My Open Letter to MAGE Solar

Dear MAGE SOLAR:                                                               revised 12/28/12

This is my one-year report on my MAGE, 10KW, grid-tied, PV system located in Gillis Springs, GA [note to readers: I first published this letter in early October, 2011, the one-year mark for my grid-tied, battery-less Solar PV array, but have periodically updated it]:

With the help of “barn-raising” friends and some paid “electrical-stuff” labor, I erected and connected my 10KW MAGE Solar PV system (fifty-four, 185/watt MAGE panels, two SMA-5000 inverters) to my utility’s grid on 9/22/10.  Now streaming excess electricity through a reverse meter into the grid, it was fully operational by 10/2/10.  Here it is.

MAGE’s engineer projected that it would produce 14,248 KWH/year. 

The system’s output has exceeded that.  Three measuring points are selected here.  As of 11:34 a.m. on 9/24/11, the two inverters’ individual window read-outs, as confirmed by the remote bluetooth reporting screen, reported 15,346 KWH of power produced. 
As of 6:05 p.m. on 10/10/11, the array produced 16,050 KWH.  [updates: By 10/9/12 the amount was 30,146, and by 12/25/12 the amount was 31,342].

My thanks to MAGE for dealing straight with me and helping me get this system erected. 

From that array I learned the following about “Solar Retail Economics” (keyed here to the one-year mark):

Again, as of 9/24/11, my utility’s “net meter” reported 14,658 KWH returned to the grid. By 10/10/11, it reported 15,324 KWH returned to the grid.  I’m informed that the 726 KWH difference (16,050 - 15,324) is explained by two factors:

(1) I consumed some of the solar-originated electricity while in my building during solar- electricity production time; and

(2) natural transmission loss as the electricity is converted from DC to AC current, then sent to the utility’s meter.

My utility (Altamaha EMC) initially paid me $.07 cents for every KWH of electricity that I fed into its grid.  It then announced that it might reduce that rate to $.064/KWH at a 5/11 “Board Meeting.” 

Despite my request, it has never informed me of its decision and refuses to specify on its billing what its meter reader reads (it claims it does not trust its meter, so it literally sends an employee out to visually read it each month), much less its actual payment rate.  As an aside, it took me about one year to work out a grid-interconnection agreement with my EMC (more on that here). 

As of 10/5/11, however, I’m carrying a $746.61 reverse meter credit (the utility cuts a check to me on 12/31 each year) on my power bill, and I project it to reach about $825 - $900 by 12/31/11. [12/29/11 Update: I just received a 12/22/11-dated, $881.61 check from 
my utility, so I guess they changed their policy; $881.61 divided by $.07 = 12,594 KWH of power. $881.61 divided by $.064 =  13,775 KWH of power.  That's not adding up to the above-noted, reverse-meter readings however, but I also received an $87 reverse-meter credit payment for 2010, and that's equal to 1242 KWH at $.07/KWH, or 1359 KWH at $.064/KWH.  Total the 2010 and 2011 payments together and, at $.064/KWH, that equals 15,134 KWH in electricity that my array fed into the grid between 10/2/10 and 12/22/11.  12/28/12: Here's my $877.79 check for 2012].

My 10KW system’s economics:

Up-front cost: $35,000 or $3.5/watt (most of this was Do-It-Yourself labor).  Compare to the $5/watt average for 2011.

After 65% fed/state tax credits (30% federal tax credit, 35% state): $14,000 or $1.4/watt

Projected 12/31/11 Reverse Meter Credit: $825 [1/7/12 update: It was $881.61]

Spared power bill (726 x .$13 = $94.38) -- yes, that’s overlooking any “transmission loss.”

Total: $919.38 ($825 + $94.38)

$14,000 divided by $919.38 =15.22 year payback cycle. 

However, I have not been full-time living in my home, so let’s assume I did and consumed 500 KWH a month (some project that the average family of four consumes 12,000/KWH a year, which is 1000/KWH a month): 500 x 12 months = 6000.  6000 x $.13 = $780

How much of that $780 figure will be spared by my array?  I'm not sure, because obviously I'll use electricity at night and thus be billed for that (no "smart grid," much less "time-of-use" billing options in my neck of the woods, by the way). And I don't have precise measurements to go on now. Even if I somehow self-supplied all 6000 KWH through my Solar PV array, then I'd still have to reduce the reverse-meter ($882) credit.  Change one number, change another.

So let’s redo my “net benefit” calculations based on reasonable assumptions:

1.  My array, factoring in 1% efficiency loss per year as my panels degrade, will average 14,000 KWH/year annual production during its 30-year projected life (yes, I'm being a tad optimistic).

