The Right Time For Solar?
Welcome to the latest edition of the Low Impact Living newsletter! We'll discuss solar power this time - as prices for solar equipment come down, rebates become more prevalent, utility prices go up, and the need to do something about global warming grows more urgent, the case for solar grows stronger every day. If you're like us, though, you still have many questions, so we'll try to answer some of them here.
Before we move on to solar, we'd like to invite all of you as subscribers to our newsletter (and we hope repeat LIL visitors!) to take a short survey that will help us with some new things we're working on to make our website more valuable to you. And, appropriate for this newsletter, we'll pick one winner from the people who fill it out to receive a Soldius 1 solar iPod/cell phone charger. So, just click on this link to take our short survey - it will take no more than five minutes of your time.
We've also added over 200 new service providers across the country in April. So, if you've searched for something before and didn't find it, please come back and try again. And if you still don't find it, let us know what you're looking for by emailing us at firstname.lastname@example.org.
Energy Efficiency and Solar Power
Before we dive into solar, it is critical to make one point up-front. You can cut a lot off of your solar installation cost by investing in energy efficiency first. One rule of thumb is that every dollar you invest in energy efficiency will cut two dollars from the cost of a solar installation. Such savings come by making sure that your house is tightly sealed and well-insulated, installing compact fluorescent light bulbs and other energy-efficient lighting, and buying the latest Energy Star appliances. Most homes with older construction and appliances can cut their energy use (and solar costs) in half. To find energy efficiency projects tailored to your area, please visit Low Impact Living's environmental impact calculator.
Onwards To Solar
If you're new to the technology, then this page from our website provides some good background information on solar energy. Here, we'll be discussing solar photovoltaic systems (i.e., solar electric or PV), and in particular what are called grid-tied systems. A standard grid-tied system does not have batteries and is connected directly to your utility's power lines. When you are generating power, your electric meter literally spins backward and you accumulate credit for the power you are generating. At night or during cloudy weather, your power still comes from the utility. If sized correctly, a grid-tied system can be designed to offset 100% of your electric bill over the course of a year.
Key Solar Decision Factors
In the US, the average house consumes approximately 10,600 kilowatt-hours (or kWh) of electricity each year. This can vary substantially - in places like California, where most heating is by natural gas and the climate is relatively temperate, the average consumption can be as low as 5,900 kWh per household. This contrasts with states that have high cooling requirements and electric heat. In Florida, for instance, the average household electricity use is 15,250 kWh. For the sake of consistent comparisons, we'll assume the US average of 10,600 kWh for all regions.
A chief reason for installing solar panels (and our favorite one) is that they eliminate your carbon dioxide emissions from using fossil-fueled electricity, and thus a major source of your global warming contribution. Because different regions use different fuels in their power plants, though, this benefit can vary significantly from place to place.
Let's assume our 10,600 kWh / year savings from above. If you obtained this in California, your carbon dioxide savings would be about 6,700 pounds / year. Not bad! But, if you lived in Colorado, you would save over 21,000 pounds of carbon dioxide. Why the dramatic difference? California's power supply is mostly natural gas-fueled and is thus relatively clean. Colorado power, on the other hand, comes mostly from coal. To see how much carbon dioxide you could save, multiply your annual power consumption by the factors shown in the table at the bottom of this page from the LIL website.
This savings isn't just for treehuggers: people are actually paying to reduce carbon these days by buying carbon offsets. Depending on where you buy offsets from, the 21,000 pounds of carbon produced in our Colorado example above would cost you over $120 / year. This cost is likely not only to increase in the future, but may also become mandatory (via a carbon tax on your utilities). So, make sure you consider this "carbon discount" into your solar calculations.
Location Location Location
One of the key drivers of the cost of solar PV systems is how much sun your area gets. A house located in Seattle would require 65% more solar panels than a house located in Phoenix to produce the same amount of electricity. So, not counting rebates, the cost of a solar system that produces 10,600 kWh in Phoenix would be on the order of $50,000, while a comparable system in Seattle would cost nearly $75,000. This may seem discouraging, but recall that it is pre-rebate - generous incentives can often cut these costs significantly, as explained below. And, many people reduce the cost by buying solar systems that only produce some fraction of their electric needs. If designed correctly, you can always add more panels later.
Rebates are the next large variable. Many cities and states around the country have launched generous incentive programs to promote the installation of renewable energy. Nationwide, the federal government offers a $2,000 tax credit for solar installations. Taken together, rebates and tax credits can cut the cost of solar panels by 50% or more. In Los Angeles, our representative 10,600 kWh system could cost $50,000 before rebates, but only $24,000 or so afterwards. Other states and regions aren't quite so generous. This great website lists all renewable energy (and other energy-related) rebates and incentives by state. Check it out to find out about the incentives near you.
Local Electric Rates
With a grid-tied system, the higher your electric rates the better your solar economics are. As an example, certain regions of California have peak power rates that can exceed $.30 per kilowatt-hour. By having a PV system that generates peak power during the daylight hours, you can sell power back to your utility during these high-rate times and buy power back during the off-peak nighttime hours when your panels aren't working.
