Here's A Cheap Way To Install Solar Panels On Your House
Cool Tools has an interesting suggestion for home owners who want to incorporate solar technology, but can't afford the steep investment costs: let the solar panel company finance it for you. The trade-off is you won't save as much money as you would if you paid for them outright, but you will save some money, and the company that's paying for the panels has a financial incentive to keep them working properly over the course of the agreement.
You sign up with a company that installs high-quality panels on your property for no money down. Zero dollars! On sunny days the panels make electrons which run your meter backwards. The quantity of panels are sized to cover about 80-90% of your current electric bill, so that you should be expected to pay the utility only 10-20% of what you pay now. In addition to the much smaller payment to your electric grid company you will also now pay the solar company a fee based on the number of watts you send into the grid. This is how they make money to cover the costs of installing the panels and their profit. The rates they will charge you per kilowatt will be less than the utility rates, so your total bill for electricity will be less each month. (Not zero, not half, but less.) Because the solar company makes money by how much electricity your panels produce they have a clear incentive to maintain the panels' performance and keep them clean and the inverters going. After 15-18 years, you own the panels and set up free and clear.
Kevin Kelly notes that by going the financing route, you're exchanging the bulk of the energy produced for free installation, which means the savings you'll see are real but not dramatic:
While you may be generating 90% of your usage, because you are leasing the panels, your total combined bill will not be 90% less. It may only be 10% less per month. But since it costs you nothing or little up front, over 18 years that 10% adds up.
Visit his site for more information on how solar power purchasing agreements (Solar PPAs) work, and some links to companies that offer them.
"Zero-Down Solar Panels" [Cool Tools]
(Photo: OregonDOT)
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Comments:
If the solar panel company could make money by hooking up their panels to the grid, they would just put them out in a big field and have at it. They wouldn't need to install them on individual houses. They can't make money on electricity (solar panels still aren't efficient enough compared to the cost), so they make their money on financing - much like auto makers (or like auto makers tried to do anyway).
I'd love to have solar panels on my house, but living in Southern Louisiana, they'd have to be replaced every three years after they got ripped off by a hurricane. =(
My house has a very large ((probably almost 40% of total) southern facing section of roof. I've always thought it would make an idea location for a solar array. I think I need to look into this.
"On sunny days the panels make electrons which run your meter backwards."
woah - they're creating matter with these things - impressive!
//electrons aren't created - they just start moving more
In Oregon Solar PV is typically $8-$10 a Watt after incentives,
Just to clear up one misconception in the article; on most houses you'll be lucky to get 3kW installed in the available area on your roof.
In Oregon west of the Cascades(the rainy part but oddly a pretty good place for solar, better than Phoenix) most years you will generate just over 1000kWh of energy per kW installed.
The average customer on the Portland General Electric system uses around 7000kWh per year of electricity.
3000kWh does not equal 90% of 7000kWh and never will.
Is solar still worth putting o your roof? Absolutely, but you aren't going to get near netzero energy use just by installing solar.
Look at the The Citizenrē REnU program as well. They own the panels, install them on your house and let you lock in a rate for electricity the next 20 years.
@YouDidWhatNow?: $30K - it isn't just panels. You have to have converters, banks of batteries (that have a life of 10 years so they have to be replaced), electrical work. Payback is somewhere between 15 and 20 years.
@YouDidWhatNow?:
Here is some info on system costs and price of solar electricity:
[www.solarbuzz.com]
18 years? That's crazy talk.
I am interested in this whole solar panel stuff though. I can't wait for the day when they are as part of the house as a water heater or central ac unit.
@Canino:
Ouch. Yeah, I can see the allure of having someone finance it for you...you're basically just renting your roof space at that point - trading space for a subsidy on your power bill.
@Canino: They would have to pay someone to put them in a big field. The energy would also then have to be transmitted from said field. The efficiency is greatly improved by putting the panels at the same place that the energy will be used.
@YouDidWhatNow?: I looked into it back in the early spring. It would cost me $48,000 to install a set of panels that would produce a little over 500kwh of power per month.
Of that $48,000, I qualified for, on a federal and state level, $22,000 in tax rebates. So a net of $26,000 in installs. But I had to front the entire $48k. And the solar panels were exempt from local property tax.
@Mr-Mr: Yeah, 18 years is a little long. Great for the people who are planning on being in their home for the rest of their lives, but I can't see me being in my home for more then 10 years. Everything I do is based on a 5-year plan.
I would love to be as green as possible, and to save as much money as possible, but the bottom line is, is it worth it over a 5-year time span. Unfortunately for me, the answer is going to be no.
Would they allow you to make extra payments to erase the debt sooner and with less interest?
/never leased anything before (except apartments)
For most households, solar hot water is a much better investment than photovoltaic. With a reasonable amount of storage, you can provide nearly all the domestic hot water needed year-round, and depending on the climate you can provide a large fraction of the living-space heat required in winter. Hot-water systems are much cheaper than PV, they're just not as sexy.
