Solar Power. Talk to me.

[malchior]

The difference is net metering. Automatic generators when installed do not have meters installed that specifically allow power back onto the grid. They could theoretically be installed incorrectly and do it but that is what inspections are for. The meter that allows a solar system requires isolation whenever the grid fails and the utility-owned and controlled meter does that. It is not the same as an ATS.

Edit:
Also might as well say this as well since it is a huge factor for understanding it - having worked in the generation business for a while now -- what you are talking about is probably true - they could design a system that senses the grid is down and auto-switch it to isolation. And I was hinting at it but the energy industry is beyond conservative and I don't mean politically. I mean they are obsessed with two things - safety and reliability. With safety being the first by far. When anything at all is proposed to change anything about how the systems is run, operated, connected to, etc. they will resist it unlike almost anything most people have seen. I wouldn't be surprised that the only reason solar is allowed to be grid-tied is because politicians passed laws to say it had to happen and the grumbling about it probably just about finally died down because enough of the grumblers retired.

[RunningMn9]

The answer has to do with physics, not safety (of the utility workers anyway). Some additional thought, and a new piece of information that I wasn't aware of have answered my own question. Thanks to Biyobi for the prodding, although his terminology wasn't quite right (solar panels produce current, not watts - watts are a derived unit based on volts and amps - you create volts or amps).

I was not aware that solar panels are a current source, not a voltage source. Gas generators are voltage sources. If we imagine the system as water plumbing, the gas generator is ensuring that the water moves through the pipes at a specific pressure. We can turn off all exits to the system (no load), and all of my plumbing doesn't explode, because the source maintains that specific pressure whether there is load or there isn't.

Current sources, on the other hand, don't create consistent "pressure". They create consistent volume. In our water analogy, it would be as if our plumbing system, instead of having a fixed water pressure, had a fixed flow rate. No matter what happens in my house - X gallons per minute are flowing into the system. If there is no outlet, the pressure will continue to mount until the system explodes and the pressure is released.

The batteries would absorb this flow if the grid couldn't. Without batteries or the grid, they have to stop the panels from producing current. With all of that said, the guy did indicate that it was possible to still be able to produce some electricity for the house, even with the grid out - but I assume he was just lying to me now.

And with all of that said - it's possible that the utility company *also* cuts the inverter off as a safety issue for their workers. But even if they didn't, running the system without batteries looks like it would be bad juju. Stupid current sources.

[Zaxxon]

The answer has to do with physics, not safety (of the utility workers anyway). Some additional thought, and a new piece of information that I wasn't aware of have answered my own question. Thanks to Biyobi for the prodding, although his terminology wasn't quite right (solar panels produce current, not watts - watts are a derived unit based on volts and amps - you create volts or amps).

I was not aware that solar panels are a current source, not a voltage source. Gas generators are voltage sources. If we imagine the system as water plumbing, the gas generator is ensuring that the water moves through the pipes at a specific pressure. We can turn off all exits to the system (no load), and all of my plumbing doesn't explode, because the source maintains that specific pressure whether there is load or there isn't.

Current sources, on the other hand, don't create consistent "pressure". They create consistent volume. In our water analogy, it would be as if our plumbing system, instead of having a fixed water pressure, had a fixed flow rate. No matter what happens in my house - X gallons per minute are flowing into the system. If there is no outlet, the pressure will continue to mount until the system explodes and the pressure is released.

Excellent way to explain it; thanks.

The batteries would absorb this flow if the grid couldn't. Without batteries or the grid, they have to stop the panels from producing current. With all of that said, the guy did indicate that it was possible to still be able to produce some electricity for the house, even with the grid out - but I assume he was just lying to me now.

One of the dudes that bid on our job had something similar. In his case, it wasn't really producing electricity for the whole house but rather was a feature of the inverter that provided a few outlets for emergency use during an outage--for charging phones, etc.

[RunningMn9]

One of the dudes that bid on our job had something similar. In his case, it wasn't really producing electricity for the whole house but rather was a feature of the inverter that provided a few outlets for emergency use during an outage--for charging phones, etc.

Yeah, he said something to the effect that the inverter could produce about 1500 watts, and the electrician would provide some outlets that I could use in an emergency in the event that the grid was out.

