is under 10k KwH per year, which is almost half what everyone was projection.

If only staying 5 years it's not going to pay for itself unless you self-install and if you finance it that will be an additional headache that will have to be resolved before selling. We were told the cost of the system would raise the sale price by an equal amount but I seriously doubt that.

I have some pretty extensive posts on here about how awesome Wilmington is and some of the different areas. Glad it helped you with your move! Are you enjoying the area?

[Morning Glory]

@AnotherEngineer we did not. The cost was not worth it since we knew there was a decent chance we would not be in the home long term. As it turns out we except to move in a few months. I will say the projections of our solar usage used by companies looking to do the install we're significantly higher than our actual usage. Now that our home is almost a year old we know that our annual energy usage is under 10k KwH per year, which is almost half what everyone was projection.

If only staying 5 years it's not going to pay for itself unless you self-install and if you finance it that will be an additional headache that will have to be resolved before selling. We were told the cost of the system would raise the sale price by an equal amount but I seriously doubt that.

I have some pretty extensive posts on here about how awesome Wilmington is and some of the different areas. Glad it helped you with your move! Are you enjoying the area?

I'm looking for a house now and my realtor warned me about scammy solar companies in the area. I saw some articles about one that is finally being investigated for fraud in multiple states,
but there may be others. Too bad because it might discourage people who would otherwise benefit themselves and the planet. 

[ChpBstrd]

Your installation sounds a very similar to mine, and in a similar climate as mine, though it sounds like prices have gone up since mid-2022. I pay about 10.5 cents per kwh. I used the attached spreadsheet to calculate the ROI on my system, including in scenarios where I switch to all electric and shut off my natural gas bill.

I'm also concerned about the shoulder months. Here on the coast of North Carolina, it's pretty common for us to have 3-5 months in the spring and fall where little heat or A/C is needed so energy usage is drastically lower than in summer and winter. It's definitely aggravating to think about generating an energy surplus for all those months at only a credited rate of 3-4 cents per kWh when I know we'll be charged ~10.71 cents for that same energy during peak months.

So here are the questions you need to ask your utility company:

1) What is the rate credited for surplus electricity generation?
2) Do the credits carry over each month, each year? Do the credits expire at some time, such as at the end of the year?

In my situation, I am credited at my billed rate for electricity, and any surplus credits add up until they are consumed or lost at the end of the year. I sized my system a little bit on the small side, so I will never lose credits that way. The point is to pre-pay your future bills to reduce SORR in retirement.

Your winter production will be lower due to the angle of the sun, shorter days, and gloomier weather, so if you generate credits in the spring and fall, you'll probably use up those credits running your heat pump in the winter. In my case, I expect to use up any surplus running my heat pump on cold, cloudy days in November and December. So even if I had sized my system to over-produce most of the time, I'd still probably never generate energy I'm not compensated for.

Note that if you sign on the dotted line today, it may be 3-4 months before you start generating electricity. Your contractor has to wait for parts to arrive, set an installation date, arrange for inspection, fix deficiencies noted in the inspection, and then arrange for another inspection a couple of weeks later, etc.

[MrGreen]

@ChpBstrd my electric company is a cooperative and unfortunately, generating excess solar is a terrible deal under their set up. They do not hang on to credits we would generate and offset them with usage. They simply pay out 3.1 cents for every KwH we push to the grid and it's added to the monthly bill as a credit. They charge 10.444 cents for electric usage so those shoulder seasons are about as cost inefficient for solar as possible if the array is sized to produce more electricity than you use at the lowest time of year. This is the biggest reason we decided against it. It's a shame because our house is perfectly positioned for solar. We have a smooth south-facing section of roof that gets sun virtually the entire day. The solar calculators put it in the mid-90th percentile for solar generation potential.

The for-profit electric company that serves the larger Wilmington metro area, Duke Energy Progress, does things differently. They give a direct 1-for-1 credit that stays on the books for the year and if there's a surplus at the end it is paid back to you at the same rate you pay for electricity. Our current house is right on the cusp of the rural/urban border. If we drive just 2 miles down the road it becomes Duke territory. The new house we're having built is in Duke territory. We expect to be there long-term so solar would be a legitimate option. Unfortunately it's also a half mile from the water and I saw numerous solar panels on the roads in that neighborhood after Hurricane Florence and that was only a Cat 1/2 storm. Probably not a good idea. The roof positioning of that house is not nearly as ideal either so the efficiency of the system would definitely be lower.

