Wednesday, June 15, 2011

Going Solar (It Rocks!)

Almost a year ago, we went solar on our house. I tweet quite a bit about it and get asked lots of questions. It has taken a year, but I finally got around to putting this together to help answer some of these inquiries. My hope is that it will prove informative to all who are looking at solar on their own house.

We got quotes from the following companies:

Namaste - has lease option (SunRun)
REC solar - has lease option (SunRun)
Lighthouse - has lease option (their own leasing plan)
SimpleSolar - Did not have a lease option
RealGoods - has lease option (SunRun)

In addition, I contacted Bella, but they never got back to me.

I originally intended to purchase the system outright. Doing so, you get a 30% Federal tax credit, a Colorado State tax credit for your sales tax, and a rebate from Xcel based on the size of the system.

The Xcel rebates are based on meeting some predetermined goals as far as amount of electricity generated by solar systems. The rebates are based on two components. A flat payment per watt plus an additional Renewable Energy Credit (REC). The rebates are on a sliding scale which is decreasing over time. Had we purchased, we would have got in at $2/watt + $0.55/kW (and this is what Xcel paid the leasing company). Xcel is currently paying $1.75/watt + REC of $0.04/kW. See Xcel Solar Rewards for more info on this. If you are thinking of going solar, get in while the getting is good (the great getting is already in the past). A final note, Xcel will only reimburse you for systems that are less than 10 Kw and less than 120% of your last years use.

If you generate more power than you use, it is banked on a monthly basis. In January, if your bank is positive, you have two options, A.) keep it banked, B.) Sell it to Xcel for the Average Incremental Cost of Electricity (AHIC). Previous years AHICs:
  • 2010 - 3.000¢/kWh
  • 2009 - 3.058¢/kWh
  • 2008 - 4.842¢/kWh
  • 2007 - 3.414¢/kWh
  • 2006 - 4.291¢/kWh
Note: If you choose Option A, it is forever, you can't go back. We have currently waived the decision, defaulting us to B. Given that we generate significantly more electricity than we use, banking the extra doesn't make much sense for us (we would never use it), so we will likely continue with option B in the future.

Even with the rebates, these systems are expensive. After looking at the cost of financing, we determined the payback would be minimal. So we looked at the leasing option. This turned out to be lucrative for a few reasons.

Here is why I like the lease:
  • Low upfront payment, fixed monthly payments for life of lease
  • Lease is for a guaranteed amount of energy generation per year
  • Leasing company takes care of insurance and maintenance of system. The inverter is going to go out in 10-12 years, they will have to replace (around $3500). Hail damage, they have to repair or replace.
  • If we generate more power than we use, it is ours, even if it exceeds the guaranteed amount. This extra can be banked or sold back to Xcel at our discretion.
Given the above, some things to consider with the leasing option:
  • Leasing company gets all of the tax credits and rebates
  • Slight headache if you sell your home, in that you need to get your buyers qualified for the lease (or prepay lease, or buy out system). It looks like SunRun makes this very easy, so this is a minor point.
As noted above, with one exception, all of the companies we talked to used SunRun as their leasing provider. Since we signed on the dotted line, two other leasing companies have arrived on the scene, Sunergy and Solar City. I do not have any experience with either company, but probably worth talking to them. Also, it is worth noting that these leasing companies only operate in states where the utilities have programs to make it lucrative to install systems. I know this after looking into the issue for some relatives in WY and UT.

The system we chose was a 7.56 kW system, installed by Namaste Solar and leased from SunRun. I was very happy with every company I talked to (except for Bella, who couldn't be bothered to even return my call). In the end, the decision was based on two things. I asked each company to "max" my roof out, figuring that as long as I was jumping in, I should go all the way. I also ran financials on each proposal, factoring in the downpayment, the leasing cost, our average usage based on the past year (1100 kWh per month), and assumed a 5% annual increase in the cost of electricity.

