Roughly 49 percent of America’s energy budget goes to heat, cool, and light our buildings. By comparison, transportation takes only 28 percent of the energy we buy. It should be clear that the opportunity to save energy, and the cost of energy, is greater for your home and place of business than it is for your transport between the two.
Solar Secret Facts
Photovoltaic [PV] technology produces electricity from sunlight, using solid-state materials with no moving parts. It’s a mature technology, first invented by Alexandre-Edmond Becquerel in 1839 and initially commercialized at Bell Labs in the 1950’s.
For residential application, PV falls into two main categories. First is grid-tied, where the home generates its own electricity, but can also draw power from the utility company at night. The second is off-grid, where the home is located too far from an electrical utility cable and the home must generate its own power, storing energy in batteries for use at night.
A basic home PV system consists of PV cells connected and packaged together in weather-protected modules, which are fastened side-by-side on a racking system to form an array. The PV modules produce direct current [DC] which in a grid-tied system flows to a grid-interactive inverter. An inverter changes the DC voltage to the alternating current [AC] for the household electric circuit powering wall outlets and all AC appliances used here in the States.
Excess power from the inverter may flow out of the house through the utility company’s electric meter, into the citywide grid. When this happens, the meter will run backwards and the utility will credit the outflowing electricity against electricity purchased from the grid at other times, like at night. This process is called net-metering.
Crystalline PV cells use silicon, a little bit of boron and phosphorus along with anti-reflection materials and a screen printing of electrically conductive grid lines on the top and a coating of aluminum on the bottom to collect the electrons. The cells are made by liquefying the silicon [derived from pure sand] at high temperatures, and then slowly cooling the material in a way that makes large crystals. For single crystals, a cylindrical boule is very slowly pulled form the the molten silicon. Polycrystals are cooled in a block formed by quartz glass, making grains of crystals as large as possible. The solid materials are sawed into very thin wafers to produce the individual cells.
Units of Electricity measurement
A kilowatt [kW] is 1,000 watts. You can buy electricity in kilowatt-hours [kWh], which is energy [as opposed to power]. For instance, if you run a 40 watt light bulb for an hour, you’ve used 40 watts-hours of energy. If you run it for 25 hours, you’ve used 1 kWh, for which the average household would be billed 18 cents [at $0.18/kWh]. A 3-kW SmartOne PV array can produce 3 kW in direct sun. If sunlight falls on it five hours a day, it will product approximately 15 kWh that day and if sunlight falls on it seven hours in a day it will produce approximately 21kWh that day.
Some newer grid-tied systems replace a large central inverter with several micro-inverters, individually attached to the back of each PV module. Power coming off the module/inverter combination is 230 volts AC and can tie directly to the household service panel. A major advantage of micro-inverters is that if one module is shaded or broken, performance of the rest of the system is unaffected creating a very low chance of complete loss. You can also monitor the performance of each individual panel independently, on a computer or your smart phone.
DC to DC optimizers are also now available, which help to optimize the power from a string of PV modules, but do not convert to AC as micr-inverters do, and do not keep one panels failure from shutting down the system or severely reducing its power output.
PV Performance Facts
The array should face the sun. This usually means due south, though if you have a heavy air-conditioning load in the late afternoon, you may want to point the array southwest. The array should not be shaded during any part of its productive day if possible. The array should be tilted upward at the correct angle to optimize seasonal exposure–typically at the angle of your latitude, in the western stats this is 10-30 degrees so it gets sunlight at a right angle at the relevant equinoxes. Some arrays can be made adjustable for varying the angle at different seasons. If the array needs to be elevated above the roof surface, it places additional uplifting loads on the roof structure during wind storms and not recommended by SmartOne. If the roof doesn’t offer a suitable structural surface, consider a ground-mounted array, a solar patio cover or a free standing solar shade structure.