[Sanitary Stache]

I just got my quote from our local well know solar provider. 14 Panels labeled Q-Cell 400 AC, and 5.6 KW. I have some shaded roof spots so panels would range from 56% to 76% of their potential (I don't totally understand this % number their software projected). They project that this array will generate 4,189 KwH/year.

Cost with financing is a little over $27,000 with $8,000 tax credit projected and a 2.99% interest rate.

We would want to buy in cash though.  I don't know how that will change the install cost yet.

I decided that financed, it doesn't make sense.  I think our monthly cash flow would increase with the solar and the "payback" is projected for 25 years, but depends on electricity costs increasing 3.5% each year.  Which seems like a big guess to me.  Something about financing this makes it seem like I do'nt really need access to the $19,000 until I am done paying for the money.  I am not sure how to describe it.  Financing makes it more complicated.  I am buying solar and buying money and the solar doesn't make the cost of the money make sense.  But if I am not buying money, then it starts to look alright.

If I take the $19,000 investment and put it into my AA and assume I can throw 4% from it each year, that is equivalent to $760 per year.  So I am considering the cash for its income potential now, not in 15 years like I would if I was financing. (When I had finished paying for the money, I may be missing something in this line of thinking and I sense I need to compare the cost of the financing to get a sense if I am on to something here.) In any case, I don't need to buy the money, I have it (or will if I do this).

If I take that $19,000 and buy these 14 panels they might generate $1,280 worth of energy credits each month.  Where I am located we get basically no generation in January and only slightly more in the rest of the winter months. So I am making that $1,280 guess on selling all electricity at the rate my electric company will credit rather than at the rate I buy it.  In practice, some of my electricity will be credited at the higher rate - the electricity I use "in house" while it is being generated. 

My State regulates how the net metering works and sets the price of excess electricity.  It is currently set at 16 cents/KwH and is locked in at the rate set when the solar panels are installed. My panels in a solar park earn a higher credit from 5 years ago, the credit is reduced pretty much every year as the utility commission decides to reduce the incentive.

Now I am just looking at comparing the yearly "return" on investment as it effects my cash flow, using the worst case cost of electricity generated and the 4% rule.

It looks like the panels will do better than 4%.  Now the 4% Rule is forever and the panels will reduce over time and eventually need to be replaced, so they are still probably losing.  There is so much variability in my assumptions.  I am thinking that the panels aren't a terrible choice and they look like they are equivalent to taking 4% per year from index fun investments.  Pro is increased diversification.

But then comes the, will we still be in the house when.." question.  I doubt the panels increase the house value by $19,000.

[GilesMM]

I just got my quote from our local well know solar provider. 14 Panels labeled Q-Cell 400 AC, and 5.6 KW. I have some shaded roof spots so panels would range from 56% to 76% of their potential (I don't totally understand this % number their software projected). They project that this array will generate 4,189 KwH/year.

Cost with financing is a little over $27,000 with $8,000 tax credit projected and a 2.99% interest rate.

We would want to buy in cash though.  I don't know how that will change the install cost yet.
...

Those are not bad panels.

Troubling they haven't quote without financing.  Your target cost should be $2.38/w or $13,300 BEFORE the tax credit.  I would offer them this and see what they say.

https://www.energysage.com/solar-panels/q-cells/2674/duo-blk-ml-g10-400/

To understand the financials you need to know your annual usage, annual utility cost, then you can look at the benefit over the 25 year life of the panels including rate of return and break-even year. 

[bryan995]

I just got my quote from our local well know solar provider. 14 Panels labeled Q-Cell 400 AC, and 5.6 KW. I have some shaded roof spots so panels would range from 56% to 76% of their potential (I don't totally understand this % number their software projected). They project that this array will generate 4,189 KwH/year.

