Hello to new EnergySagers –
I’m located in Massachusetts and I thought my recent experiences looking into solar PV for my house might be helpful for folks.
First off, I should say that I’m pretty lucky to have an unobstructed south-facing roof. I’ve been thinking about solar for a while, and watching prices go down, so a couple of months ago I started asking people who had installed solar PV panels if they could recommend companies. I found two through word of mouth and then I found three more via EnergySage.com.
Expected Social Benefits, Unexpected Financial Returns
I was definitely interested in the “social” benefits of cutting back on fossil-fuel generated electricity, but what really surprised me is just how financially beneficial the project might be. It turns out that all of those other benefits of cutting back on fossil and nuclear generated power—reducing the massive health, economic, balance of trade and national security costs (not to mention the environmental risks of climate disturbance)—are just icing on the cake.
So back to the question of finding a solar company and figuring out if it makes financial sense. It turns out that Massachusetts is an especially good place for solar right now. It starts with saving (or eliminating) electric utility bills and then there’s the 30% federal tax credit, and also MA tax credits when you build a system.
And perhaps best of all, for the foreseeable future, there are solar renewable energy credits (“SREC”s) which you can sell every year based on how much electricity you produce. To get one SREC takes 1,000 kWh of solar energy production and the value of the credits range from $285 to $523 depending on the market. So when I calculated the yearly financial benefits, I looked at a low and a high side. There is some debate about how long the state will offer SRECs but as best I can tell, the SRECs are guaranteed to continue for 10 years at a minimum value of $285 for each 1,000 kWh you produce.
As I wrote, I received several bids and I’ve included the two best options below. One important thing to keep in mind is that are a few options for paying for your system. You can buy the system outright, finance it, or lease it. Leasing has different flavors too, some of which require no money upfront. But if you pay nothing upfront you get a smaller financial return which for some people that might be the way to go. You still save some money and you (or we!) still get all of the social benefits noted above.
For me, I don’t mind paying something upfront for a bigger return in the years to come, so the lease I looked at is what they call the “pre-paid” lease where you pay it all upfront and have no monthly payments. I compared that approach with the outright purchase.
There are many other options, but I’m just including what I think are the best two approaches, and also the best two bids, so this doesn’t get too complicated:
|Option A:||Purchase||$7690||Cost of installation per kW: $3.58|
|Option B:||Pre-Pay lease||$6680||Cost of installation per kW: $3.11|
This comes with a 20-year warranty and is supposed to produce about 2,600 kWh – which is about 67% of my usage so my electricity bill will not go down to zero.
Either with the Pre-Pay lease or the Purchase, the savings are the same — see below. The question is why do the purchase? As far as I can tell there’s no good reason. It costs more and provides no additional benefits. Under the lease, though, if anything stops working, the company will fix it.
|Annual SRECs: 2.6||Low||$741||High||$1359|
|Total annual return:||$1230||$1848|
|Option A:||Purchase||$11,170||Cost of installation per kW: $3.49|
|Option B:||Pre-Pay lease||$8,030||Cost of installation per kW: $2.51|
This also comes with good warranties: 15 years for the labor with a 20-year guaranty on the production under a lease and also a guaranty that the panels will be at least 80% efficient up until 25 years. This system is supposed to produce about: 4,000-4,400kWh, which is 100% of my usage so my electricity bill should go down to nearly zero.
Again, with either the Pre-Pay lease or the Purchase, the savings are the same — so why buy? Note that this system produces more electricity, which means it produces more SRECs and therefore more income.
|Annual SRECs: 4||Low||$1140||High||$2092|
|Total annual return:||$1881||$2833|
The long and short of it is that you don’t have to think about this the same way you would a kitchen or bath renovation which have no financial returns. Right now, at least in MA—and maybe some other states—it’s more like a mutual fund. If I invest $7,000 or $8,000, I’ll get from $1200 to $2800 back annually. That’s an annual return of something like 18-35% if I do one of the pre-paid leases. That’s not bad for helping out the planet a little bit and honestly I don’t think you can find a mutual fund that’s nearly as good.
I’ll let you all know how this shakes out in Part 2.