We Go Solar
December 2014: Bowden's Go Solar
We had solar panels installed on December 31st of 2014. Being Elon groupies who hope to one day own a Tesla and vacation in space, we selected Solar City. Normally we would do a significant amount of research prior to an undertaking like this but were a bit burnt out after adding over 1,120 sf to our approximately 1,000 sf home. However, just because we didn't perform our due diligence doesn't mean that you shouldn't; hopefully the following text and tables will help.
The first step in the process is determining how much electricity you use. Our data, downloaded from the PG&E website, is shown in the table above. You can see that we used 3,244 kWh over the course of one year before we got the solar panels. Or, on a monthly basis we averaged 270 kWh which cost $36.51 or $0.14 per kWh. Note that 270 kWh (kilowatt-hours) per month is approximately equivalent to having four (4) 100-watt light bulbs on 24 hours a day for one month.
Solar City used this data, along with the proposed location/orientation of the panels on the roof, the estimated number of sunny days per year, hours of daylight per day, etc., to determine we needed 8 panels that could produce 2.080 kW. This value means that, assuming the sun shines on the panels 24 hours a day for an entire year, the system would produce 18,221 kWh per year (2.080 kW x 24 hrs/day x 365 days/yr = 18,221 kWh) or more than 5 times what we need. Of course in real life it usually gets dark at night, often it is not sunny during the day and the panels get less efficient as they age. Solar City takes this all into account and, in your contract as shown in the table below, state how much energy they GUARANTEE that our system will produce.
The first three columns in Table 2 are from Section 6 of my contract and they show that Solar City guarantees that the panels will have produced 85,171 kWh after 30 years. This averages out to 237 kWh per month or 2,839 kWh per year for 30 years. We added columns 4 thru 7 to highlight the following:
- First, as shown in the year 2 row of column 7, our system is initially sized to provide 94% of the 270 kWh that we, on average, use each month. This means we still need to buy a small amount of power from PG&E each month. Solar City does this intentionally since buying small amounts of electricity from PG&E is cheap but if you produce surplus electricity PG&E will pay you wholesale, not retail, rates for it.
- Second, column 6 shows that when our panels are 30 years old they will produce about 87% of the electricity as when they were new. We have no doubt that in 30 years solar panels will be much, much cheaper and much, much more efficient than our panels, but they will still work and meet about 80% of our electricity needs.
Now let's look at how much this all costs.
Table 3 shows cost scenarios for sticking with PG&E versus going solar. In the PG&E Scenario we buy all of our 270 kWh per month of electricity from the utility while in the Solar City Scenario we generate 237 kWh and purchase the remaining 33 kWh from PG&E. In years 1 thru 4 we will pay slightly more for solar but after year 5 will be saving money. From years 5 thru 30 the solar cost savings increases incrementally until year 31 when the solar cost goes to zero since the loan has been paid off. Other notes and assumptions regarding the table are as follows:
- Column 3 is the price per kWh from PG&E which is assumed to increase by 4% each year. We don't know how realistic this number is but if the PG&E rate increases by only 2% each year then it would take 8 years for solar to be cheaper. Note that the PG&E price we're using is Tier 1, the lowest tier pricing and my average cost from Table 1. If you are an energy hog you are probably buying some of your energy from costlier tiers (Tier 2 = $0.18 per kWh, Tier 3 = $0.26 per kWh, Tier 4 = $0.32 per kWh).
- The $37.62 per month in the column 5 is the cost per month of a $7,425.60 30-year loan at 4.50%, which is how much and how we are paying for our system (Google "loan calculator" to determine your own payment). The price includes no-money down, installation, materials, all permits, a rooftop warranty, system monitoring, and repair/replacement of all equipment/materials for 30 years. Note that the actual cost was $10,608.00, but we qualified for a 30% tax rebate, and as required in the contract, applied the refund to our principal once we received it.
- Column 6 is the cost of the 33 kWh of electricity we buy from PG&E each month since the solar system, per Table 2, is sized to generate most but not all of our electrical needs.
However, we don't want to be paying off a $7k loan for 30 years so every month we're going to pay an extra $40 towards the principal. If we do this the loan will be paid off in about 10 years! However…
The actual payment structure is even more complicated than what we've just explained. Specifically, instead of paying Solar City $37.62 each month for 30 years they made our initial monthly payments lower (and more comparable to what we are currently paying PG&E for electricity) and then increase the monthly payment by 2.90% each year for the life of the loan. Their selling point is that our monthly payment will start out less than what we are currently paying and will increase by less each year (2.9% versus 4.0%) than if we stuck with PG&E.
As of this writing in May 2015 our system has been running for about 4 months. Some of our miscellaneous thoughts are:
- Ugly Conduit – The installers will want to run the metal conduit (pipe) that houses the wiring on the outside of your house, which we think looks really ugly and will make replacing roofing or siding difficult. In our case the conduit is on the outside but is in an area you can't see from the street or backyard so we don't really mind.
- Monitoring – The performance of our system is shown online in real-time as the inverter transmits data wirelessly to our router. It's cool, and easy, to see how much energy we've produced and/or are producing.
- Autopay – To qualify for the 4.50% rate (instead of 5.00%) we had to sign up for auto-pay. However we want to make extra payments and the only way to do this is to call Solar City on the phone. Note that when we called them on April 28th to make an extra payment they said the online payment portion of their website was in the last stages of testing and would be rolled out soon.
- Better World – Going solar was never about saving money but rather helping create a healthier planet for our children. We find it amazing that we can generate almost all of our electricity from the sun without being saddled with a big down payment or large monthly payments. If you have the option to go solar, please do it!
Here are links to some reference material:
· Click here for the spreadsheet I used to make the tables used above (72 KB xlsx file).
· Click here for the actual contract we signed (899 KB pdf file).
· Click here for an informative data sheet about the program (1,458 KB pdf file).