I'm of a mixed mind about this.
Pro: it gets people who might otherwise not do so to install solar panels. And it indirectly lowers the price of panels for all, since manufacturing scale efficiencies apply.
Con: it has the potential to cost math-handicapped or lazy homeowners a bundle of cash over 18 years, which is a LONG time. Especially for materials that are likely to benefit from scale efficiencies.
And, I'm unsure who gets the tax write-offs (CA has them, so I assume most other states do, and perhaps the Feds?)
@YouDidWhatNow?: When I last looked into it, the install we were looking at was $10k to $15k more than replacing my existing roof, and there were various tax incentives.
A lot of people do it when replacing the roof ANYWAY because you're shelling out the big bucks for the roof, and adding on some extra for the solar isn't as big a hit then.
(Our roof is pretty new, so it'll be a while before we get to the solar moment.)
Depends on where you live, and how many panels you'll use.
In California, a typical installation for a 2000 sq. ft. house is about $15k-$20k - that includes the state and federal tax incentives. Typical ROI is around 7-10 years.
@Trai_Dep:
I looked into a program like this in CA.
Since the system is initially owned by the company, they get the tax incentives, not to mention the fact their actual cost of the system is much less since they're "buying direct" from themselves.
So what would cost me ~$15k probably costs them closer to $10k in just materials and labor.
I don't quite know what happens if you move within that period. Do you just transfer the contract to the new owner? What if the new owners are anti-solar, or want to install a system that they actually own from day one?
@amuro98: What if the new owners are anti-solar
Yeah, fuck the sun, I fuckin' hate it too, long live the fuckin' beast.
@HIV 2 Elway: i think his point is that the field is not a good idea.
@Canino: i don't see how this is a bad thing. So long as you are connected to the grid and use power, you won't actually owe any money out of pocket, so to speak, to these companies. So it's not like cost is an issue.
@HIV 2 Elway: You wouldn't have to pay anyone to put them in a big field. You buy a piece of desert out in Phoenix next to a transmission tower.
That is, if it's cost effective - which it isn't because solar panels aren't efficient enough yet.
It would never make sense to hook up thousands of individual connections (many redundant costs) if you could make one connection. The reason there's not just one connection is because solar isn't cost effective. So they try to get individuals to take on the payback period of 15+ years. That's all this is - getting someone else to finance the payback.
I'd like to point out that the reduction of your power bill will be to the top tier pricing first. In CA, and I suspect most places, power use up to a certain amount is paid at a base rate (which the solar repayment rate would still be less than), but usage over the base limit is paid at a much higher rate. So even if you are only getting 25% of your power via solar, you are trading paying the higher (highest?) rate for one lower than the base rate. Your 25% power use reduction becomes 35% overall payment reduction.
[My numbers are necessarily fuzzy since I don't have specifics, but the financial logic is sound.]
@dveight: Actually, a program like this would be great for you, since you're uncomfortable with an ROI with a window past five years. In that case, the return you'd see by doing it yourself is zero, thus whatever increment this company returns is a plus, with no downpayment needed.
Win/Win, right?
@Eyebrows McGee (now with more baby!): I have access to high efficiency solar cells to recharge marine batteries, and used those to cover the south overhang in my house. But I supplement those with four small wind turbines, they cover almost half of my projected energy demands. All the energy generated is used at home, I cant put any on the grid.
The only drawback I have is that I get no incentives and I footed the whole bill for the equipment. I can reduce some of the cost by doing a homemade inverter/switch for the battery banks and some other miscellaneous parts.
I checked into this in the SF Bay area and found that you need an electric bill of at least $150 per month for it to be worth it. One other advantage is that at the end of the contract you can either own the current solar panel configuration or enter a new contract and get all new equipment with the latest technology. I am sure that solar panels 15 to 20 years from now will be more efficient and much cheaper than current panels.
the technology is getting drastically cheaper and more efficient year over year. wait 5 years and the price will be to the point of making your initial costs up in < 4 years.
@Trai_Dep: I think in about 10 years, no matter how good of a deal is, this is going to seem like a HUGE scam. I think we're just on the cusp of solar becoming as cost effective as, and eventually even more cost effective than coal. I wonder how the company handles upgrades? I'm sure at some point during the next 18 years, putting up the latest and greatest solar tech will cost less than maintaining these old behemoths. So is the company counting on a business model which today seems pretty fair, but in 15 years is the modern equivalent of payday loans?
@HIV 2 Elway: Ummm, you'd be surprised. Remember that turn out your lights for one hour thing a few months ago? A lot of Republicans (Fox News included) made it a point to turn on extra lights just as an FU. So they chose to spend a bunch more money on electricity that day to....well, I'm not sure what they were trying to do.
With interest rates on loans crazy-low due to the recession, isn't it more economical to just get a loan and pay for it yourself? Pay off the loan with the savings on the electricity.
This wouldn't really fly here in Montreal anyhow. While I'm told that snow doesn't have that big of an impact on solar panels, the fact that our electricity is far cheaper up here would really change the financials.