Modules are tough and carry a performance based 25-year warranty. They need to be cleaned occasionally, which is usually a matter of hosing off dust and leaves. If appropriate, consider how you’ll clear snow off the modules. The inverter needs to be mounted in a cool, shaded place, such as the north side of the house. Inverter life expectancy can vary 10 to 15 years, unless a micro-inverter is used then the life expectancy can be up to 40 years and is usually performance based guaranteed to 25 years.
A web-based monitoring system tells you how much power you’re making from each individual module, moment to moment and logged hourly, daily, weekly, monthly and annually. It can, in some cases tell you, precisely how much your system saves on the power bill, and the trees you have saved along with your carbon footprint you have offset.
Return on YOUR Investment
How long will it take for my new solar or wind electric system to pay for itself?
Great Question!
That depends on your climate, utility rates, and incentives, but it also depends on your solar panel manufacturer, your inverter, and the installers ability to match these two. Most of SmartOne’s systems have a 3-6 year payback but remember you just prepaid for future power at today’s prices so in reality the return on investment is DAY ONE! Can your current power supplier state that or offer an end to your payments? Do they offer an increase in value to your home?
Also factor in sunny or windy states with expensive electricity, the payback is faster than in calm or cloudy states or where power is relatively cheap. The most important factors for making solar an attractive investment include high electric rates, financial incentives, net-metering policies and good sunlight.
Where net-metering laws exist [43 states plus the District of Columbia and Puerto Rico], solar energy offsets the retail cost of the electricity generated. In some regions, solar systems are allowed to operate on a time-of-use rate schedule, enabling users to sell back electricity to the utility at peak rates. Time-of-use rates vary in price by time of day, with higher rates during times of power shortage [for instance, when loads are high]. Usually between 7am-7pm that’s when the utility must pay more to purchase electricity. These higher electric rate periods often occur in the heat of the day.
SURPRISE, this is when solar system arrays are most productive.
Direct incentives can include tax benefits, such as credits and/or depreciation. The most celebrated recent incentive is the federal tax credit for solar systems that was expanded on January 1, 2009. The credit is for 30 percent of the system cost and can be coupled with state, local, and utility incentives. The Database for State Incentives for Renewable Energy [dsireusa.org] lists state and federal incentives around the country for all types of renewable energy and energy efficiency, or just ask a SmartOne representative
Some areas have rebates of up to $2.25 per watt cutting the up-front expense. Others have performance-based incentives [PBI] that pay 5 to 30 cents per kilowatt-hour [kWh] for power produced over 3 to 10 years. Some also use solar renewable energy credits [SRECs, also called green tags], which are similar to PBIs in that they produce value based on system performance.
SRECs represent the bundle of legal rights to the green part of each kilowatt-hour produced by a solar system. SRECs are valuable to utilities in certain states because those utilities must comply with renewable portfolio standards [RPS], requiring that a certain percentage of electricity sold must be derived from solar sources. New Jersey SRECs have recently been the most valuable, trading in their auction market for as high as 61 cents per kilowatt-hour, thus earning five times the price of the electricity savings they are also producing. SREC value will probably be much more modest going forward.
Feed-in tariffs [FIT] are yet another type of performance-related incentive, but one that foregoes the new-metering benefit. The customer continues to pay the regular electric bill, but gets paid for all electricity fed back to the grid. Gainesville, Fla., has a FIT of 32 cents per kilowatt-hour for 20 years, but it is so popular that the program is currently sold out. Ontario, Canada, also has a FIT program, with payments between 44 and 80 cents [Canadian] per kilowatt-hour for 20 years, depending on system size and mounting type. Georgia, Hawaii, California and Vermont also have FIT [feed-in tariffs].
Another factor in the economics is escalation in electric rates. Solar and wind are escalation-protected investments because they offset electricity costs at the current prevailing rate. As rates rise, the owner saves even more. So, in fact, going solar is like prepaying for your power for the next 3-6 years, at today’s price upfront to be guaranteed free power beyond.
Several useful ways to measure the economic value of a generating system are: compound annual rate of return, increase in property resale value, and cash flow if the purchase is financed. In strong economic cases, the annual returns are over 10 percent, the cash flow positive and the increase in resale value are greater than the system cost.
