- The current 30% federal tax credit for installing solar panels will go down each year before being eliminated in 2022.
- Join theÂ Solar United Neighbors co-opÂ by July 31st, 2019 to get a bulk rate on installation. Thereâ€™s no obligation.
Whether or not you want to save the environment, you almost certainly want to save money on electricity. The best way to do either is to reduce your usage — more efficient light bulbs and appliances, turning off things youâ€™re not using, line drying clothes, etc. â€“ but solar panels can help a lot, too. How much depends on a lot of things, so letâ€™s look at my own, personal example.
In 2017 we spent $10,978.8 (originally $15,684, but reduced after federal tax credits) to install twenty-one 270 watt solar panels. I estimate that over the lifetime of the solar panels weâ€™ll save at least $16,475.12. Why â€˜at leastâ€™? Electricity prices will probably go up.
Take home: The current federal solar tax credit makes a big difference. Get it while you can.
Estimate Shmestimate: Show Me the Money
My estimate comes from looking at how much electricity our solar panels generated (6.26 megawatt hours, MWh) in the first full calendar year of operation (2018) and multiplying that by the most relevant Indianapolis Power & Light (IPL) residential rate (9.0752 cents per kilowatt hour, KWh, for usage between 500 and 1000 KWh/month). Since solar panels degrade over time, I also factored in a reduced 80% generation rate for the last five years of a thirty year lifespan. There are various factors which will cause this estimate to be inaccurate: The aforementioned changes in electricity costs, changes in the weather over time, and the actual degradation of the solar panels vs the expected degradation.
How much have we actually saved? In 2016, the last full year before we installed solar panels on our roof, we spent $1,310.89 on electricity. In 2018, the first full year with solar, we spent $457.90. Those numbers, however, are misleading because we also switched from an electric water heater to a gas water heater at the same time. Our combined electric/gas for 2016 vs 2018 was $2,621.25 vs $2,027.20. Even that, however, is still misleading because between 2016 and 2018 my wife and I ended up making changes to how we eat that led to a considerable increase in cooking and baking at home, which, given our gas stove, presumably affected our gas usage, though I don’t have a good sense as to how much. Also, I think weâ€™re using more hot water now that we have a tankless water heater, and donâ€™t have to worry about the shower getting unexpectedly cold. Additionally, not considered in those numbers are anything related to changing electricity or gas prices or differences in weather/sunshine.
So, when will we break even? Itâ€™s irrelevant, as what really matters is how much money weâ€™ll save over the life of the solar panels, but people keep asking, so â€¦ according to my most conservative estimate, it will take eighteen years. If you make some different assumptions about our electricity vs our gas usage, and make some beneficial assumptions about where electricity prices are going, itâ€™s about ten years.
Take home: Month to month changes in expenditures are affected by much more than switching to solar power, so gauging the savings of a solar power installation is best done by looking at how much electricity was generated and calculating what it would have cost to purchase that electricity from your utility.
Other ways solar power can make you money
You can earn and sell solar renewable energy credits (SRECs) and you can earn a cryptocurrency called SolarCoin.
Indiana doesnâ€™t have its own market for SRECs, but the Ohio market allows Indiana residents to register their solar generation facilities. We earn one SREC for each MWh produced. Utilities in Ohio that want to meet mandates for providing energy using renewable sources purchase the SRECs. While some other state SREC markets have paid hundreds of dollars per SREC, sadly the Ohio market has not been very lucrative. I am happy to report that there at least has been some increase lately. Prices were around $5-$6/SREC through all of 2018 but have recently gone up to $20-25/SREC. So, the six SRECs we produced in 2018 only earned us about $30 total, but the six we expect to produce in 2019 will likely earn close to $150. You can hold on to SRECs rather than selling them right away, if you like. As with any market, you have to decide when you think would be the best time to sell.
Your solar provider can help you get registered on the Ohio market. The result is an account with a firm (such as SRECTrade) which enables you to provide your SRECs for sale. Typically, you will need to have a revenue grade meter installed as part of your solar generation system, and the amount reported from that revenue grade meter is used to earn SRECs. Our revenue grade meter was itemized on our installation invoice at $250 by our solar installer, though my understanding is that many installers simply include them as part of the installation.