But at that point, I already own the generator, so it's not that big a deal.

[malchior]

Well of course the physics is the root cause if you dig into the power engineering.

As you mentioned batteries could deal with it but the system wouldn't be hooked up the same way and it is hella expensive - the batteries buffer the system from the grid. The battery lives are 5-7 years (lead acid generally) and have diminishing capacity over time. As you mentioned if they weren't buffered or cut off the system would eventually have to release the power somewhere - melted wires in the house or back onto the portion of the grid that is still contiguous. Sort of sounds like a safety/reliability issue.

[Smoove_B]

What does solar power mean for firefighters?

[RunningMn9]

Well of course the physics is the root cause if you dig into the power engineering.

As you mentioned batteries could deal with it but the system wouldn't be hooked up the same way and it is hella expensive - the batteries buffer the system from the grid. The battery lives are 5-7 years (lead acid generally) and have diminishing capacity over time. As you mentioned if they weren't buffered or cut off the system would eventually have to release the power somewhere - melted wires in the house or back onto the portion of the grid that is still contiguous. Sort of sounds like a safety/reliability issue.

Like I said in my adjustment post above - the issue isn't bleeding energy back out on the grid, just because. They could easily just have a cutoff/transfer switch in the meter that protected the grid in the event of an outage. As an electrical engineer, that's an easy problem to solve.

The safety issue exists for my house (not the utility workers), because the solar panels are current sources, not voltage sources. I wasn't aware of that when I asked my original question. And yeah - I'm not getting a giant goddamn battery bank to avoid having to turn on my gas generator.

[Biyobi]

Thanks to Biyobi for the prodding, although his terminology wasn't quite right (solar panels produce current, not watts - watts are a derived unit based on volts and amps - you create volts or amps).

Electricity is voodoo. As a gamer, wattage is most important to me so I stick with it.

[RunningMn9]

Alright, the numbers are in. I'm a confused bear. I consume a little over 16000 KWH per year. The system they want to install is will produce a tad under 12000 KWH per year (initially). To buy the system will cost $31,858 over 10 years (that includes taking out the 30% federal tax incentive, and adding the financing charges since I sure as shit am not forking over $25,000 in cash). That produces free energy for 25 years. At that point I own a 25-year old solar installation.

To lease the system will cost $33,108 over 25 years. That will produce the same amount of free energy for 25 years. It also includes all maintenance for those 25 years. At that point, I do not own a 25-year old solar installation (they will haul it away for free).

As far as I can tell, the decision comes down to getting SRECs (and shouldering maintenance and any insurance costs) and whether in 25 years I want to own a 25-year old solar installation. And increased property value (although that will be somewhat diminished after 25 years, because it will be an old-ass system that is a lot closer to needing substantial repairs. Am I missing something else?

[Zaxxon]

That is the bulk of it. What's the before tax credit cost per watt? How big are the expected SREC payments?

[RunningMn9]

That is the bulk of it. What's the before tax credit cost per watt? How big are the expected SREC payments?

I left those numbers downstairs, but somewhere in the neighborhood of $3.50 per watt. It was $2.42 per watt after the tax credit (but not including financing charges, which jacked it almost all the way back up). The financing they told me last week was not what they showed up with today. Although what they showed up with today seemed probably in line with what I could get if I went and found a loan on my own (sub 6% over 10 years). Plus, the loan terms seemed to include the expectation that I would fork over the tax credit amount and re-amortize the remaining portion of the loan (dropping the loan payment from $305 to about $170).

What made me stare at the paper was the fact that they present the lease as if I am paying 10.7 cents per KWH - for a guaranteed level of production (they pay you the difference if the system outputs less than that guaranteed amount) - which is a savings of about 5 cents per KWH today (and they are telling me that this might rise to saving 40 cents per KWH in 25 years). But when I looked at it, it just seemed to me like I was really financing the cost of the equipment over 25 years - while enjoying the same free electricity. The only real difference was that I give the old-ass system back at the end (the way I thought about it was asking how I would feel today about having a solar system on my roof that was designed in 1989). And there is some mystery in terms of the SRECs versus expected maintenance and insurance costs over those 25 years. For now, the SRECs in NJ are trading around $180. This system will generate 11 or 12 per year. There are associated tax consequences of selling those as well, I assume.