Compound annual rate of return, or CARR, is another term for interest-rate yield– a metric for comparing one investment to another. For example, a savings account might pay 1 percent interest and the long-term stock market has paid about 8 percent [including dividend reinvestment]. In several states, the results for solar can be substantially better than the long-term stock market.
A theoretical increase in property resale value occurs in homes with generating systems because of the reduced utility operating costs. According to a 1998 Appraisal Journal article by Rick Nevin and Gregory Watson, a home’s value should increase $20,000 for every $1,000 reduction in annual operating costs from energy efficiency. So currently a 3kW system replaces approximately $1,800 annual costs on average. The rationale is that the money from the reduction in utility bills can be spent on a larger mortgage with no net change in the monthly cost of ownership. Nevin and Watson calculate that historic mortgage costs have an average after-tax effective rate of about 5 percent. If $1,000 of reduced operating costs is put toward debt service at 5 percent, it can support an additional $20,000 of debt. The borrower [homeowner] pays the bank the amount they saved on the utility bill.
Home equity loans are often excellent sources of funds because the payment terms can be long, the interest rates on real estate-secured loans are relatively low and the interest is usually tax-deductible, so the net monthly payments are often quite low. As stated, in many cases, the new loan payment will be less than the savings the solar system will generate. See solartoday.org/doesitpay for example cases from around the United States and their returns, cash flows, and projected resale values.
Over time, electric rates usually rise, so the savings increase, but the loan cost generally stays relatively constant unless you are leasing your system, so the situation gets better and better for the system owner, even as the savings from the system are paying off the loan. Once the loan is paid off, all the savings go to the owner. Those who don’t have equity available can explore other options. Two rapidly growing options for homeowners are commercial financial products applied to residential situations. These are solar power purchase agreements [PPA and solar leases. In both cases, a “third party” [someone other than the consumer or the installer] owns the system placed on a consumer’s roof. The system and its benefits are provided at little or no up-front costs to the homeowner, reducing the homeowner’s investment risk and need to find financing or cash. Currently the Residential Solar Lease is under attack in states like Arizona and cities like Riverside, California.
LEASING PITFALLS – DISCUSSED
#1: There is little to no upfront cost.
Anytime someone is going to give you something for free, start looking at the fine print. In a Lease/PPA, it’s the finance company that makes money, not you. If you have capital to invest, or access to capital through an equity line or refinance, there is a much better way to go solar.
#2: I can lock in my utility rate. RESPONSE: Leasing companies may claim a locked utility rate but many times there is a built-in rate escalator. So
you are really locking into a rate that is guaranteed to go up. Make sure to read the fine print.
#3: The leasing company guarantees system performance. All of our solar panels come with a performance guarantee. As long as the sun keeps shining, you have
guaranteed performance with our system.
#4: I will have financial peace of mind without ownership worry.
Having a system on your roof that you don’t own, with a 20 year agreement with a finance company isn’t peace of mind; it can instead be a burden. Ownership is the only way to ensure that what is yours stays yours. The finance companies can bundle and resell your agreement to someone else. It is also important to consider that a leased system may adversely affect your ability to sell your home.
FACTS:
TAX Perks to Know
Tax season is a great opportunity to follow up with past customers and remind them about the tax benefits of installing solar on their homes and businesses; showing potential customers how much they could have saved on their taxes can also be an effective selling tactic, especially for those who recently received a large tax bill. Check in with your customers to see how familiar they are with the federal Investment Tax Credit (ITC), which allows solar owners to take a credit against their federal tax liability equal to 30% of the qualifying costs of the solar electric system. Remind your customers to contact their tax advisors about the potential savings from solar.
Here is what your customers should know about the ITC:
You should also familiarize your customers with their state tax credits and incentives. Many states offer their own tax credits which reduce the system owner’s state tax liability and can play an important role in making solar more affordable.
Also add digital file of: CSI Handbook, DSIRE link and Enphase Commercial PDF.
How do you want these, PDF or other?