2.  My utility’s electricity price will inflate over time and average, over the next 10 years, $.16/KWH (currently it’s $.13/KWH; and yes, I'm being pessimistic, but realistically, I think).

3.  I will use (I’m single, and live in a very energy-efficient home) 7,200 KWH per year.

4.  Since a lot of that electricity consumption will be in the nighttime, I will not be able to draw on my solar array’s electricity while consuming 7200 KWH of electricity per year.  Assume that I’ll engage in “smart usage” (run dishwasher, etc., only when the sun’s shining) and I guesstimate that I’ll use 4200/year of my own (hence, Solar PV) energy.  So, I’ll pay the utility for 3000 KWH of power and be spared 4200 KWH.

4200 x $.16 spared power bill costs = $672 net savings (tax free at that).

5.  14,000 KWH - 4200 KWH = 9800 KWH fed back into the grid.  Assume my utility is “nice” and pays me at least $.07KWH.  Hence, 9800 x $.07 = $686.

6. $672 + $686 = $1358.

Payback Cycle: $14,000 / $1358 = 10.31 years.

But that's a little rosy because there will be some "transmission loss," so that 9800 KWH number may be too high.  I'm not sure, yet, what that number will be.  Maybe 9000 KWH. 
Plus all of this, of course, assumes that there are no repairs (no panels fail, the SMA inverters, which are mounted inside my garage, last 30 years, and no Balance of System components fail).  That's a somewhat rosy, but not unreasonable, assumption.

Anyway a family of four, self-consuming more of their power (thus, increase the .16/KWH savings number), will be closer to 10 years, if not less.  Hence, the payback cycle will be shorter.

Otherwise, I know of only three ways to shorten that cycle:

1.  decrease the array’s up-front cost;

2.  increase the reverse-meter payment (solar vendors can stream performance-based, publicity-rights payments to Solar PV customers by supplementing utilities' reverse-meter payments by a few cents);

3.  increase the utility’s charge for electricity that I consume but spare myself with my array.

The bottom line: I claim the lowest cost for an installed, 10KW, grid-tied system in America.  I’ve openly challenged others to show me a lower cost system.  None have.

Yet, even at that low ($35,000 unsubsidized, $14,000 subsidized) cost, and even with 65% of it subsidized by the taxpayers, and even using manually adjustable, single-axis racking to eke out above-projected KWH yield (I adjust it 3 times a year, about an hour of my time for each adjustment), “Joe Six Pack” is not going to spend $14,000 for a 10-year payback cycle, even if he’s convinced the following 20 will provide him more or less pure profit. 

This is America.  No one delays gratification that long. 

At least, there are no masses of consumers thinking about Solar PV that way. 

Solar PV marketing departments take note: For rural Georgians you can analogize a solar array to pine trees -- which are omnipresent in Central Georgia, where I live and where MAGE is headquartered.  A spare 10-20 acres of land is deemed not worth the cost/effort to farm, so landowners plant state-subsidized pine trees.  It costs relatively little to do, and over the years some income is reaped by selling pine straw, perhaps, and pulp wood when the strand is commercially thinned 12-15 years out.  And if the market’s up in year 20 or so, the owner makes some money clear-cutting the strand, sometimes collecting $100 or more per pine if it’s “telephone pole straight.”

There’s an example where people invest in the long-term, though it’s typically with “retirement land” deemed too unproductive, economically speaking, to actively farm.  You thus should get those Georgians to think that way about Solar PV.  Hence, properly market Solar P.V.  Reach that thought pattern.  Remind them that a field once pine-planted is suddenly worth more (the cost of the plantings, and the future income stream); ditto for a home/farm with a built-in, "free electricity" component.

For the moment, then, this much is certain: Solar PV will take off at $.70 - $1.00/watt (hence, my 10KW array would go up for $7,000 - $10,000 -- hard cost, don’t worry about labor, as “Joe Six Pack” will find a way to install it himself, just like he doesn’t need a “professional” to set up a moonshine still in the woods).  That’s about a 7-10 year payback cycle, which happens to match the outer-limit Joe will tolerate on his car and truck payments. 

Will Joe “feel” all that to the point where he decides “hey, that’s a great bargain, I need to jump on it?"  Perhaps.  But one problem is that he doesn’t know this.  Any of it.  The Solar PV industry is not educating him (marketing) about these facts.  MAGE is not educating him about it.

That’s one problem.

The other is, whether Solar PV continues to be subsidized or is unsubsidized, $.70 - $1.00/watt is where the price must go.  And $1.00/watt (hence, $.40/watt less than what I paid) is where you must, at a minimum, take it.  Because green or not, price rules.