It seemed like my decision was whether to give them $31,800 over 10 years, or $33,000 over 25 years. So an extra $1200, spread over 15 years? I feel like I have to be missing something. My guess is that it's in the SRECs, but I don't really know how much I can count on those over the ensuing years.

[RunningMn9]

The current average rate of electricity in NJ is about 15.9 cents per KWH. The oldest data I found was from 1990 (24 years ago), which was about 9 cents per KWH. That ratio might yield 28 cents per KWH 24 years from now (just as a plausible number anyway).

[Zaxxon]

You probably have some significant negotiating room there. On a system that big, $3.50 is not a very good price/watt unless there are conditions specific to your home that are pushing labor costs up our something.

That loan rate is double what two of my bidders offered me, as well, although I suppose that could be a regional thing.

So my advice if the value proposition is in the ballpark of making sense: get a couple more quotes.

As to your questions on specifics, I'm not sure I am reading you right so I'll come back after I've had a chance to read your post more thoroughly (bedtime for the kiddos now).

[RunningMn9]

unless there are conditions specific to your home that are pushing labor costs up our something.

Like being in the hell hole that is NJ?

[RunningMn9]

Some quick and dirty research on the cost of solar installation in NJ says that a 5KW install should start around $18K. This system is almost double that. So I'm at least not shocked that the price is what it is. Which isn't to say that I couldn't negotiate that down, but to be honest, that sounds like work.

[RunningMn9]

Over the past year, I used 23,317 KWH.

I guess the good news is that since 2006, my efforts to slash my electricity consumption were successful to some degree. Shaved about 7000 KWH annually, which is about $1000 per year. WTF was I doing back then?!?

[Zaxxon]

Some quick and dirty research on the cost of solar installation in NJ says that a 5KW install should start around $18K. This system is almost double that. So I'm at least not shocked that the price is what it is. Which isn't to say that I couldn't negotiate that down, but to be honest, that sounds like work.

Sure does. In my world, working to pay for the system sounds like work, too. Keep in mind that a 10 kW system shouldn't cost nearly 2x a 5 kW system, as the permitting and a significant portion of the labor does not rise linearly with system size. Just for reference, for the bids I got, the after negotiation price ranged from 10% below to 25% below the initial bids. Not an insignificant chunk of change for a couple of hours of work.

The current average rate of electricity in NJ is about 15.9 cents per KWH. The oldest data I found was from 1990 (24 years ago), which was about 9 cents per KWH. That ratio might yield 28 cents per KWH 24 years from now (just as a plausible number anyway).

The companies I talked to suggested that on the average, rates will go up from 4% - 5.5% / year. I found that to be a bit unbelievable, but your estimate (15.9 --> 28 in 24 years) comes to 2.4%, which is probably conservative going forward what with clean power regulations and all. A growth rate of just shy of 4%/year would see 40 c/kWh in 24 years. If you're curious about where your power comes from, this is a good reference. If you want to sanity check the solar output numbers you're getting, this is useful.

The financing they told me last week was not what they showed up with today.

What made me stare at the paper was the fact that they present the lease as if I am paying 10.7 cents per KWH - for a guaranteed level of production (they pay you the difference if the system outputs less than that guaranteed amount) - which is a savings of about 5 cents per KWH today (and they are telling me that this might rise to saving 40 cents per KWH in 25 years). But when I looked at it, it just seemed to me like I was really financing the cost of the equipment over 25 years - while enjoying the same free electricity. The only real difference was that I give the old-ass system back at the end (the way I thought about it was asking how I would feel today about having a solar system on my roof that was designed in 1989). And there is some mystery in terms of the SRECs versus expected maintenance and insurance costs over those 25 years. For now, the SRECs in NJ are trading around $180. This system will generate 11 or 12 per year. There are associated tax consequences of selling those as well, I assume.

So that's more than a loan if they're including guaranteed outputs and making you fork over the system at the end. That could be a pro or a con--you may consider it old tech in 20 years, but if it's still producing at 80% capacity, you may also prefer to let it ride at a cost of $0 rather than replace it.