I think we're on the cusp of a significant increase of cost per KW/H. A lot of new innovations in efficiency are finally coming online and so in the next few years, I think the cost of solar will become competitive with other power sources.
PS- In case this works its way on the boards- no, the energy required to make the panels is not higher than the amount of energy it will create over its lifetime. That may have been true 30 years ago, but it has not been that way for many years. Rush Limbaugh has lied to you.
Some other contries that allow energy companies to compete. So, if you want your power company to be all "green" you can have the Greenpeace power company. If you want your power company to burn baby seals and toxic plastics, you can have that too. But the problem with that is that we'd need to nationalize the transmission lines to allow competition. All socialism is bad. So, we can't be capitalist because of capitalism.
@wickedpixel: Already the panel cost is only about 1/3 of the cost of a residential system, the balance is labor. So Even if the panels were free you're looking at a minimum of about 12 years for payback in most markets.
Well by taking advantage of this deal, you are locking yourself out of future solar improvements that could eventually reduce your bill further or allow you to buy the whole system taking advantage of a government credit. Think if it this way. Solar price is constantly on the decline and efficiency is steadily increasing. So by agreeing to put these things on your house for 15 years, you are basically financing (renting to own) inferior equipment. Plus, if this takes off, fees are likely to decrease as time goes on, not increase. It would be better to save up money, put it in a money market account and consider the interest you earn as savings on your electric bill until solar becomes a viable option.
@DrNick: you're not taking efficiency into account. Current efficiency rates average around 20% for residential panels with the most advanced (and expensive) topping off at around 40%. Worst case is the advanced technology becomes more broadly available which would double average residential efficiency. That's not even taking actual improvements in efficiency into account.
Labor costs will decrease as technology advances. Thin film cells are easier to install than silicon, for example.
@Canino: The other savings is regulatory -- it's far, far easier for them to get a permit for a local homeowner's rooftop than buying property, developing it, providing utilities, clearing regulatory, zoning, etc. requirements, and whatever else a dedicated site requires. That more than offsets any increased cost for having multiple hookups. Plus, having the homeowner keep an eye on it and remote access for maintenance reduces their upkeep expensese -- they only have to actually visit the site if there's physical damage or a severe enough problem that the remote-access system can't cover it.
When we're talking about efficiency, are we talking about electronics becoming more efficient, or the panels themselves?
@rush0: The panels, they are hard and expensive to produce without impurities. Pretty much my whole undergraduate program focused on solar cell processing.
Would it be cheaper to install an array of photo panels in your back yard rather than on the roof? (let's assume sufficient acreage and no legal/neighbor problems).
@Trai_Dep: Well, according to their documentation ([www.solarpowerpartners.com]) the right candidate would own/control the property for 20 years. So I don't think they are saying that I am the ideal candidate.
@HIV 2 Elway: Right. And the tradeoffs tend to be economically neutral. Either you produce a cheap panel with a reduced conversion rate (which means it produces less electricity) or you produce a an expensive, but higher quality panel that that will take just as long in ROI costs. So, much of the attention is trying to break this barrier in some way (either really cheap, but mediocre panels, or more expensive, but highly efficient panels, or something inbetween). So, the R&D companies have a variety of approaches to the problem.
As someone who works in solar, this does not make sense. After 15 years you do not own the system, you still need to either let the system go or pay the difference.
By 15 years, the inverters need to be replaced, and the panels will only have a 10 year warranty left.
Its like any car lease. At the end you either buy it, choose another car, or are left with nothing.
You do not get to take advantage of the federal and state (in california) rebates and tax credits, not to mention that you are paid less for what you produce.
Also, energy rates are not taken into consideration, here in California the rates have been doubling every 10 years. So by the time your lease is up, your bill could be as twice as high, and you have an aging, depreciating system in your hands that you either buy up or let go. Either way you are screwed.
Find the money somehow, private financing or HELOC (haha) and do the system outright. Payback is 5-8 years. IRR is over 30% in 90% of the systems we build. Beats the stock market. And with the governments plan to lean dirty techs as coal and gas, energy prices are set to spike up soon, without end in sight.
Maybe I'm missing something. Isn't the company offering to replace broken panels, perform maintenance, etc.? Does your calculation of 30% IRR take that into account?
Just curious -- I'm not saying you're wrong.
I have this setup on my house. (California)
First of all, you don't need batteries.
You should get on a Time of Use meter, where you agree to pay triple for electricity from noon-6 during the summer. That way, any juice you generate during those peak hours runs the meter backwards at triple speed.
On this plan, you also get a discounted rate during the rest of the day.
Cost for my three-bedroom house: about $22K, minus $7 subsidy. My electric bill is $700-$800 per year.
Yeah, I'm waiting for someone to invent some that are tiny and don't need all the accessories. Just wire them up and they zap enhanced power to your house!
And you can buy them at Walmart!
Since I am clueless and too lazy to go look for myself, what is the typical purchase and install price of this kind of thing anyway?