The SolarCoin cryptocurrency was created to incentivize solar energy production. Will it work? I have very little idea. In the meantime, weâ€™re earning one SolarCoin for each MWh produced. I have a digital wallet on my computer to hold them. Currently, SolarCoins are trading for about three to five cents each. I havenâ€™t bothered looking in to how to actually sell them yet.
Take home: Get a revenue grade meter and register on the Ohio SREC market. Register your production with SolarCoin, but donâ€™t hold your breath on making money from it.
Generation and usage never match perfectly
Solar panels generate electricity when the sun is shining. The electricity thatâ€™s generated is direct current (DC). It gets fed into an inverter which converts it to alternating current (AC), which is what we use in our homes. What if you generate more electricity than you need at any given moment? What if itâ€™s cloudy or dark? Sometimes youâ€™ll want to send excess electricity back to the grid and sometimes youâ€™ll need additional electricity from the grid. Your solar installer will help you arrange with your electric utility to swap your current, one-way electric meter for a bidirectional meter which can measure both the electricity you draw from the grid and the electricity you send back to the grid. Donâ€™t confuse this bidirectional meter with the revenue grade meter needed for getting SRECs. The bidirectional meter goes outside your home. The revenue grade meter goes inside your inverter. When you generate more electricity than you need, it will flow back into the electrical grid and you will get credits on future electric bills. When you donâ€™t generate enough electricity at a given point, you will draw enough electricity from the grid to make up the difference. Your electric bill will thus show you two numbers: The amount of electricity you drew from the grid and the amount of electricity you sent back to the grid.
Note that IPL not only charges based on a usage rate, but also a relatively small, fixed connection amount. There are two standard amounts: $17/month for bills with usage over 325 KWh/month and $12.50/month for bills with less than 325 KWh/month. Reducing our monthly rate has dropped us into the lower category, which is a welcome if small extra savings.
Whether or not the electricity you send back to the utility is credited at the same rate that you are charged depends on when you get your solar system. For systems installed from now until either the middle of 2022 or until the amount of investor owned utilities (IOUs, typically solar, but could also be wind or others) reaches a certain size, IPL is required to provide full retail net metering rates until 2032. From what Iâ€™ve read, at current installation rates thereâ€™s a high likelihood that weâ€™ll reach the middle of 2022 first, before the limit on IOUs is reached. Unfortunately, to get the best deal â€“ retail net metering all the way to 2047 — you would have had to get your solar panels installed by the end of 2017.
As the credit one gets from net metering goes down, the possible value of a battery to store excess solar power goes up. Batteries, however, cost thousands of dollars, plus installation costs, and lose some of their energy in the process. Typically, if retail net metering is available, the electric grid is reliable, and there isnâ€™t a need for emergency power, you have no need for a battery.
For electric vehicles, consider the special EVX rate that IPL provides. Iâ€™ve only read about this, but it looks like you could have a separate electric service installed with its own meter that would only be usable for charging a vehicle, but which would get special rates. Off-Peak rates, when people are typically sleeping, are only 2.764 cents/KWh, about a quarter of typical residential rates. I would guess that there is some upfront cost for the install, but that itâ€™s a great deal.
Take home: Install by July 1st, 2022 to get guaranteed retail net metering until 2032. You probably donâ€™t need a battery. You might want a separate service for an electric car.
Buy vs. Rent
Our experience has been with purchasing our own solar system. Now that itâ€™s on our roof, we own it. There are other business models, however, that involve renting your roof space to a company which will install their own solar panels. I think companies with this model have only very recently come to the Indianapolis area. The big advantages to this renting model are that you donâ€™t have to spend the money up front to get the system and you donâ€™t have to pay for any fixes if something goes wrong or gets broken. My guess is that the down side would be that you wonâ€™t save as much money in the long run, but I havenâ€™t done any cost/savings comparisons.
Take home: Consider a rental option, particularly if you would have to borrow money for the install.