It seemed like my decision was whether to give them $31,800 over 10 years, or $33,000 over 25 years. So an extra $1200, spread over 15 years? I feel like I have to be missing something. My guess is that it's in the SRECs, but I don't really know how much I can count on those over the ensuing years.

Did the salesman discuss the SRECs specifically? That financing sounds more like a lease to me (them covering maintenance, guaranteeing output, and having you re-up or give it back at end of term), and typically in those cases (at least among the bids I got) the lessor gets the SRECs.

I have a hard time comparing systems without taking the bid down to its component parts of cash cost and SREC + utliity savings. If you're looking at 11-12 SRECs at $180 ea/year, that's gigantic. In Colorado I get a whopping $0.03/kWh, or <$200/year for my small system. $2k/year in SRECs plus $2,500 in utility savings/year (16000 kWh * $.159) on a system that costs you $32k? Seems pretty decent to me. Assuming I'm not making math mistakes, that's around $4,500/year in direct savings, assuming utility rates don't rise and your house does not appreciate due to the installation. Since they will and it will, more the better.

[Zaxxon]

I see I took your usage # (16000 kWh) and transposed it with your production estimate (12000 kWh). So that's a little less gigantic at around $4k/year in direct savings initially, but still pretty big IMO.

[RunningMn9]

I thought it was clear that I was comparing a lease versus a financed buy. Perhaps I am not explaining just how little I want to pre-pay 25 years of electricity.

And yes, the sales guy talked about the SRECs specifically. The problem that I perceive in NJ is that the prices are currently propped up by governor fiat. That can disappear as soon as the utility companies buy his successor. He is forcing them to buy a minimum number of SRECs, which is inflating their worth at the moment (because they were tanking).

This is from my looking at them, not from the sales guy. He presented them as wonderful free money.

[Zaxxon]

That certainly would make the lease more attractive.

[RunningMn9]

That certainly would make the lease more attractive.

One way or another, 33 panels are going up on my roof.

[Zaxxon]

[malchior]

I've got my lease just about signed - pending them fixing my wife's name on the documents. My average power rate is 18.2 cents and I have usage somewhere around RM9s so I have a fairly hefty bill. I am looking at a approximately $75 lease payment for a 6KW system which should cover about 60% of my usage. So by their calculations which actually look a little conservative I'll save about $600 the first year with no money upfront. My only concern is compared to buying the system itself it is not a wash over the 20 years. An equivalent system would cost about $15000-18000 installed and that is the total lease payment over time but I don't capture the tax benefits, etc.

As to the power cost side - I see the 4-5% number as being plausible especially with the new carbon regulations coming online - but I tend to believe we have some buffer built in since we are being bilked in the first place here in NJ (imagine that!). Even so in about 5 years I'm not going to mind displacing that 60% and I have tons of efficiency improvements to do. I need to do insulation, my A/C system is about 30 years old and my windows are all original (40+ years). I may be able to get that 40% left over down to 25-30% over the next few years. Anyway, the best part is the zero upfront cost, not having to deal with the SREC situation which is plain FUBAR here as RM9 mentioned, and no maintenance risk. Not too shabby.

[Zaxxon]

Congrats.

[RunningMn9]

My only concern is compared to buying the system itself it is not a wash over the 20 years. An equivalent system would cost about $15000-18000 installed and that is the total lease payment over time but I don't capture the tax benefits, etc.

Yeah, the way things are presented is confusing. For instance, with their assumptions, they say that the Lease will yield about $50,000 in savings over 25 years. For the purchase option, which includes the same assumptions, plus their analysis for the SRECs and maintenance - they show the 25 year savings at $75,000. So my first reaction was "Ok, that's $25,000 extra over 25 years, I need to think about that...". But then they have a final column, which is "Cost Adjusted Savings / Accumulated Cash Position". And that starts out at -$31000, in year one it gets a nice bump due to the $9,300 federal tax credit - but at the end of Year 25, that column spits out $54,000.

I understand that $54,000 > $50,000. But over 25 years, is it worth locking up that money? My aversion to locking up money says no.

