Wednesday, June 15, 2022

My Experience with Solar Panels

Our 13-Panel Solar Array

Last year, I went through the process of having Solar Panels installed on my house in Flagstaff. Now granted, Flagstaff does get over 300 days of sunshine per year, but the questions I most often get when others learn of my rooftop solar are: 1) How much did it cost? 2) Has it been worth it? 3) Do you get paid for power you don't use? 4) Did you get battery storage?

There was quite a bit to learn, and a fair amount of nuance involved with investing in solar, so I thought I would run through my experience here so that you all can see just how valuable it has ultimately been for us, and some of the things that I learned along the way.

First off, let me get to the those big questions. How much did our rooftop solar setup cost? Well, the answer to that question is not as simple as you might think. First, cost typically depends on whether or not you pay outright, or you finance. Outright payment typically comes with a price reduction/discount. With that said, a good rule-of-thumb for cost is typically about $1000 per panel (but that is definitely dropping fast). We designed our array based on our typical monthly usage...and opted for a 13-panel array. This is somewhat on the smaller side, but our typically monthly usage is only about 300-400 kWh (for our 1600 sq. ft. home). For a larger household, our array probably wouldn't be sufficient. We wanted to go with a setup that would essentially generate at least 200% of our daily average usage (meaning we'd generate at least a 100% surplus). This was not only so we could "make some money selling back to the grid", but would also future proof us a little for the day when we finally buy that EV car. There are also several appliances in our house that would be nice to ultimately replace with electric. With that all said, our quoted up front and out-the-door cost was $14,147 ($17,996 if we financed). But...this is where it gets interesting. There is a 26% federal tax credit you can claim on your taxes for new solar. This meant the following April, we would be able to claim $3743 dollars as credit on our taxes, effectively giving us a $3743 refund. On top of that, Arizona adds another $1000 State Credit. So, while we did have to pay the full amount up front, just 9 months later we got almost $5000 back...resulting in a NET cost for our solar installation of under $10,000. Not bad for a full rooftop solar setup. Now, I realize that not everyone has $14,000 dollars to plunk down on a solar array, and frankly neither did we. BUT, we were clever in how we made it work. 

Rather than finance the panels and pay a higher price overall, we saved up and were able to put down about $9000. Then, I took out a 12-month interest free Discover Card and paid the remaining $5000 on that card (and getting $100 in rewards points). I then put that card away and never used it again. Nine months later when we got our tax refund, I paid off the full balance and haven't used the card since. This allowed us to pay the reduced price, and not have to finance or take out a small loan from the bank or credit union.

So how much did our solar setup cost? Well...after it was all said it done, about $9500.

It's important to know, that the federal and state credits are going away fast, so I highly recommend if you're interested in solar, get it installed no later than next year. By 2024, the credit will effectively be gone.

So...has it been worth it?

I guess the short answer to that question is....Maybe not quite yet, but it definitely will be.

On a full sun day, we are generating about 27-28 kWh of power. We typically only use about 10 kWh per day. In other words, we're generating over 2x our daily use on a good day. So you might be thinking, "Awesome, that means you make money on the 18 kWh you sell back to the grid!". Sort of.

Yes it's true that we sell back all unused power we generate to the grid. BUT, we live in an area with an effective vertical utility monopoly. Flagstaff is serviced by a company called APS, and they have full reign over our area. In order to use solar, you must sign contracts with APS and agree to their terms. To put it bluntly, APS is trying to make money, and my rooftop solar basically loses them money. do they rectify this? Well, they eliminate what's called "Net-Metering" and instead implement time-of-use plans with reduced buy-back rates. Let me spell this out for you:

Several years ago, rooftop solar operated on a simple principle called "net metering". This meant that monthly power usage was essentially a simple net calculation. How much produced - how much used. If that number was positive, APS credited your account at the going kWh rate (usually between 11 and 13 cents). If that number was negative, you paid for the net amount used. This model was not ideal for APS however, and the Arizona Corporation Commission changed the rules and allowed APS to instead implement what are called, "time of use plans". These plans not only charge consumers a higher rate for used power between 3 pm and 8 pm, BUT they can buy back any over-generated power at a lower rate than we they sell it. So even if our rooftop solar generates 200% of our monthly use, we won't earn 100% credit on our account. To be fair, time-of-use plans do also help to eliminate the problem introduced with large solar generation: "The Duck Curve" (Google it), but it still means you've got to be mindful of how and when you use power. It get's incredibly complicated, but the short story is that we've become really good about not running any energy intensive appliances between 3 and 8 pm. When it is all said and done, during a typical month (excluding winter), we can "Earn" somewhere between $1 and $1.50 per day. This doesn't sound like a lot, but this is on top of all the power we use. So not only are we breaking even on all our usage, BUT, we are earning about a dollar a day.  Now in the winter, when the sun is lower, and our roof is covered in occasional snow, we sometimes don't even break even. Currently, our electric "Bill" is -67 dollars (meaning we have a $67 credit). For this month, we are on day 12 of the billing cycle and are earning $1.09 per day on average. When winter comes, we'll probably start chewing in to that credit and if we have any credit left over come Jan 1, APS sends us a check and we start they cycle over again.