As already noted, sooner is better in terms of getting the most federal tax credits and qualifying for the longest retail net metering.
When will your roof need to be replaced? It’s best to time the roof and solar installs together. If you put up solar and then five or ten years from now need to replace you’re roof, you’ll either have to take the solar down and put it back up, or invest in new solar much earlier than you might have otherwise. Some installers will include a provision in their contracts that they will handle reinstalling solar for a new roof at a particular rate.
Take home:Â If you can put up your new roof and install your solar panels at the same time, do it.
Since you will likely only ever get credit on future bills, if you overprovision your solar installation you could end up never getting paid for all your energy because you’ll just keep racking up more and more credits. Look at how much electricity you use. Consider ways that you might reduce electricity. Donâ€™t purchase a system that will generate more electricity than you expect to use.
On the other hand, try to purchase a system that will generate as much electricity as possible (without going over the amount you will use), even if adding more generation capacity drives your cost/watt up. If youâ€™re comparing two different solar power installation estimates for the same amount of generation capacity, then by all means lean towards choosing the less expensive option. If, however, you are trying to decide between installing less generating capacity for a lower cost/watt as opposed to more generating capacity for a higher cost/watt, look instead at the total cost vs. savings over the life of the system. Adding, for instance, more powerful, but more expensive solar panels could easily increase the cost/watt ratio at installation time, but end up generating enough extra electricity over the life of the panels to more than make up the difference.
Take home: Add as much capacity as you can use. Look at the lifetime cost vs. savings rather than the cost/watt.
Keeping it working
Your electric bill will not show you the total amount of electricity you generate, because some of that electricity will be used within your home, so never goes into nor comes from the electric grid. Typically, the manufacturer of your inverter will provide an online and/or mobile app interface that allows you to track your current and past electricity generation. Your solar installer will help you get the account you need to see your results.
Your solar installer is usually not just installing your system, but monitoring and servicing it as well. They will typically monitor your system for any errors and let you know if thereâ€™s a problem, and they may provide a service where they clean your solar panels of any accumulated dust or debris after a certain number of years. Itâ€™s important to understand not only the costs of the install, but into what sort of ongoing relationship you are entering.
You can also do your own monitoring of your system, both in terms of physically inspecting the panels and in terms of keeping track of the data about what electricity is being generated. The inverter we use, for instance, provides both an application programmer interface (API) that is accessible over the internet, and a LAN interface, either of which could be used to provide data programmatically. I noticed that one of our panels seemed to be producing less than expected. The support person at our installer investigated it and agreed, arranging with our manufacturer to have a part replaced. Iâ€™d like to be sure to catch this sort of irregular, poor performance in the future, so am considering developing my own monitoring algorithm, though I havenâ€™t yet done so.
The good news is that there isnâ€™t much thatâ€™s needed to keep a solar generating system running. Snow and debris will melt or be washed off. Panels are quite sturdy and can usually handle evenÂ the worst hail and hurricanes.
Take home: Data is provided to you via the web or an app. Some maintenance required, but not much.
Is my house a good location for solar panels?
In the northern hemisphere, solar panels work best when they can face south, because the sun always crosses overhead in the southern half of the sky. The best angle for catching rays changes from season to season as the sun passes overhead at different heights. Panels that face East or West could potentially still be useful, but probably not panels that face north. Ideally, there would be nothing blocking sunshine from reaching your panels, but partial coverage might still be ok. A tree in our front yard cuts off sunshine in the morning from some of our panels and our neighbors’ house cuts off some of the sunshine from our lower rows of panels.
Your roof needs to be able to handle the load of the solar panels.Â Your installer will likely be required to get both a structural and electrical permit.Â It may be that your solar installer will make a structural determination themselves, but they will probably need to have a structural engineer come out and do a formal assessment.
Panels could potentially go in a field rather than on a roof. Panels can be propped up to a more advantageous angle.Â Solar installers will use an algorithm based on your latitude, the angle and facing of your roof, the expected number of sunny days, and maybe other factors to estimate how much electricity an installation of panels would generate in a year.