Now, I get that there might be some playing around with the quote. The net cost of the quoted system is $21,700. Let's say I get them to knock $5,000 off the quote, that brings the net cost to $18,200. Add back in the financing cost of the loan, and for the sake of argument, let's say that I get that chopped in half to 3%, over the same 10 years. Probably looking at $4000 in finance charges (between loan origination fee bullshit, and the interest itself), so now you are back up to a financed cost of $22,200. That's $2.41 per watt, installed and financed.

That puts the 25-year difference at about $14,000 - using their assumptions for the NJ SREC market, maintenance, and escalating energy prices in NJ over time.

And that's not a small number. But here is where I get confused. I am thinking about saving $14,000 in 2014 dollars. But I'm not saving $14,000 in 2014 dollars. The largest amounts of savings are going to be in 2032 dollars or 2035 dollars. I'm paying the money up front, with dollars that are going to be significantly more valuable than the dollars I would be saving in 2035. Again, while not a perfect comparison since no one can project 25 years of inflation going forward. $1 in 1989 (25 years ago) had the same buying power as almost $2 today.

Lots of unknowns. What if the SREC market goes to shit here when Christie leaves office? That could be 22 years of SRECs that are way below their assumptions for the projections.

It's complicated. What is NOT complicated is that going solar in some way, shape or form should save me a good chunk of cash. The only question now is how much will I save and how much will it cost up front.

[Zaxxon]

What I don't understand in the case of your lease is why the rate and loan costs are so high. If they are getting the SRECs, *that* should be their main profit center. A 6% rate, plus loan fees, plus thousands/year in SRECs is quite the sweet deal for them. Here in CO, the offers were in the ballpark of 2%, with $0-$1k in fees.

[malchior]

I think I have a decent answer about the SRECs at least here in NJ. The problem is the one RM9 stated. Not too long ago SRECs were around $600. They are now at $160 and the likely equilibrium is $100 or even $80 if fair market demand was driving it (according to the solar folks in the company). That uncertainty is being baked in inside the lease somewhere. In mine I'd say they are capturing something like $3000 of easy cash in the deal over 20 years which isn't all that much considering all the peace of mind it buys me. Plus there is almost no scenario where I don't save money. I just might not save as much money. I can live with that since they are taking all the risk around the maintenance, natural disasters, and they could take a hit due to the SRECs or possibly hit gold. My assumption is they are better at estimating that uncertainty than I am so I'm fine with the deal for those reasons.

[Zaxxon]

That makes sense. Here in CO the SRECs are set by contract and do not vary, so there is less risk there.

[RunningMn9]

What I don't understand in the case of your lease is why the rate and loan costs are so high. If they are getting the SRECs, *that* should be their main profit center. A 6% rate, plus loan fees, plus thousands/year in SRECs is quite the sweet deal for them. Here in CO, the offers were in the ballpark of 2%, with $0-$1k in fees.

You are confusing things. If I buy the system (with the loan) - *I* am getting the SRECs. Their profit comes from bullshit loan fees and interest.

If I lease the system, then they get the tax credit and the SRECs, and that's how they pay for the equipment, the install and maintenance, and make their profits.

Because I am curious, I ran a thought experiment for the lease. Our brains are trained to not process future payments with respect to inflation. So when I see that I am going to make a $110 per month lease payment for 25 years, I can easily add that up and see that I am paying $33,108 for the solar system (and agreeing to sell it back for $0 at the end, for the purposes of the thought experiment). But as mentioned earlier, I'm not paying them $33,108 in 2014 dollars, since very little of the money I am giving them will be in 2014 dollars.

I can't project future inflation, but for the purposes of illustration, let's pretend that I entered into this specific lease in 1989. Based on the rates of inflation from 1989 through the end of 2013 (same 25 year spread), I actually would have paid $23,776 in 1989 dollars for the system. What I would be doing with this lease is fixing the cost of energy in time - and completely shielding it from inflation. I would pay 10.7 cents per KWH in 2014, and 10.7 cents per KWH in 2039. But in 2039, inflation can have a powerful effect, and that might be the 2014 equivalent of less than 6 cents per KWH.

[Zaxxon]

Just make sure you take into account the additional hurdle a lease presents if you decide to sell before it's out.

[Zaxxon]

Which, I should say, is not likely to be a huge deal. But the report I read did make clear that it can be a turn-off for buyers.