Finally, the no-zoning, no-code (thus, no extra expense) counties like mine (Treutlen County, GA) will present the best opportunity to achieve this.  My labor costs were $3500 and I was spared the $500 - $5000 in cost that other jurisdictions impose via permitting and red-tape.  “Barn-raisings,” will cut even the $3500 cost.  Country folk learn electricity basics, welding, etc. -- because they must.  Solar PV isn’t that hard to learn, despite what the prima donna installers would have us all think.

It follows that, if you ever intend to develop the grid-tied, residential market you should first focus on the easiest places to install it -- such as my Gillis Springs, GA (Treutlen county) homeAgain, folks around my neck of the woods learn how to erect and run moonshine stills and marijuana plots.  They do those things to make money.   Tax-free money.  They’ll thus learn how to install solar panels/films/membranes if they’re convinced they can make money -- within a reasonable time.  When Solar PV gets plug-and-play simple (hence, cut out labor costs), installed costs fall to $.70 - $1.00/watt, and grid interconnection is cost-free, this market will take off.

That is where you must take the residential grid-tie Solar PV market.  You must eliminate every last layer of cost.  You already have a two-cost-layer-elimination advantage in Central Georgia: no-zoning, no-code counties: no permitting costs and low or no labor costs (hint: open up a "barn-raising," free training center, like Home Depot does for do-it-yourself customers).

You are now in a position to build a commoditized, residential Solar PV market based on very-low-cost Chinese panels, with Balance of System (BOS) costs supplied by American suppliers (yes, let the Chinese, not Obama, subsidize our renewable energy).  And Central Georgia is your ground zero for final assembly -- myriad empty factories and no or very-low-tax zones with cheap, non-union labor, plus local/state politicians distributing public largesse.  Too, you've got my system as a free showroom -- with an array that's performing above specs!

I call that a perfect storm of opportunity.  Carpe Diem!

12/28/12: Here's my latest cumulative data report. Note that the "Meter" column is determinative.  That amount is multiplied times 8 cents by my utility to figure up the reverse-meter credit check that it sends to me at the end of every year.  The spread between the "inverters" and "Meter" column is explained by the electricity my home consumed:

DATE KWH Output (Inverters)                        Meter

9/24/11 15,346

10/10/11 16,050

11/11/11 17,062

11/18/11 17,215

12/3/11 17,380

12/17/11 18,457

12/31/11 18,635

1/1/12     18,022

1/14/12 19,193     18,535

1/24/12 19,582                       18,710
2/4/12 20,101                       19,211
2/23/12 20,702                        19,797
3/12/12 21,367                         20,429
4/3/12 22,451                               21,364

4/17/12                             23,111                                 22,091
4/23/12 23, 267                        22,232
5/7/12 24,022   22,939
5/28/12 24,902                                              23,767

6/3/12                               25,201                         24,030
6/16/12                             25,769                                              24,565
6/21/12 25,760 24,565
7/8/12 26,793 26,483
8/5/12 28,003                                          26,645

8/12/12 28,256 26,858
8/26/12 28,842  27,402
9/5/12 29,216                         27,719
9/16/12 29,711 28,186
9/30/12 30,311                         28,760
10/9/12 30,566                         28,985
11/6/12 30,744 30,129
11/25/12:   32,398 30,758
12/25/12 33,009 31,342
Meanwhile, for a broader Solar PV market analysis, click here.

Note this State-By-State electricity-price graphic.  It's money quote: "Households paid a record $1,419 on average for electricity in 2010, the fifth consecutive yearly increase above the inflation rate, a USA TODAY analysis of government data found. The jump has added about $300 a year to what households pay for electricity. That's the largest sustained increase since a run-up in electricity prices during the 1970s."  

Also: "Electricity cost varies widely depending on where you live. Cheapest: Northwest communities near hydropower dams — as low as 2 cents per kilowatt hour. Most expensive major utility: Consolidated Edison, supplier of New York City — 26 cents per kilowatt hour, according to EIA."  All of this provides market analysts the price-point for the masses, for "Joe," and thus in projecting when he'll bite on your marketing hook.  I say it's $.70 - $1.00 watt.  Get us there, OK?

Here's my system's Master Energy Production Report up to 12/25/12.  Note the discrepancy between what my bluetooth device tells me and what my inverters tell me.  I'm not sure why that discrepancy exists. The lower "meter" number makes sense because that's the utility's meter and its reflecting how many KWH of power I've fed into the grid.  It thus will be a lower number than my inverters' number because I'm consuming some of the power my array makes, so that much less electricity thus makes it from the inverters to the grid.
James Christopher Desmond,
Dec 28, 2012, 3:50 PM
James Christopher Desmond,
Dec 28, 2012, 3:40 PM