The Namaste proposal won out on both counts. My simple (and it turns out, conservative) financial analysis indicated we would save $20K over the 20 years. This system had the largest downpayment ($1800) due in part to the need to move a vent on the roof to accommodate the panels. The vent movement was the tactic that allowed them to propose the largest system. The system is guaranteed to generate 11 MWh a year (after 10 months, the system has averaged 1 MWh/month, so looking at 12 MWh+ for first year), which is approximately 80% of our 2009 average usage. Payments are $76 a month for 20 years.

To compare, this system would have cost us $28K to purchase outright. I am pretty sure this is after Xcel rebates, but before tax credits, but those details are a bit hazy, as I stopped looking at the purchase very early.

One other nice to have from Namaste that none of the other installers quoted was a screen guard around the base of the panels on the roof. This will keep critters out from under the panels and off of our roof.

So how are we doing? The system went live the last week of June, 2010. Since then, we have been net producers, generating more electricity than we have used. Since turning the system on, we have generated a total of 10,204 kWh energy, of which 3,338 kWh were put back on the grid (as of May 2011). Translation, for the past ten months, we have generated more power than we have used, by a significant amount!

But wait, I mentioned that the system was only sized for 80% of our average use last year? Well, at the same time that we got the system, we made some changes around the house to reduce our usage. Anyone who knows me knows that I like it COLD. Normally, my AC thermostat would be set to 70 and sometimes 68. This summer, we set it to 74 during the day and 72 for four hours in the evening. I know that this doesn't sound like a sacrifice, but those closest to me (and those who have observed how I dress in the winter) know that I have been less comfortable than I would have liked. The other change we made was to use small fans around the house to recirculate air instead of the HVAC fan. These changes have resulted in a considerable drop in our energy usage at the same time that we have added generation capability to our home. Net win!

Prior to getting the system, our electric bills averaged $120/month. Since we generate more than we use, our new bill should be just the lease payment minus any money we get from Xcel buying back the excess. This is almost the case, but there is one added fee, which is an $8/month charge for being connected to the Xcel grid. There has been a lot of complaint over this fee from some quarters, but I can understand the rationale. I am using Xcel's equipment both to transmit my excess to the grid and to augment my supply when the system is not generating. I think the fee is reasonable and even taking it into account, we are still already money ahead of where we were this time last year.

Finally, let me describe the system. On the roof, we have 24 SunPower 315-watt panels. These panels are all wired up and feed DC power into an inverter on the side of the house. This unit converts the DC power to AC power. This is fed into a meter used by SunRun to monitor production. A second meter follows the SunRun meter and is owned by Xcel to do the same thing (because they don't trust SunRun's meter!). Following this, the power is fed into our breaker box. The main house meter was replaced with a NetMeter (it runs forward and backward). This last meter is the one we are billed from. In addition, I have added a Ted5000 system to allow me to monitor our power generation and use in real time. The whole thing looks a bit Rube Goldberg in nature, but it works!

So during the day, the system generates power if the sun is shining. Namaste sent me an informational email informing me that the system would not generate power at night or on extremely cloudy days. That was almost a deal breaker, but we decided to continue! ;-) At night, we pull our power from the grid. As long as we pull less power from the grid than we put onto it during the day, our house is a power generation plant.

One more item to note. We do not have a storage system (batteries). Such systems are extremely expensive and have to be periodically replaced. The grid becomes our storage system, which is fine, but there is a caveat. If the grid power goes down, our system will shut off. This is to ensure that our system does not put power back onto the grid while someone is working on it, causing injury or death. So when the power is out for our neighbors, it is out for us.

I will continue to modify this as I receive questions and clarifications. I hope it provides useful information on going solar! Feel free to send questions my way and I'll help if I can.

If you choose to go solar and select Namaste and/or SunRun, please mention you heard about them from me as they have referral bonuses, and hey, any little bit helps.