[RunningMn9]

Which, I should say, is not likely to be a huge deal. But the report I read did make clear that it can be a turn-off for buyers.

I'll give them my spreadsheet.

That's really my main concern with the lease. However, there are outs in the lease for that purpose. I can have them move the system to my new house, free of charge, and maintain the lease. I can pre-pay the remaining portion of the lease and have them yank the panels off (not a favored choice ). I can also negotiate with them to pre-pay the remaining portion of the lease, negotiate the fair market value of the system, and then the solar system becomes mine - and in theory - the property value insta-increases because it has free solar on the roof. Not optimal, but hopefully not the end of the world.

[Zaxxon]

Yep, I am not trying to dissuade you from the lease. Just making sure you're considering all aspects.

Now if only my power company would get off their asses and complete my meter swap so I can flip the switch. There's something particularly galling about a system sitting on my roof not producing due to bureaucracy.

[malchior]

In my lease scenario the lease is transferrable if they meet the credit terms and they are buying a house so I'm not too worried about that. Alternatively I could pre-pay the balance and the panels can sit up there until the end of the 20-year term. There are a lot of ways to deal with it. They won't be all that visible either (the backyard of the house slopes to a degree where you can't see the roof from the back at all where the panels will be so it won't be a sight issue. Sure it is more hassle but I would hope that a reasonable person would see the benefit. Especially if I can show them bills where they see the benefit in black and white.

[Carpet_pissr]

Fascinating thread. I am paying around $500/month to our power company, and our rates are around .10/.11 KWh I think. I think a lot of that is an inefficient, or possibly poorly functioning A/C unit or units, but still, I wonder if there is any way going to solar would benefit me (short term). I have no idea how long I will be in this house with my job situation potentially tenuous. Is there perhaps a cutoff...like you will definitely lose money on this if you are not going to be in the same house for X years? And if so, what is the general consensus of the time period?

[stessier]

Fascinating thread. I am paying around $500/month to our power company,

Do you live in a mansion? Recharge a fleet of Tesla's daily? Or are you just terribly generous and pay extra to lower the burden on the rest of us?!?

I live only 2 hours north and pay $200/month max during the hottest part of the summer. In the winter it is around $75. We have gas heat and cooking, though, so that helps a bit.

[Zaxxon]

It depends on how large a system your roof and finances can support, electricity rates, local incentives, etc. For me the payback ends up around 3-4 years if the home appreciation numbers that I found end up being accurate.

With such a gigantic usage number in your household, the potential is there for a quick payback if you have a roof conducive to a big array.

[RunningMn9]

Fascinating thread. I am paying around $500/month to our power company, and our rates are around .10/.11 KWh I think. I think a lot of that is an inefficient, or possibly poorly functioning A/C unit or units, but still, I wonder if there is any way going to solar would benefit me (short term). I have no idea how long I will be in this house with my job situation potentially tenuous. Is there perhaps a cutoff...like you will definitely lose money on this if you are not going to be in the same house for X years? And if so, what is the general consensus of the time period?

That seems...impossible.

You are talking about averaging 151 KWH *per day*. For comparison, I am looking at a 9.2KW system, which will generate about 12,000 KWH per year. You would need almost 5 of those systems to cover what you are doing.

That's not an inefficient AC unit that you've got on your hands. If you are really averaging $500 per month (and not just hitting that for a couple of peak months in the summer), and your rate really is around 11 cents....Jesus.

I have to believe you've got external wiring that is exposed, pouring delicious electrons into the Earth.

Things were bad in my household with 23000 KWH per year. That would only average me $305 per month, and that's at almost 16 cents per KWH. I made two changes to shave about 7000 KWH per year off of consumption - do not run the AC when the heat exchanger is in direct sunlight, and I changed a significant amount of lighting from incandescent to CFL and now some LEDs.

[Zaxxon]

Yeah, CP unless you live in an 8000 sq ft house, your first move should be for an infrared/blower energy audit. Most power companies will subsidize these.

[Isgrimnur]

I'll be in the market for a home at the end of this year. One of the first thing's i'll be investigating on any house is the insulation level and getting estimates on having the walls and attic spray filled to as max a capacity is feasible.