My last electric "Bill"

So let's do some back-of-the-envelope math. Let's say that when we average our production over an entire year, we'll assume the worst case scenario that we are only breaking even. Before solar, our electric bill was about $80 per month when averaged over the entire year (some months it was $40, other months $120). This means we were spending ABOUT $1000 year on electric for our home.

We paid ABOUT $9000 for our panels, so this would mean in 9 years they pay for themselves. This is an incredibly conservative estimate, and I would guess our buy-back break-even period is probably closer to 6 or 7 years. So, as long as we stay in our house for at least 6 years, the panels will very likely have been "Worth It". Of course this doesn't factor in the net value of our home as well. The panels most certainly increased the equity/value of our home by at least the $9000 that the panels cost, meaning if we were to sell, we'd likely not lose money in the long run. And lastly, as to whether they've been "worth it"....well we certainly think that they have been even if just for the fact that we're doing our part to reduce our fossil-fuel based energy consumption. Next EV car!

So have our solar panels been worth it and do we get paid for the power we generate and don't use? YES! and YES! We'll have a buy-back period of probably about 6 years, and our home equity has increased, our fossil-fuel energy consumption has decreased, and we are providing the grid with our surplus renewable energy.

And lastly...did we get battery storage? This is an easy one. NO we did not not get battery storage. I would absolutely love to have a battery storage unit installed on our house to truly tap into as much of the power we generate as possible. The battery setup compatible with our unit (Enphase), would provide enough storage power to essentially keep our house fully running overnight (except for our electric dryer). In the end, it's always better to use as much of the power we generate as possible as it costs more to buy power from APS, then we earn selling power back. So why didn't we get battery storage? Well, mostly because the technology is not-quite-there yet...and because what is there, is REALLY expensive. I got a quote on a basic battery storage unit for our house, and it was almost $20k. This is twice what we paid just for the panels and we couldn't justify the expense. I imagine the technology and costs will come down ridiculously fast over the next 5-10 years, and we are planning to simply wait a few years and re-assess.


Here are some things I'd tell you based on what I learned along the way. First, try to find a local company to work with. We had a lot of people from Phoenix (or national companies) try to sell us panels, but we ultimately went with a local company that works and services Flagstaff. This also allowed us to use a referral from a neighbor that gave us another $500 off our price (and gave them a $500 bonus!). We also felt better about supporting local business.

Do your research on what technology the company uses. Many solar panels are cheaply made overseas and are not reliable, or have faulty inverters. Make sure to go with a company that has good reviews, and has reliable equipment. I'm not saying you should only buy American panels (ours were made in Germany), just do your due diligence here.

Think about the condition of your roof. If you need a new roof, it might be wise to do that before installing panels. If not, it means having to remove them a few years down the line when re-roofing your house. Our roof was redone just a few years ago, so that variable was not in our equation.

Plan for the entire process to take at least 3 months (probably more like 4-5). Once we signed papers with our company, it took about two weeks for the initial roof inspections, and then another two months for the approval from APS, the City, and our HOA. After that, the installers actually put everything up in just two days. It took another couple of weeks for APS to install their meters and get us tapped into the primary grid. After that, our installers came over as we turned things on, and set up our unit to our wifi so we can monitor everything from our phones. Watching the app becomes a fun daily game to see how much you are producing vs. consuming. We signed papers in late-April, and "flipped the switch"in late-July.

...and that's about it. The entire process, while lengthy, is actually quite painless. It's important to note that you also don't necessarily have to buy your panels. You can also lease them and simply allow a company to "use your roof". You won't earn as much this way, and you don't ever own the panels, but it also means you are not responsible for them. Also, if you do buy, and finance...most solar companies have ridiculously low interest rates, and they will tailor your monthly bills, to be roughly equivalent to what your electric bill is. So to you, you aren't really seeing any difference in your monthly bills.

I hope this was useful/helpful to you and I'm happy to answer any questions in the comments.

Power generation and consumption for June 14th.
(We consumed 7.1 kWh, and produced 27.7 kWh, exporting 20.6 kWh)

Also, I highly recommend this video talking about why we should cut ties with gas appliances...and why "Cooking with Gas" being "Better", is a common misconception.