In other areas, low electricity rates make solar less attractive. In Los Angeles rates never exceed $.15 / kWh and typically average less than $.10 / kWh. So even though Los Angeles has ample sunshine and an attractive rebate program, the lower power rates mean that you don't save as much money as you would in another area. The Chicago area is similar: even with recent price increases, electric rates are still below $0.09 / kWh. Great if you use lots of electricity, but bad if you are trying to make the economics of PV work for you!
One quick but important addition to this electric rate discussion. What is explained above is all about today. One of the huge benefits of solar power is that you lock in your electric rates. Electric rates are on the upswing across the country, and they will only increase if we ever have a sane global warming policy that puts a price on carbon emissions. This will make your solar investment more profitable.
A common critique of solar PV is that the up-front costs are so high, often exceeding $15,000. Many solar installers counter this fear by saying something like the following: "if you finance your purchase, you'll be cash flow positive from day one." How does this work? Well, what they mean by this is that the principal and interest payments on your loan net of any interest-related tax savings, when averaged over each unit of power generated, will be less than the cost of buying that power would have been.
This does NOT necessarily mean it is a good investment: even if you are making money on each unit of power consumed, the amount might be so small that your payback period could exceed 15 years and your return on investment could be much lower than if you had put that money in the bank. So, as with everything we've discussed so far, while it is true that you can become cash flow positive from day one via financing, the answer to the real question - what is the likely return on my solar investment? - depends on many factors, including the interest rate on your financing and your tax bracket since you can often deduct interest.
Does Solar Increase Resale Value?
Another argument in favor of solar PV is that it will increase the value of your house. This may be true. But is it because a future buyer values the environmental benefits of a solar house, or because they are factoring their lower energy costs into their increased purchasing power? If the latter, then this is double-counting: you have already factored your energy bill savings (typically over the next 20 years) into your own economic evaluation of solar panels.
So, if someone can show you evidence that homes in your region are selling for some premium above and beyond what you've calculated solar will save you in electric costs over time, then great! Otherwise, be careful about including this in your analysis.
The Bottom Line
Phew. We're finally done with our little review. But you are probably more confused than you were before. How do I put this all together?
In summary, solar makes a lot of sense in many parts of the country. In some areas (such as parts of CA, IL, NJ and MA) the right combination of enough sun, strong incentives, high power prices and above-average electricity use mean that solar is nearly cost-competitive today, and can generate financial returns comparable to investing in the stock market. Without doing the detailed analysis, here are some easy things that will suggest whether solar makes sense for you:
Solar may make sense if:
- You live in a relatively sunny locale;
- Your local government or utility rebates are attractive (i.e., > $2.00 / watt);
- You have net metering laws in your area that allow you to sell power back to your utility;
- You have power rates > $.15 / kWh, higher rates during peak periods, and spend more than $100 / month on electricity;
- You are in a high tax bracket (should you choose to finance); or
- You truly want to eliminate your energy use / carbon footprint and have the money to spend!
Above and beyond economics, many folks (including us) feel that solar PV makes sense just for the environmental benefits. Even if economics is the critical factor and your situation doesn't meet the criteria above, your specific situation might still be profitable over the long run. Find a solar installer in your area in our database - most will provide a free quote along with an economic analysis tailored to your conditions.
There are many other good tools that will give you some sense of how much solar will cost in your situation. Check out the following websites for more information:
California Energy Commission Clean Power Estimator (but it works everywhere).
Imagine Energy System Design Tool A good simple estimate of system size and cost from Imagine Energy LLC, a solar company in Oregon.
A good overall estimator from Sharp Solar, a leading panel manufacturer.
PV In Your Pocket
Whatever way you cut it, a full solar PV system is still a major investment. Fortunately, solar PV is making its way into more affordable products we use every day.
There are several great ways to charge your iPod, Blackberry or cell phone using solar chargers. They will save you some money and carbon, but you'll also never have to find an outlet again. We like the Soldius 1 Solar Charger and the Solio Universal Charger. Or, if you prefer to wear your charge, you can even get backpacks with integrated PV, like the Helius model shown here.
There are also some great solar products for your yard. Installing solar accent lights outdoors can save $10 - $50 per year and several hundred pounds of carbon dioxide. Check out these solar landscaping accent lights. Or, solar powered fountains will add the soothing sound of running water to your yard, and may even earn you some points with the local bird population.
The Other Solar Power
While solar PV is sexy right now, the best way to capture energy from the sun is solar hot water. Solar hot water systems are over three times more efficient than solar PV systems in converting the sun's rays into energy you can use in your house. And in many parts of the country hot water heating is the second or third biggest energy sink in your house (after heating and cooling), so this can lead to major savings. We don't have room to cover it in depth here, but we will in a future newsletter where we discuss green water heating options. Until then, check out this article from Home Power Magazine for more information.
Well, that's all for this newsletter. Thanks for visiting Low Impact Living, and we hope you have a happy Earth Day!
Jason Pelletier, Co-Founder, Low Impact Living
Do you have a topic you would like us to cover? Send us an email at email@example.com and we will try to incorporate it in our newsletters over the next few months.
Individual results of using green products and services listed herein may vary. Low Impact Living, Inc. takes no responsibility for individual results, nor for service providers or products listed on this website.