Tuesday, March 12, 2019

Solar home economics (+ Day #3 off-grid)

If you have a house with a sunny roof and no solar panels, then you are leaving money on the table.

One can look at home solar economics two ways:

1) If I credit my monthly electricity savings toward paying myself back for solar, how long until my energy is free?

  • It takes 7-8 years to pay off the system and get free electricity.

2) If I amortize my purchase and maintenance costs over the life of my solar system, what is my annual rate of return on the investment?
  • Internal rate of return on capital invested in rooftop solar is 14%. (wow!) ** 
These figures are at the solar prices available today through the solar purchasing cooperative (more on that in another post), and with the current federal tax credit.

Because I also invest for retirement, I look at it the second way.   Solar on the roof is equivalent to 25-year Treasury bonds with a coupon rate of 14%.  I'd put my entire retirement account there if I could.  That’s what rooftop solar is, except that we are limited in how many such “virtual bonds” we can buy – our maximum is set by our electric bill.  

Of course, if you had an electric car, you could expand your “virtual bond holdings to cover the increased charging demand.  That would give you a 14% annual return for never buying gasoline.

The Residential Renewable Energy Tax Credit currently returns 30% of the installation cost for solar power and for batteries charged exclusively with solar. Details and phase-out schedule are found here:

If you were buying a new house and had to pay off the solar system on your mortgage, you’d still pocket money at the end of the year.  For a modest 1500 sf house, you would save an extra $811 every year. **

** calculations by Philip Fairey, Deputy Director of the state of Florida’s Solar Energy Center (FSEC) in at the University of Central Florida.

Energy report from day 3 off-grid

Monday, 11 March was another successful day off-grid.  The air conditioner ran regularly, we charged the car, and various home appliances operated normally (microwave, freezer, toaster, etc.).  

Tomorrow is laundry day, with clouds predicted for the afternoon.  That sounds like a challenge: will the batteries still have enough power left to make it through the night?  The rest of the week looks like intermittent sun & rain.  Stay tuned.

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