Cost with financing is a little over $27,000 with $8,000 tax credit projected and a 2.99% interest rate.

We would want to buy in cash though.  I don't know how that will change the install cost yet.
...

Those are not bad panels.

Troubling they haven't quote without financing.  Your target cost should be $2.38/w or $13,300 BEFORE the tax credit.  I would offer them this and see what they say.

https://www.energysage.com/solar-panels/q-cells/2674/duo-blk-ml-g10-400/

To understand the financials you need to know your annual usage, annual utility cost, then you can look at the benefit over the 25 year life of the panels including rate of return and break-even year.

That quoted price is absurd :)

Even Tesla direct, WITH a Powerwall comes in at $22,876 for 4.8KWH installed.

4.80 kW Solar Panels                  $11,376
1 Powerwall Battery                    $12,850
Solar & Powerwall Discount        -$1,350
Cash Price                                  $22,876

Federal Tax Credit                      -$6,776
Price After Potential Incentives     $15,812

You can drop the powerwall for the $11,376 installed price. 
$2.37 per watt BEFORE any incentives

TLDR - just use tesla :)

[Sanitary Stache]

Tesla doesn't serve my area.  Bummer.  But can I just do it myself?

Edited to Add:  My local electric supply company won't sell me the parts, so I am guessing there is some State regulation in this field, or maybe its not worth it for them to work with ignorant DIYers.

I am seeking more quotes.

[Syonyk]

I just got my quote from our local well know solar provider. 14 Panels labeled Q-Cell 400 AC, and 5.6 KW. I have some shaded roof spots so panels would range from 56% to 76% of their potential (I don't totally understand this % number their software projected). They project that this array will generate 4,189 KwH/year.

Okay.  What's your annual power consumption?  That seems a bit low production for that size system, but if the roof isn't great, probably sane.

Cost with financing is a little over $27,000 with $8,000 tax credit projected and a 2.99% interest rate.

Excuse me?  $4.82/W?  What is this, 2010?  2005?

In 2022, there are plenty of words for that.  None printable in polite spaces, or even here.  I'll simply say, "Wow, that's obscene..." and leave it at that.

But can I just do it myself?

In almost all areas, yes, if you're the homeowner.  And, of course, if you're comfortable doing the work.

Ground mount is cheaper, but for roof mount, you should be able to hit $1.25/W, maybe $1.40/W if you're going with some seriously premium panels.

If you have a 200A main panel, you can backfeed up to 32A (40A under the 120% rule, solar is defined as continuous so gets an 80% derating, so 32A/240V/7.6kW.

Figure out the setback requirements, figure out what you want to do for panel placement, and do it.

If you're under NEC 2014, you can probably get closer to $1/W, but if you're under NEC 2017, you're going to need per panel electronics, and it sounds like you've got shading on your roof, so either microinverters and pay the Enphase tax, or if you really hate Enphase as you ought, optimizers and a string inverter.  Costs end up the same either way.

[Sanitary Stache]

@Syonyk Thanks!

Annual power consumption is 6,227 kW in 2021, 7,575 (estimated) in 2021.  I am also planning to replace my oil hot air furnace with an air to air whole house heat pump.  I haven't sized this yet, but I am already using more electricity than I can generate with the available roof space (based off the calculations from this quote).  I have requested quotes from two more companies, but I am going to try to put together a DIY bill of materials.

I also have a tracker in a solar park. I haven't paid much attention to it, I bought it before I knew about money.  My share of that 16 panel (labeled CS6P-260) 4.16 kW system has been 4,182 Kw in 2021 and I am guessing 3,729 Kw total for this year. That was $19,200 before the tax credit in 2016 or $4.61/Kw and $3.20/Kw after the credit.  This tracker gets a better net metering credit value than what is currently on the books in my State.

I am also getting roof replacement quotes for standing seam.  But I am starting to convince myself that I should DIY all of it, I could DIY an asphalt shingle roof.  I can't be working full time.

[Syonyk]

Standing seam has the benefit, for solar, of having zero roof penetrations.  There are a range of clamps that attach to the standing seam bits, so you're not putting any extra holes in the roof.  And a good standing seam roof ought to last about forever.