Take home: Unobstructed, sturdy, south facing roofs are best. Your installer should get permits.
Whatâ€™s involved in an install?
Our install took two days. There was a team of ten people on site. While the rails and solar panels were being installed on the roof, others worked on running a line from the roof down into our small HVAC closet, where our circuit breaker is. Finding a route was no simple task, needing to drop multiple stories through parts of the house that couldnâ€™t be directly seen, but our installers eventually hit upon a creative solution. In the process of identifying possible pathways, they realized there was an old, unused exhaust pipe from a replaced HVAC system that dropped directly into the utility closet from the roof.
For our equipment, each panel has its own optimizer, which helps get the best results out of that panel. All of the electricity coming out of those optimizers gets fed into our SolarEdge inverter, converted into AC and fed into our circuit breaker. Â Problem was, we didnâ€™t have any room in our circuit breaker. If need be, our installers could have provided a secondary breaker box, but we collectively hit on the solution of converting our electric water heater into a gas water heater, which we were happy to do.
The connection from our circuit breaker to the back of our house needed to be updated so that electricity could flow back into the grid. That included providing a cutoff switch on the back of the house so that someone from our utility could cut off our generated flow from entering the grid, if necessary. Our installers found a couple of safety issues with the box on the back of our house and with our circuit breaker and fixed them for us at no extra charge.
Our house has 100 amp service from the grid, which is common, but was not enough to get the biggest inverter that we might have used, which Â would have required upgrading to 200 amp service. The result is that our inverter cannot actually handle the peak load of DC current it receives, cutting off a bit of the power thatâ€™s generated. The cost of upgrading the service to our house, however, would have led to a net loss in savings.
In order to report metrics about electricity generated, our inverter is connected to the Internet wirelessly. Instead of being directly on our WiFi network, the inverter uses a Zigbee, which provides a more reliable connection. The Zigbee thatâ€™s plugged into our inverter communicates with a Zigbee base stations thatâ€™s plugged into our home router.
Take home: Every install is going to have its own unique details, and sometimes those details wonâ€™t be found until the install itself is in progress.
Solar and the Indiana Historic Preservation Commission (IHPC)
We live in a Conservation District and are subject to IHPC approval for changes made to the exterior of our house. Thankfully, our roof isnâ€™t easily visible from the street, so adding solar panels wasnâ€™t likely to significantly change the look of our building. Our request for a Certificate of Appropriateness only required an administrative hearing rather than a full commission hearing, and was approved with no issues.
Take home: Do your homework about any homeownerâ€™s association or other rules or covenants that might apply.
No, really, you should check out the current co-op
The co-op website provides a great introduction for how the co-op provides value and information about public meetings where you can learn more.Â The Indianapolis Solar Co-op is potentially open to people beyond Indianapolis, too. The only limitation is whether or not the vendor that is chosen is willing to travel to your site. If youâ€™re not close enough to Indianapolis or canâ€™t make the July 31st deadline, look for future SUN co-ops and/or look for a Solarize campaign (see next paragraph) near you.
Co-op is a term used by Solar United Neighbors (SUN) which is a non-profit that has organized bulk purchases in about a dozen states and which is organizing in Indiana for the first time this summer. The SUN Co-op is working in partnership with multiple groups, including Solarize Indiana, a homegrown organization that has facilitated many groups of bulk solar installation purchases in Indiana since 2017. There are some procedural differences between how SUN and Solarize groups do things, but the goals and end results are the same.
Take home: Now is the best time. If not now, soon.
Who do you recommend?
You saw the recommendation to join a co-op or Solarize group, right? Well, if for some reason that doesnâ€™t work out, Iâ€™m happy to recommend Jefferson Electric,Â who did our install. If you mention my name, weâ€™ll get a referral bonus, so feel free to take this with a grain of salt, but I think they did very good work and have been pleasant to work with.
SIRENÂ providesÂ a great resource of information about getting Solar energy in Indiana.
If youâ€™d like to see pictures from and learn more details about our install, thereâ€™s a Facebook albumÂ about it.